Situational Analysis
The term
Situational Analysis refers to Collection of methods that managers use to
analyze an organizations environment, capabilities, customers and business
organization.
In simple
way it is a way to establish the core competencies that could be sustained for
a long term and act as Sustainable Competitive Advantage.
Nowadays the
concept is truly an indicative regarding the actual knowledge and acquaintance
with commercial implementation. It is again act as imperative source for many examinations
like competitive exams, FSSAI Mains, State Selections and many others.
Friends, in
this article we will discuss typically four methods used in situational
analysis.
I. SWOT Analysis
II. 5’C’ Analysis
III. Porter’s Five Forces
IV. VRIO Analysis
I.
SWOT Analysis:
SWOT
Analysis is a technique used to evaluate company’s competitive position and to
develop strategic planning.
It is an effective approach to scan
out the environment of the organization. In SWOT Analysis:
‘S’ stands for Strength
‘W’ stands for Weakness
‘O’ stands for Opportunity
‘T’ stands
for Threats
SWOT Analysis further divided into parameters.
1. Internal Analysis
2. External
Analysis
1. Internal Analysis:
It typically Strength and Weakness. It is directly related with the organization
and they act as present scenario of the organization. Every organization has to
increase their strength on one side and reduce the weakness on other side.
Strength includes things you have in abundance, skills and capabilities, brand
name, reputation etc. Weakness includes set of characteristic feature like high
cost, inadequate funding which provides disadvantage to the organizations.
2. External Analysis:
It includes Opportunity and Threats. It is actually indirectly related to the
organization and act as a future scenario.
The major
focus is to use the future opportunity in a better manner so it could be
strength in future. Opportunity includes new source of investment, FDI, modern
technology help out to boost the efficiency in production.
At the same
time firms have to use proper resources to reduce the threats which could be
come in the future. Otherwise they act as your weakness in future. Hence, a
proper care should be taken for trends, modernization to fit in the
competition.
In a Nutshell,
we could say Strength and Opportunity are useful to the organization. Hence,
use the opportunities to increase the strength. While Weakness and Threats are
harmful to the organization. In the long run company needs to minimize weakness
and reduce threats.
Examples of SWOT of
Food Processing Industry:
Strength: Availability of raw material, skilled
manpower
Weakness: Low processing level, Infrastructure
facilities
Opportunity: Globalization, FDI, AEZ
Threats:
Global Competition, Pricing strategy.
II. 5 ‘C’
Analysis:
It is a
combination of 5 ‘C’s namely Company, competitors, customers, collaborations
and climate as shown in the below Figure.
1. Company: First
‘C’ involves evaluation of company analysis with the help of
·
Goals
& Objectives: Stated by the organization, Mission and Vision
·
Position:
Clearly define the marketing strategy approach and marketing mix utilization.
·
Performance:
Level of commitment to achieve the stated objective and mission.
·
Product
Line: Various level of products offered by the organization and their thorough
analysis.
2.
Competitors: The main objective is to analyze the
competitors and prepare accordingly. It includes following set of parameters.
·
Identify
Competitors: Identify both present and future competitors.
·
Assessment
of Competitors: Analyze the strategy of competitors and resources utilized by
them.
·
Predict
Future competitors: It is again important to predict future initiatives from
the competitor which are helpful to define future activity.
3.
Customers: The most complex ‘C’ in the
analysis. It involves following aspects to analyze.
·
Customers
Needs and Wants: Here, one has to identify required need of customer and
satisfy by means of goods and services.
·
Perceive
to Buy: Organization have to perceive the customer to buy the product with the
help of promotional campaign, product features, advertisements etc.
·
Income
Level: It is important to sort out the customers as per their income level and
preferences.
·
Frequency
of Purchase: It acts as important tool to know the loyalty towards our
organization.
·
Distribution
channel: In current scenario it is needed to have the hold for further
distribution of our commodities through different platforms.
4. Collaborations: It
is one of the way to increase the business applications and ideas.
·
Intermediary:
These are the middlemen who could be specialize for transactions.
·
Suppliers:
They provide resources for the products preparation. It mainly includes
manufactures, wholesalers, merchants, franchisors, importers & exporters,
independent crafts people and drop shippers.
·
Distributors:
It is mostly important to carry inventory required for the organization.
·
Partnership:
It includes sharing of business, skills and capabilities to increase the
efficiency.
5. Climate: It acts as a critical factor which
affect the business. It mainly includes PESTLE analysis.
P: Political Factors
E: Economical Factors
S: Social Factors
T: Technological Factors
L: Legal Factors
E: Environmental Factors
III. Porter’s
Five Forces:
It is
developed by Michael Porter in 1979. It is a combination of five significant
factors required to make a strategic decision. The Porter’s Five forces model
used to explore the environment within an industry and business strategy
development.
The
main implications are helps to adjust your strategy to suit the environment and
identify an industry’s structure to determine corporate strategy.
The
following five forces described by Michael Porter.
1. Threat of New Entrants
2. Threat of Substitute Product
3. Bargaining power of Buyer
4. Bargaining power of Supplier
5. Rivalry among existing firms.
The concept further elaborated with the given diagram
representing Porters Five Forces.
IV.: VRIO Analysis:
VRIO Analysis is a
vital technique used for evaluation of company’s resources and offering to make
positive impact on competitive advantage.
The term VRIO
abbreviated as ‘Value, Rarity, Imitate, Organizing’.
1. Value: Benefit
offered by the organization against cost incurred. But if still organization
could not able to provide value then that could be Competitive Disadvantage for
the organization.
2. Rarity: It
is nothing but innovative idea or rare concept to introduce which acts as temporary
Competitive Advantage.
3. Imitate: The
product or service is difficult to imitate or copy by the others. Hence it will
unused competitive advantage as our products do not imitate easily but still
need to be organized one.
4. Organizing: With
the perfect combination of all four parameters an organization can create a
Sustainable Competitive Advantage (SCA). The SCA could be retained for longer
time and build the healthy relationship with the customers.
Reference
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