Key success factors

Key success factors
See also
McKinsey matrix Knowledge gap strategy IFE matrix Market attractiveness SPACE method Economic profile of a sector Criteria of market strategy evaluation Hofer matrix ADL matrix

Analysis of the key success factors is the method used to analyze the resources and skills of the analyzed company. The main idea here is to specify the most important criteria for the analyzed company. The method is based on the principle of 20-80 where about 20% of all the factors have a significant influence (80% of sample) the results of the company.

Diversity of the key success factors should be emphasized, they are based on type of business and the industry in which the firm operates. To effectively analyze the business, you need to find specific factors, unique to a particular industry. In principle, it is assumed that the number of explicit elements should be more than 2 and less than 6. The most common items highlighted by analysts, are: position in the market, the level of organization of the company, profitability, share of production cost, image of the company, the level of technology.

You should also bear in mind the age of the sector, not only the type of the analyzed factor. For example, for the initial phase, technological level is assumed as having the greatest impact on production, under development stage position on the market is key. The most important in the maturity stage is effectiveness. In exit stage during which a declining costs play a key role performance is most important..

Application

After the above preparation manager can now proceed to the appropriate part of the task, i.e. creating a table of key success factors for the company in question:

Key Success Factors	Weight	Rating (1-5)	Weighted value
Factor 1	E.g. 0,3	E.g. 4	0,3 x 4 = 1,2
Factor 2	E.g. 0,4	E.g. 3	0,4 x 3 = 1,2
Factor 3	E.g. 0,1	E.g. 5	0,1 x 5 = 0,5
Factor 4	E.g. 0,15	E.g. 2	0,15 x 2 = 0,3
Factor 5	E.g. 0,05	E.g. 4	0,05 x 4 = 0,2
TOTAL	1,0		3,2 points out of 5 points possible

Source: Own elaboration

Following the above assessment, the group of analysts has the opportunity to comment on the results, specify the weak links IN businesses which are essential to the company, using the same table to analyze the main competitors on the market to help accurately locate the analyzed company among the major players, and finally create the right strategy to strengthen the weakest links in the company.

Frequently method of scoring of the key success factors are used when creating the ranking lists, created and published annually for various industries.

For even more accuracy, in showing value of the analyzed company, you can also use the analysis of competitiveness profile, i.e. compare your company with a market leader or an ideal company to which management aspire.

Examples of Key success factors

• Strategic Vision: It is important to have a vision of where the company is heading, and to set goals and objectives in order to achieve that vision.
• Leadership: A successful company needs strong and effective leadership in order to ensure that the vision is followed and that the right decisions are made.
• Market Position: Knowing the target market and positioning the company in the market is key to success.
• Quality Products and Services: Quality products and services are essential for a successful business.
• Innovation: A company must be able to innovate and adapt to changing markets, technologies and customer needs.
• Human Resources: Having the right people employed, who are motivated and empowered, is key to success.
• Financial Resources: Having the necessary financial resources to invest in the company’s growth is essential.
• Customer Relationships: Establishing strong customer relationships is essential for the success of a business.
• Brand Recognition: A strong, recognizable brand is key to success, as it creates trust and loyalty among customers.

Advantages of Key success factors

• Key success factors provide a basis for identifying and measuring the most important elements of success for a company.
• They provide a framework for evaluating the company’s performance, helping to ensure that all areas contributing to success are given proper attention.
• The analysis of key success factors can help a company focus on the areas most likely to yield the greatest returns.
• It allows companies to identify and prioritize those areas that require additional focus and resources.
• Key success factors can provide valuable insight into the competitive landscape, helping to inform and guide strategy.
• The identification of key success factors can help a company identify potential threats and opportunities.
• It can help to identify areas where the company has an advantage or area of expertise.
• They can also help to identify areas of potential improvement and provide a mechanism for tracking performance over time.

Limitations of Key success factors

• Key success factors can be subjective and may not accurately reflect the actual performance of the company.
• They can be too general and fail to capture the nuances of a company’s operations.
• They may fail to take into account the changing trends and dynamics of the business environment.
• The key success factors may also be outdated and fail to reflect the current market environment.
• It can be difficult to measure the impact of each individual factor on the company’s overall performance.
• Key success factors do not always take into account the external factors that can influence a company’s performance.
• The key success factors may not be relevant to the company’s long-term goals and objectives.

Other approaches related to Key success factors

• SWOT Analysis – This analysis tool is used to identify the Strengths, Weaknesses, Opportunities, and Threats of a company or business. It helps to identify which areas of the business are strong and which need improvement, as well as what potential external opportunities and threats may exist.
• PEST Analysis – PEST Analysis is a tool used to analyze the Political, Economic, Social, and Technological elements of a company or business. It helps to identify which external factors are influencing the success of the company or business, and how they can be managed.
• Competitor Analysis – Competitor Analysis is the process of analyzing a company’s competitors in order to gain an advantage over them. It involves identifying the weaknesses and strengths of competitors, understanding the competitive landscape, and assessing the company’s position in the marketplace.
• Core Competency Analysis – Core Competency Analysis is a tool used to identify and analyze the core competencies of a company or business. This analysis helps to identify what skills and resources a company has that can be used to gain an advantage over its competitors.
• Benchmarking – Benchmarking is the process of comparing a company’s performance to that of its competitors. It helps to identify areas of improvement, and areas of strength, so that the company can make adjustments to stay competitive.

In summary, Key Success Factor Analysis is a method used to identify the most important criteria for a company’s success. Other approaches to understanding the company’s success include SWOT Analysis, PEST Analysis, Competitor Analysis, Core Competency Analysis, and Benchmarking. Each of these approaches helps to identify the resources, skills, and external factors that have a significant impact on the success of the company.

References

• Freund, Y. P. (1988). Critical success factors. Planning Review, 16(4), 20-23.