Situational Analysis

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Definition: Situational Analysis

Situational analysis refers to the context with respect to both external and internal environment in the market with respect to a specific industry or firm. In short, it is a photograph representing the current business environment of a particular industry or organization.

The situational analysis is generally a combination of three individual analysis called as 5 C’s analysis, SWOT analysis and Porter’s five forces analysis.  5 C’s analysis comprise of context or climate, customers, competitors, collaborators and company. Analysis in the form of the above five mentioned phrases gives the holistic picture of the business environment along with the competition that a new firm needs to face to enter this industry.

While SWOT analysis represents the Strengths and weaknesses of the firm (internal environment) along with opportunities and threats in external environment.

Porter’s five forces that govern an industry or firm are as follows:

1. Bargaining power of buyers

2. Competition

3. Bargaining Power of suppliers

4. Threat of substitutes

5. Threat of new entrants

Hence, this concludes the definition of Situational Analysis along with its overview.


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