Situational Analysis - Acklam Grange School

Situational Analysis

Component 1

Learning aim C

Merit and Distinction Criteria

Assessment Criteria

C.2M3:

Analyse how the internal and external factors determine the success of a selected enterprise.

C.2D3:

Evaluate the most significant internal and external factors currently affecting a selected

enterprise.

Enterprise aims

Surviving Meeting customer needs

Making a profit Providing an excellent service

Some of the main aims of an SME include:

What are the aims of your two businesses? (Look back at Learning Aim A)

Are they achieving their Aims? Is the business successful? Why?

Reasons for success

SME

Hard work Customer service,

satisfaction and

experience

Resilience

Determination Employees

Skills

Ability of the

entrepreneur

Even when an SME achieves success, it will need to continue working hard to ensure it

stays a success.

Methods of measuring success

Success

Survival

Making a living

Sales volume/ value

Market shareProfit

Reputation

Customer satisfaction

Here are ways that a business can measure how successful it is. You need to talk about how successful one of your businesses has been in the conclusion of Learning Aim C

Situational Analysis

Situational Analysis means the process of analysing a situation. An enterprise that uses situational analysis will be able to study its position in the market, and assess how it could be affected by trends and developments.

There are two common tools an enterprise can use, these are:

SWOT Analysis

PEST Analysis

SWOT Analysis

Strengths are things that the enterprise is very good at.

Weaknesses are areas where the enterprise needs to improve.

Opportunities are based on both the strengths and weaknesses and to set out ways that enterprise can consider new areas or aspects to improve on.

Threats are anything that is likely to prevent the enterprise from being successful.

SWOT AnalysisExample:

Strengths Weaknesses

• Maintaining a high number of customers

• Having a good reputation• Offering quality service

• Lack of Training provision for staff• Not enough resources that would

improve trade• Some goods or services not selling as

well as others

Opportunities Threats

• If a product is not selling well – stop selling it and offer different products

• Expansion – start selling in another location or to new customers

• Changes in customer taste• New competitors entering the market• Existing competitors changing what

they are doing or increasing their marketing

• Existing or new competitors lowering their prices.

Example of a SWOT Analysis

for a small cafeHow well do the think the enterprise is doing? Fully justify your answer

What does competitive advantage mean –use the cafe SWOT Analysis to help you explain your answer

PEST Analysis

A PEST Analysis can be done after an enterprise has identified all the internal and external factors that effect or influence it. Analysing this information can help the enterprise to make decisions on how to best deal with and plan for these factors.

Most factors identified in a PEST Analysis will be external.

PEST Analysis

Political:• Changes to Government Regulations,

Policy and Laws• Changes in Government • Effect of pressure groups.• Effect of wars• Effect of Taxation• Relationship with other countries• EU and BREXIT

Economic:• Employment levels• Exchange rates, which can effect the

price of materials from abroad• Wage Levels• Interest Rates (may have to pay on

borrowing/loans)• The amount of money people have to

spend (disposable income)

Social:• Changes in trends and fashion• Ethical concerns • Environmental concerns• Customer Demographics (age, gender,

interests, income, etc.)• Attitude to towards work• Level of Education

Technology:• Developments in computers and the

internet• Developments in Mobile technology• Introduction of machines to replace

human workers (self service checkouts, etc.)

• The increase in the amount of online buying

Example:

Example PEST analysis