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Center for Innovation 1910 / 2910 : Creative Problem Solving / New Venture Feasibility: Situation Analysis

Situation Analysis Background

The main environments investigated in the Situation Analysis are market, industry and firm. However, the Situation Analysis also considers relevant issues and trends in the macro environment.  A brief overview of these environments follows.

The Situation Analysis sets out the facts that are the bases for all future analyses in subsequent sections. That is, with the exception of any primary research, all data reported in subsequent sections of the Marketing Plan should be traceable to the Situation Analysis, including current financial performance.

Develop a working understanding of the customer or user. Use Business Source Premier for a SWOT analysis, industry profiles, market research reports or product reviews.

  • Who are the people with the the problem we are looking to solve?
  • How do they currently solve that problem?
  • Why do they choose one solution over another?
  • How much value do they perceive in currently used solutions?
  • What needs to change in terms of the value function for them to consider your product

Internal Analsyis of the Firm: Who You Are... Who You Are Not

Consider your firm's past performance and the reasons for those outcomes. Then analyze your firm as if we were a competitor.

SWOT Analysis

SWOT = Strengths, Weaknesses, Opportunities, Threats

From a business perspective, the SWOT analysis identifies and assesses:

  • The business unit's strengths and weaknesses including its source of competitive advantage.
  • The primary opportunities and threats in the market and industry

The justified SWOT matrix is a foundational element of the Marketing Plan and it leads to a plan's Goals and Objectives.

SWOT Analyses in Business Source Premier

Macro-environment Trends

Many firms have failed or not performed as we expected by overlooking trends in their macro environments. To avoid this fate, look at those factors that Porter identifies related to industries. For example: Changes in long-term growth rates; Key buyer segments; Costs and efficiencies; Relevant government regulations; Rates at which proprietary knowledge is diffusing. You also want to consider trends related to markets such as changes in: Cultural or Demographic factors; Social or Lifestyle factors; Economic issues; Legal or Political concerns; Physical environment.

Macro Environment - Trends

Industry Analysis

Objectives

  1. To conduct an external (outside the business) environmental scan.
  2. To prepare a feasibility study (preliminary to a Business or Marketing Plan).

Questions to Consider

  • How large or small is this market?
  • Is it bound by geographic considerations?
  • What are the barriers to entry for new competitors?
  • Does the current financial climate help or hinder entry into this market?
  • What is the forecast for the product life cycle?
  1. Rivalry among competitors
  2. Threat of new entrants
  3. Availability of substitutes
  4. Bargaining power of buyers
  5. Bargaining power of suppliers

Start with LexisNexis Academic to create a basic Industry Analysis from a Financial or Market Segmentation view.

Once you have the financial pieces:

  • Balance Sheet
  • Income Statement
  • Cash Flow Analysis
  • Earnings Analysis

Then you can start to compare companies or analyze industries by:

  • Creating a Company Comparison List
  • Building a "Dossier" or "Industry Profile" that includes discrete aspects such as:
    1. Gross Sales and Revenue
    2. Economic and Political Impacts
    3. Global Positioning
    4. Brands and/or Products
    5. Competitors' Analysis
    6. Risk Analysis
    7. Merger & Acquisition News
    8. Market Segmentation
    9. SWOT Analyses (Business Source Premier)
    10. Distribution Channels
    11. Stock Price Movements
    12. Financial Ratios
    13. Industry Benchmarks

Industry Analysis and Description

International

Product Studies or Applied Technology Scenarios