Situation Analysis: Importance, components, framework, and examples

Situation Analysis involves doing the internal and external factors of a business. Let’s take a look at its importance, various components, framework, and examples.

What is Situation Analysis?

Situation analysis is the analysis of the internal and external factors of a business. It involves conducting a market analysis, assessing the strengths and weaknesses of the organization, doing an assessment of the external environment, and doing a competitive analysis.

Sun Tzu, the Chinese military strategist wrote The Art of War (translated version Wing, 1989), which effectively confirms why the Situation Analysis needs to be How much more so with no computation at all.

Here are some of the tools that are used in Situation Analysis.

• PESTLE/PEST
• Porters 5 Forces
• SWOT/TOWS
• Segmentation (requires careful analysis) and target marketing
• Decision-making units 
• Global segments 
• B2C (consumer) segments
• B2B (industrial) segments

Resources to Refer

While doing situational analysis for a business, students should refer to published research reports from sites such as Mintel and Marketline Advantage, government sources, national newspapers, business website, etc. for data and information on the company.

For example, if the main area of your company’s business is catering then search for information on the size of the market, product types, customers, competitors, etc. The company’s website should offer information on the product range, which can be viewed as current market segments targeted by the company.

What to include in Situational analysis Report

Situational analysis of a business should inlcude:

• Market Analysis
• TOWS / SWOT Analysis
• PEST analysis
• Competitive analysis

While doing Situation Analysis, you should look at answering the following questions:

• What developments and changes in the political and legal environment can or will affect the organisation and, specifically, its marketing decisions and actions?
• How can local, regional, national and international economic conditions affect demand and customer buying power now and in the future?
• In what ways are trends in demographics, social values, popular culture, customer attitudes and customer perceptions influencing demand, markets and segments?
• What changes in social and cultural values are influencing attitudes towards ethics in marketing?
• How are technological innovations affecting customers, competitors, suppliers, channel partners, marketing and internal processes such as research and development?
• What ecological concerns may affect the organisation’s materials, suppliers, energy access, processes, marketing programmes and public reputation?
• What is the current competitive situation and how is it changing (or likely to change)?
• What benchmarks can be used for competitive performance and on what basis can the organisation achieve competitive advantage?
• What makes successful competitors successful? What prevents unsuccessful competitors from achieving their objectives?
• What lessons learned through the external audit can be applied to marketing planning?

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