#31 What a precise situation analysis can do for your corporate strategy

Strategy is a plan. This plan includes a well-founded situation analysis. But how do you conduct a precise situation analysis? What exactly is behind it and what benefits can it bring to your company? And how much time should you set aside for this? In this episode, we provide answers to these questions and go into detail about the six points of the situation analysis so that you know how to proceed and how it can bring clarity to your corporate strategy.

Christian Underwood on LinkedIn Prof. Jürgen Weigand on LinkedIn Digital market intelligence with cedura Trend management from trendone

Blog article 31

How can a precise situation analysis be achieved?

Counter question: What is it actually and what is it supposed to do?

When developing a strategy, you should always take a close look at your starting point. What resources do you have at your disposal? What do you want to achieve in the future? And more importantly, how did you get to where you are today? From this perspective, you should look to the future and consider what it will take to be and remain relevant. Strategy is often confused with goals. However, these are two completely different things that you should be aware of. The question: "Imagine if your company ceased to exist tomorrow - would anyone miss it?", is a very important one. It requires you to reflect on whether you are really in the position you think you are in. Is this position sustainable for the future? In the majority of cases, it turns out that customers remain loyal to the company, but only in the short term. In the medium and long term, many companies can be replaced by the competition. This is a profound insight that hurts. Strategizing means dealing with the things that you would rather push away.

How do you proceed with a situation analysis? It is almost impossible to conduct a situation analysis on your own and it requires a team. The first step is to collect internal and external data. This is not about big data, but about the relevant data. It's about answering the important questions for your own organization. Collect quantitative figures and gather qualitative impressions from internal and external experts from the organization. It is important to think outside the box here and not remain stuck in your own image. Even if your company was successful, a situation analysis always makes sense, as success can rarely be carried into the future using the same parameters as in the past. Once this data has been collected, it must be analyzed soberly. This can reveal some brutal truths. A situation analysis is divided into six different areas:

Customers

A large part of the analysis is the customer side:

Who are your own customers? How can they be addressed and what are their needs? Why are they customers? Who are the non-customers? What do non-customers need?

It takes a lot of effort to really understand your customers. Because customers have a certain power that you have to face up to. When was the last time you were on site with your customers? Know what makes your customers tick. If you don't understand what makes them tick, what their preferences are and how these will change, you will lose your customers.

Market

Relevant markets must be recognized. Companies usually belong to certain sectors or industries. However, this is not the same as markets. An industry can have diverse markets. A market, on the other hand, can be served by various industries. The term "relevant market" comes from competition policy and attempts to define who is active in a certain environment. From a company's perspective, it is important to consider which markets you want to be represented in:

Do you want to cover as much as possible of what the industry has to offer? Or should the focus be on individual markets?

The definition of a relevant market has two dimensions:

Products or services Geography (regional/national/international)

Once you have answered these questions, you can consider whether you can also be profitable in these markets. Just being there is not everything.

Competition

After you have analyzed which relevant markets exist and whether they can be profitable, the next question is: Who are your direct competitors? Understand who your competitors are and how profitable they are. Remember that it does you no good to simply create customer value. This must also be profitable in the end. Be aware that customer value is subjective. Customers decide whether something is useful or not.

Future trends

There are a number of trends - both technologically driven and socio-cultural in nature. Demographics continue to play a role here. Looking into the future means seeing which trends will continue and which will be newly generated.

Creating a trend radar helps to develop a strategic vision and look into the future. Predicting the future is of course difficult, but anticipating is important. This means considering possible future scenarios and thinking ahead. The trend radar from our colleagues at TRENDONE can help you to have a concrete guide to action in this process, which you canfind outmore abouthere. Trend research helps you to develop competitive and future intelligence without investing heavily in your own resources.

General environment (macro perspective)

Which factors are really relevant in your own environment? The type of company is decisive in answering this question. There are core drivers such as politics, geopolitics, socio-cultural change or sustainability. The larger and more international a company is, the more relevant these factors are.

Own reality

In order to strategize and create a balance in the situation analysis, you need to look at both the external and internal circumstances. Analyzing your own reality means not only looking in the mirror, but also having the mirror held up to you with all the unpleasant truths that you may have glossed over before. The profitability matrix, which you can find in detail in ourbook, helps you to think about how your company really earns money.

How long do you need for a situation analysis?

How much time you need for a situation analysis depends on how many resources you have and how complex your company is. Allow between four and twelve weeks for a thorough analysis.

Ideally, a situation analysis takes place before a strategy workshop so that the results can serve as input for the workshop. The interpretation of the data takes place together in the workshop. Do the groundwork for the situation analysis and take enough time for it without getting lost in it. In our book"Hope is not a strategy", you will find your own workflow for dealing with the situation analysis more intensively.

Conclusion

Strategy is a plan. Think about the steps you want to take, when you want to start the situation analysis, what you want to achieve with it and what questions it should answer. Then you can get started straight away.