How do I perform a situation analysis?
Situation analysis looks at all relevant aspects of an enterprise from an internal business management perspective as well as from an external market-related perspective. It is a strategic tool that is used in marketing to review an enterprise’s current situation, strengths and weaknesses, opportunities and threats.
What is situation analysis used for?
In marketing theory, it often forms the introduction to enterprise-specific research papers or student essays. In marketing practice, it is used as the basis for concept development or for preparing for the acquisition of new corporate customers.
What are the elements of an effective situation analysis?
An effective situation analysis is characterized by a logical structure and a proper scientific approach:
- Analysis of Company
- Analysis of Competitors
- Analysis of Customers
- Analysis of Collaborators
- Analysis of Context
This aim of a 5C analysis is to deliver complete and comprehensible results (i.e. under the same conditions, the results would be able to be reproduced by other analysts using the same framework).
If more detail is needed, there can also be a complete analysis of the enterprise’s Communication channels (“6C analysis”).
More effective situation analysis with PESTELE und TOWS
There is a structured process for analysis of the Context: The first step is analysis using the PESTLE framework followed by a TOWS analysis, an extension of the classic SWOT analysis.
The PESTLE analysis consists of the following factors:
An additional Ethical factor is often incorporated in the analysis. This is then known by the acronym PESTLE(E) – or more simply: STEEPLE.
The TOWS matrix comprises the following overlapping areas:
- SO: Strengths / Opportunities
- WO: Weaknesses / Opportunities
- ST: Strengths / Threats
- WT: Weaknesses / Threats
Whereas the SWOT analysis looks at the strengths, weaknesses, opportunities and threats individually, the TOWS matrix views them in relation to each other. This makes TOWS a more meaningful tool than SWOT.
Situation analysis completed – what next?
In marketing theory, a situation analysis forms the perfect introduction to the main part of the research paper or student essay, which then undertakes a conceptual and strategic investigation of the topic based on the results of the analysis.
In marketing practice, once the situation analysis has been completed, the phase of strategic concept development – or meetings with prospective customers – can begin. In terms of concept development, the situation analysis provides an overall picture with multilateral points of reference. In terms of the acquisition of prospective customers, it is advisable to pick out individual significant results in order to keep the entry point for the initial discussion clear and to illustrate the need for it.
Sources: Marketing Management in Japan, Marketing Communications & Penetrating the Japanese Market; Study Module at Rikkyo University, Tokyo