Aug 28 — Written By: Andy Quella

How To Conduct A Situation Analysis For Your Business Or Non-Profit Organization

Before investing significant time and resources into your digital strategy, it's important to conduct a situation analysis to determine the health of your organization and industry. The output will enable the classification of key business decisions according to their frequency, risk, and importance. By maintaining a constant pulse on internal operations and external factors such as shifts in human behavior, businesses can identify opportunities for growth and innovation.

The methodology for executing a situation analysis can vary depending on the particular product or service category. In any case, a comprehensive approach is recommended and involves the implementation of a digital audit, SWOT analysis, and competitive analysis. Each step provides visibility into the technical aspects that influence productivity and performance. The assessment will establish a foundation for strategic planning and benchmark for future progress.

Digital Audit

The purpose of conducting a digital audit is to reveal any limitations in your current strategy, while providing insight into the top-performing tactics resonating with target audience segments. It's a diagnostic tool that can be used to identify areas for advancement and optimization. From digital engagement and historical campaign performance to in-store traffic and online search rankings, the exercise should examine all business activity, including market share trends and offline sales.

For most businesses and startups, it's optimal to perform a digital audit on a monthly or bi-monthly basis to quantify the effectiveness of in-market strategies and ensure efficient resource allocation. The recurring analysis will enable more accurate forecasting and problem solving. In addition, the test-and-learn methodology will equip the organization to deploy incremental improvements and further enhance the user experience to encourage action and repeat engagement.

SWOT Analysis

The SWOT analysis is a strategic planning tool used to identify the internal and external variables that can influence the trajectory of a business. SWOT is an acronym that stands for strengths, weaknesses, opportunities, and threats. It's a simple framework to determine your strengths and weaknesses with respect to the competition and any opportunities or threats that may impact performance. The analysis is often used as a starting point for planning and strategy development.

Strengths: Explore the advantages you have over your competition. This may include the motivation of your staff, access to certain resources, or supply chain efficiency. Analyze your unique value proposition and consider what direct competitors might see as strengths. After identifying the different areas where you excel, accentuate these points throughout your strategy.

Weaknesses: Determine the areas of your business where you might struggle or fall short as it relates to the competition. Identify internal constraints or bottlenecks that could be restricting growth. Formulate solutions and likely outcomes, while taking into account positive and negative feedback. Alternatively, monitor external reviews to gain insight into what individuals like or dislike about your competitors.

Opportunities: Evaluate current industry standards and explore opportunities that will help differentiate your product or service. Perform research and forecast demand to understand how the market may change over time. Translate sales targets into market share projections and estimate the full scope of an opportunity. When applied, actively measure performance to gauge the impact of your efforts.

Threats: Identify any external factors that may limit growth now or in the future. Consider the competitive landscape when you first entered the market and how it has evolved. Threats are often beyond our control, yet still influence the probability of success. Contingency planning is a proactive technique to prepare for sudden risks by implementing pre-planned mitigation strategies.

Executing a SWOT analysis on a monthly or quarterly basis can help you build upon what it is you do best, while surfacing relevant threats or opportunities for improvement. The insights can be used to kickoff strategy informally, or in a more sophisticated way, providing a 360-degree view of the industry and where it might be headed. Actively monitoring internal operations and industry dynamics can accelerate speed-to-insight and better prepare the organization for unexpected challenges.

Competitive Analysis

The competitive analysis is used to evaluate external competitors and in-market strategies. The results provide visibility into how your competition is positioned, the tactics driving the highest levels of engagement, and any strengths or weaknesses that differentiate one competitor from another. An effective analysis starts with listing your main competitors, researching their product offering, and analyzing relevant data to identify segments with unmet or underserved needs.

Identify Competitors: Scan the market to identify your direct and indirect competition. This may include organizations that you consider to be main competitors or those that offer slightly different products but still compete for the same audience. Once a list of competitors has been established, you can efficiently monitor trends and develop a deeper understanding of brand perception and reputation.

Perform Research: Take an in-depth look into the products or services made available by the competition. Browse the market as a potential customer to surface key product features and price points being offered. Determine how each competitor is positioned by examining their target audience, content strategy, and share of voice to understand unique sales tactics and approach to customer service.

Strengths + Weaknesses: Objectively judge the competition when determining their strengths and weaknesses. Review industry forums to identify areas where your competition surpasses expectations or underperforms. If a competitor is experiencing rapid growth, deconstruct the strategy and underlying tactics driving the success. Consider their brand promise, company mission, and market reputation.

Analyze Trends: Establish an understanding of the current market conditions and external variables that may impact growth. Forecast demand to determine if levels are increasing or decreasing and the subjacent factors influencing potential shifts. Are more competitors entering or exiting the market? If the industry is progressing, it could trigger the need to further differentiate your product or service.

Once completed, the competitive analysis will serve as a compass to guide product development, creative strategy, and process optimization. The results will help organizations plan a response when faced with more difficult decisions such as adjusting prices, launching a product, or targeting a new audience segment. Through a deeper understanding of competitor tactics and perception, brands can fine-tune their approach and work to establish a unique position in the market.

Conclusion

Actively monitoring internal processes and relevant market trends can be critical when attempting to successfully scale or grow a business. The situation analysis and supporting insights can uncover areas for improvement and other important factors influencing supply and demand. Maintaining an emphasis on sustained adaptability will ensure decision makers are adequately prepared to manage disruptions in the market, emerging technology, or shifts in human behavior.

When the results of the underlying digital audit, SWOT analysis, and competitive analysis are embedded into business operations and communicated with external partners, organizations will be in a better position to navigate future challenges with resilience and agility. The insights will help define effective marketing objectives that are attainable, relevant, and timely. This can ultimately lead to a competitive advantage and provide a basis for making more informed decisions.