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Project Management
Notes 7.2 Situational Analysis
Situation analysis is a method managers use to analyze both the internal and external
environments of an organization in order to understand the firm’s own capabilities, customers
and business environment. As described by the American Marketing Association, a situation
analysis is “the systematic collection and study of past and present data to identify trends, forces,
and conditions with the potential to influence the performance of the business and the choice of
appropriate strategies.” The situation analysis consists of several methods of analysis: The 5Cs
Analysis, SWOT analysis and Porter five forces analysis. A marketing plan is created to guide
businesses on how to communicate the benefits of their products to the needs of potential
customer. The situation analysis is the second step in the marketing plan and is a critical step in
establishing a long term relationship with customers.
7.2.1 Marketing Plan
1. Introduction
2. Situation analysis
3. Objectives
4. Budgeting
5. Strategy
6. Execution
7. Evaluation
The situation analysis looks at both the macroenvironmental factors that affect many firms
within the environment and the microenvironmental factors that specifically affect the firm.
The purpose of the situation analysis is to indicate to a company about the organizational and
product position, as well as the overall survival of the business, within the environment.
Companies must be able to provide a summary of opportunities and problems that may be
encountered within the environment in order to gauge an understanding of their own capabilities
within the market.
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Caution A Marketing Plan is created to guide businesses on how to communicate the
benefits of their products to the needs of potential customer.
7.2.2 5C Analysis
While a situation analysis is often referred to as the “3C analysis”, the extension to the 5C
analysis has allowed businesses to gain more information on the internal, macroen-vironmental
and micro-environmental factors within the environment. The 5C analysis is considered to be
the most useful and common method in analyzing the market environment due to the extensive
information it provides to a business.
1. Company: The analysis of the company allows for the evaluation of the company’s
objectives, strategy and capabilities. These areas indicate to an organization about the
strength of the business model or whether there are areas for improvement, as well as
how well an organization will fit with the external environment.
(a) Goals & Objectives: An analysis on the mission of the business, the industry of the
business and the stated goals required to achieve the mission.
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