Situation Analysis

What is Situation Analysis?

Situation Analysis is one of the primary parts of the planning strategy of an organization and is an analysis of the situations that are present internally in the company environment as well as the situations present externally, outside the company that could affect the organization. According to Sun Tzu, “Situation Analysis means knowing about everything that can impact on the victory”. In other words, Situation Analysis is essential for formulating a successful marketing strategy in order to continuously evaluate the company’s position in the market.

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Situation Analysis is the evaluation of the current situation of an organization. The organization needs to take a comprehensive look at itself as well as the outside environment. Essentially, Situation Analysis attempts to answer questions about the organization such as:  Where it came from; Where  it is now; Where  it is going; What its choices are; Who its stakeholders are; and What are the expectations of the stakeholders.  Situation Analysis establishes vital issues for developing Vision, Mission, objectives and targets of the organization.

How is Situation Analysis conducted?


Situation Analysis, as said earlier, is the first step in strategy planning process. that has to be conducted before starting the market planning strategy. One part of situation analysis is conducted on all the functions and operations of the company’s internal environment such as its financial resources, technological resources, and the core competencies of its human resources and their performance. The next part of situation analysis investigates the external environment the company faces, such as the economy, the opportunities and threats in the market and its competitors. Situation analysis is a continuous process and has to be in place to monitor the situation and take the appropriate actions as needed, to avoid being caught out napping when there are changes in the environment.Once the situation has been analysed, the company then must decide on the necessary action to take with relevance to the changes in the environment. For instance, because of the recent economic downturn and the constraints on the financial resources, many companies are now offering their services online thus reducing their costs and manpower, while offering ease of purchase to the customer.

What are the processes that can be followed to conduct a Situation Analysis?

The most popular and effective methods of conducting Situation Analysis are: SWOT, Stakeholder Analysis and PEST. SWOT involves in investigating the strengths, weaknesses that are present inside the company and the external opportunities and threats that could impact on the company. Stakeholder Analysis helps in understanding the perceptions, expectations and priorities of all those who have an interest in the company, including the employees, investors, suppliers and customers. PEST examines the outside influences that could impact on the company in the political, economic, social and technological fields.

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