Company situation analysis

Company situation analysis is a process which aims to disclose all opportunities (capacity) and the risks inherent in the environment and assess the competitiveness of company's resources and existing market position. The analysis is thus reduced to two issues:

• analysis of the market environment (competitive environment, development trends),
• analysis of business marketing resources (staff, market share, the attractiveness of the offer, the price position of the company, distribution systems, promotional activities)

Company situation analysis techniques

To comprehensive analyse the firm's position, there are several commonly used techniques (fig. 1.):

• SWOT analysis company's strengths, weaknesses, opportunities and threats,
• TOWS analysis,
• ASTRA analysis,
• Strategic portfolio analysis,
• Porter's Five forces analysis
• Analysis of the product life cycle,
• PEST analysis and variants: STEEP analysis; STEEPLE analysis,

Fig. 1. Situation analysis levels

Strategic portfolio analysis

It is another of the analysis of strategic situation of the company. Its aim is assessment of current and expected market position and on that basis to formulate the development strategy of the company. The most popular version of the portfolio analysis is BCG Matrix.

Portfolio analysis uses such indicators as:

• market dynamics,
• size of the market,
• capacity of the Market,
• market share.

Conclusions from the portfolio analysis are the basis for the formulation of objectives, operational strategies and marketing plans.

Apart from the BCG matrix, other portfolio analysis methods include:

• McKinsey matrix,
• Hofer matrix,
• ADL matrix

Product Life Cycle Analysis

It is an analysis of the structure of demand in terms of product life phases of the market. The situation of the company is often judged on the basis of quantities of products that are currently in the launch phase, phase to generate the greatest benefits and at the stage of aging. Analysis of the product life cycle impact assessment of the sales and allows for a coordinated policy to ensure steady business for a long period of time. The disadvantage of this analysis is assessing of the situation of the company in isolation from the results of the competition.

Company resources analysis

Its role is primarily a description and evaluation, from a strategic point of view, of the main resources of the company. The analysis covers the entire cross section of resource companies:

• financial resources (profitability, creditworthiness, etc.),
• physical resources (materials, buildings, equipment service stations, etc.),
• human resources (crew, engineers, managers, etc.),
• organizational resources (information systems, existing structures, etc.),
• technological resources (standard, quality, brand, know-how, etc.).

Examples of Company situation analysis

• SWOT Analysis: This is a basic analytical tool used to assess the Strengths, Weaknesses, Opportunities, and Threats (SWOT) of a company or organization. This analysis can provide an in-depth look at the company's current situation and help to identify areas in which the company may need to focus on in order to improve or sustain their competitive edge.
• PEST Analysis: This type of analysis is used to identify external factors that may affect the success of a company. This includes Political, Economic, Social and Technological factors that could potentially have an impact on the company's operations.
• Porter's Five Forces Analysis: This is a tool used to analyze the competitive environment of a company. It looks at the bargaining power of suppliers, the bargaining power of customers, the threat of new entrants, the threat of substitute products, and the intensity of rivalries in the market.
• Competitor Analysis: This is a process of evaluating the strengths and weaknesses of a company's competitors. It can provide insight into the company's current position within the market and help to identify potential areas of improvement.
• Market Analysis: This is an analysis of the current market conditions and trends. It can be used to identify opportunities or threats that may exist within the industry and to identify potential customers or markets that the company may be able to target.

Advantages of Company situation analysis

Company situation analysis is a useful tool to help companies understand their current market position and how they can best leverage their resources to stay competitive. Here are some advantages of conducting a company situation analysis:

• It can provide insight into the current market conditions and competition. This allows businesses to gain a better understanding of their strengths and weaknesses, as well as the opportunities and threats that exist in the marketplace.
• It can help identify areas for improvement and growth. By analyzing the current market situation, companies can identify areas where they can make changes to gain a competitive advantage.
• It can be used to develop strategies for staying competitive. By analyzing the current market situation, companies can create strategies to better position themselves in the market and make more informed decisions about their future.
• It can help companies better allocate their resources. By understanding the current market conditions, businesses can more effectively allocate their resources and focus their efforts on areas where they can gain the most benefit.
• It can provide useful information for decision-making. By analyzing the current market situation, companies can gain valuable information to help them make better decisions.

Limitations of Company situation analysis

• Company situation analysis can be limited by a lack of data and resources. When it comes to the data, it is difficult to get reliable and up-to-date information on the competitive environment, the market dynamics, customer preferences and the economic climate. Similarly, resources such as personnel, technology and finance can be insufficient to conduct a comprehensive analysis.
• Time constraints can also limit the effectiveness of company situation analysis. Gathering and analyzing the necessary data takes time, and the data itself may be outdated by the time the analysis is complete.
• Company situation analysis can also be limited by the expertise of the analyst. A comprehensive analysis requires an understanding of the different aspects of the company’s environment. If the analyst does not possess the necessary level of expertise, the analysis may be incomplete or inaccurate.
• Finally, the scope of the analysis can limit its effectiveness. If the analysis is too narrow, it may not provide a complete picture of the company’s competitive environment or its position within it. Conversely, if the analysis is too broad, it may be difficult to identify and analyze the key factors that need to be addressed.

Other approaches related to Company situation analysis

Other approaches related to company situation analysis include:

• Market Analysis: This approach involves studying the current market trends, competitive landscape, customer needs and preferences, and market conditions. It also includes assessing the potential for growth, identifying opportunities for improvement, and formulating strategies to capitalize on them.
• Financial Analysis: This approach focuses on analyzing the financial health of the company, such as examining its financial statements, ratios, and financial trends. It helps to identify areas of strengths and weaknesses, and to formulate strategies to improve the company's financial performance.
• Strategic Analysis: This approach aims to identify and analyze the strategic goals and objectives of the company, and to develop strategies to achieve them. It involves studying the company's strategic environment, analyzing its competitive advantages and disadvantages, and formulating strategies to maximize its competitive advantages and minimize its weaknesses.
• Environmental Analysis: This approach focuses on analyzing the external environment in which the company operates. It involves studying the political, economic, social, and technological factors that may affect the company's performance, and formulating strategies to capitalize on the opportunities and minimize the risks.
• Organizational Analysis: This approach involves analyzing the structure and functioning of the organization, its relationships with external stakeholders, and its internal processes and systems. It helps to identify areas of strengths and weaknesses, and to formulate strategies to improve the organization's performance.

In summary, company situation analysis involves a range of approaches that involve studying the market, financials, strategic environment, external environment, and organization of a company, in order to identify opportunities and risks and formulate strategies to capitalize on them.

Company situation analysis — recommended articles

Strategic analysis — ASTRA analysis — Importance of swot analysis — Technological portfolio — Internal analysis — Strategic management tools — Strategic analysis methods — SPACE method — Key success factors

References

• Bamberger, I. (1981). Strategic Management in Small and Medium Sized Firms by Portfolio Analysis?: A Theoretical and Empirical Study. Universit e de Rennes 1, Institut de Gestion de Rennes.
• Fleisher, C. S., & Bensoussan, B. E. (2003). Strategic and competitive analysis: methods and techniques for analyzing business competition (p. 457). Upper Saddle River, NJ: Prentice Hall.
• Prescott, J. E., & Grant, J. H. (1988). A manager's guide for evaluating competitive analysis techniques. Interfaces, 18(3), 10-22.
• Talley, E. (1998). Turning servile opportunities to gold: A strategic analysis of the corporate opportunities doctrine. The Yale Law Journal, 108(2), 277-375.
• Weihrich, H. (1982). The TOWS matrix—a tool for situational analysis. Long range planning, 15(2), 54-66.

Author: Małgorzata Latała, Krzysztof Wozniak