Knowing the Business Realities: Situational Analysis

Situational analysis is simply what it says: analyzing the situation. Before leaping into any action, the sales manager must analyze the business realities to determine what the best action would be. Additionally, after the action has been completed, another analysis must be done to determine the impact of the action on all concerned stakeholders and what, if any, further action must be taken. What situations do you as a sales manager need to collect data on and analyze? Here are a few:

Your industry
Your corporation or organization
Your unit, subsidiary, strategic business unit, division, etc.
Your sales team
Your sales individuals
Your products and/or services
Your distribution channels
Your marketing department
The cross-organizational resources required to meet your objectives
Your addressable market(s) and its industry
The targeted markets of your primary addressable customers
Your primary competitors
The primary competitors of your primary customers

The general environment (the context in which all business must operate)Perhaps the simplest and most effective tool for analyzing the business realities is the S.W.O.T. The letters stand for Strengths, Weaknesses, Opportunities, and Threats. This approach provides clarity, albeit not perfect clarity, to many of the key realities around which you build your plans. You cannot make a sales management decision without knowing these realities. In addition, the answers are not carved in stone, but fluid and continuously changing. As you are going through change, so are your customers, competitors, suppliers, and the general environment. Plan to review regularly and make adjustments based on changed or new information.Let’s take a look at a few of the most important S.W.O.T.s:

Your organization or unit/division/subsidiary (any or all)
Your sales team
Your products and/or services
Your primary competitor
``
Your primary customer(s) or addressable market (your choice)

Description of S.W.O.T. letters:

S: Strengths of whatever you are reviewing. This is internal to the target being analyzed. It tends to be controllable and focuses on the current or present situation. Here and now, what is strong about the target? Does it have a large and loyal customer base? Are its finances good? Perhaps the company has a copyright or technology that gives it strength.

W: Weaknesses of whatever you are reviewing. This is also internal to the target being analyzed. It tends to be controllable and current, too. An example here might be that the company has a poor distribution model, aging product portfolio, or lack of brand identity.

O: Opportunities consider what might occur in the future for the target of your analysis to gain greater success, particularly if it fixes its weaknesses and leverages its strengths. This is external, less controllable, and future-focused, and might include global expansion, brand dominance, and acquisition of competitors or desired niche product providers that could expand the overall product portfolio. Remember, the company can’t achieve these conditions unless it corrects its weaknesses.

T: Threats to this target’s current and future success, particularly if it does not fix its weaknesses and leverage its strengths. This, too, is external, less controllable, and future-focused. Here we find such undesirable situations as hostile takeovers, bankruptcies, and loss of market share.

Note

Approach this analysis as if you were an outside consultant. Be independent in your thinking, and try not to link any of the states or conditions to any other business or conditional event. If you are reviewing your own company or sales team, do not complete the S.W.O.T. as you compare to other competitors. Why? Because you could easily become self-satisfied that you are better than a competitor, but in the customer’s eyes, you are both failing. In other words, you end up measuring the target against the wrong benchmark. Complete your S.W.O.T. on an individual evaluation only!

S.W.O.T. Example Your Primary Customer or Addressable Market

Strengths	Weaknesses
Product portfolio	Aging customer base
Cash reserves	Old technology
Management team	Fragmented distribution network
Stable, long-term reputation	Perceived poor customer service
Strong brand identity	Decreasing margins
Defined market position perception	Global infrastructure
Etc.	Etc.

Opportunities	Threats
Diversified product line	Market elimination
New acquisitions	Competition with newer technology
Newer, younger markets	Zero margins due to too many competitors
International markets	International competitors with low labor costs.
Strategic alliances	Pull-through sales by customer service
Etc.	Etc.

To add value to your S.W.O.T.s, circle items on the lists of your Weaknesses and Threats on the right. This is where you’ll need to concentrate your plan.

Knowing the Business Realities: Situational Analysis

by Lidia Spencer.

Description of S.W.O.T. letters:

Disclaimer