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- [Instructor] Hello, welcome
to week two, part two,

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where we will be talking in depth

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about situational
analysis, why do you do it,

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and then I'll walk you through some models

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that will help you
gather some of the pieces

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that you will need to do this analysis.

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To make sure that you get
off onto the right foot

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and really understand the environment

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in which you are operating,

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it's important to do a
situational analysis.

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And here is a definition from the American

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Marketing Association
that I will let you read.

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So a situational analysis is a description

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of the internal and external environments

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of the business or the organization.

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So this is an important distinction,

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that the internal ones are things

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that you have some control over.

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It tends to be things like
the strengths, assets,

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your resources, the challenges
you face, the partnerships,

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the lack of things that you have,

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the things that you
really have control over,

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versus the external
environment tends to be things

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that you have little or no control over,

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And being able to sort the right things

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into the right boxes in this case

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is an important part of
your homework assignment.

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So think about, again,
internal being things

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that you have some control over.

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External being things that you have

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little or no control over.

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So an example, just an
easy one is an external

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factor might be whether
it rains today or not.

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You don't have a lot of control,

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but the internal is, did
you bring an umbrella.

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Do you have one?

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Did you buy one, or do
you have a rain suit?

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Do you have that asset that you need

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to face that external factor.

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So my thoughts on this
is, really was shaped

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by kind of an early mentor of mine,

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who I worked with at
Michigan State University,

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Professor Chris Peterson.

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And he talks about how,

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that why having the right
assumptions and beliefs

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are so important to the
performance of the organization.

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So if you have the right
assumptions and beliefs,

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then you will develop strategies

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which are sort of big picture,

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how do we go about our businesses,

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which will leverage the opportunities,

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leverage your strength and help

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to overcome your weaknesses and threats.

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And in that way, those
strategies will inform

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the operations, the sort of
day to day, how do you put

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these strategies into
place, how do you allocate

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your own time, your labor, your resources,

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where do you sell and what do you do,

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and things like that on a more day to day,

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which then will result in
some sort of performance.

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And too often, and Professor
Peterson's work suggests

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that when you don't get the performance

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that you want, that too often
folks only go one step back,

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and they tweak the operations,

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and they tweak those day-to-day
things without understanding

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that those operations
based on a faulty strategy.

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And the strategy is faulty
because your assumption

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and beliefs about the world,
about your own organization,

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and the environment in
which it operates is faulty.

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So with bad assumptions, you're gonna have

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a faulty strategy, and no
amount of tweaking of operations

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that are based on faulty strategy

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will ever give you the
performance that you want.

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I'm going to walk you through several

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models of situational analysis.

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The first one is five W's and an H,

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who, what, where, when, why, how,

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which is really for the internal.

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And then the five C model,
and the so-called PEST model,

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which we'll look at both
internal and external.

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And I think like, I believe
that looking at and thinking

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about both of these models
will give you a very broad view

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of the environment that
you'll be operating in.

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So the five W's and an H
is just those five familiar

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questions, six, who, what,
when, where, why and how.

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So by asking and answering those,

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it'll tell you a good bit about
your business organization.

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First, who, who is or
are the entrepreneurs,

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what drives them, why
are they in business?

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What is motivating them?

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And what are their strengths?

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What are their skills and assets?

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And what are the weaknesses
that they may have?

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And are there team members who are helping

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to shore up those weaknesses.

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Who might also apply to the customers.

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Who are the current ones,
who were the target ones?

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Who are they going after now?

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Who's buying it?

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The what is what is the
product or the service?

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What do they sell?

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What is the thing that they are providing?

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Where looks at location.

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Where is the business located?

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What are the advantages or disadvantages?

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And one way of thinking about that is,

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so if you're on a storefront,
if you are on Church Street,

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the obvious advantage is foot traffic.

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People are just gonna
walk by and go in there.

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The disadvantages, the rent is going

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to be probably quite high there.

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In the same way, that
selling in a big city

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gives you the advantage of having

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a lot of potential customers there,

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but the downside is you're probably

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going to have more competitors as well.

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The other where question
is, how do your goods

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or services get to the customers?

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Do they, do you sell them directly?

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Do you use intermediaries?

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Some of the when questions include

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how long have they been in business?

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How has it changed over time?

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And what stage are they in?

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Are they in the startup phase,

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or is it all the way at the end,

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where they're thinking about succession,

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of who will take this business over,

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I'm ready to retire or I'm ready to sell,

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or I'm ready to move on.

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Those are all when questions.

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Next come the why questions.

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What drives them to be in business?

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What is motivating them?

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Is it because they have a
passion for what they do?

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Is it the autonomy, like they
want to be their own boss.

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A lot of folks do.

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Are they in it for the money?

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What combination of this?

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And when you look at
the mission and vision,

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which we already learned about,

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that's gonna tell you a lot about why.

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Finally, how, what is the performance?

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How are they doing?

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Are they fulfilling the mission and goals?

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How do they operationalize
the values and goals?

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How do they actually put these values?

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How do they put the mission
and vision into place?

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And finally, a word that
we're gonna learn a lot later,

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what is its position in the marketplace?

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What space do they occupy
compared to their competitors?

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And stay tuned for a lot more
on position as we go through.

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'Cause that's a very
important marketing concept.

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Another model is the five C's.

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And here are those five
C's, company, competitors,

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customers, collaborator, and climate.

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The climate is really,
going to be thinking

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about the external environment.

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And I'll walk through each one.

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So for company, what are its
goals, its mission and vision?

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What does it sell?

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What's its position in the marketplace?

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What is its performance?

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Next week we're gonna talk
at length about competitors,

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and help you think about who they are.

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And why are the, why did you
choose those as competitors?

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What are your competitors' goals, assets,

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strategies, strengths, position,

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and what are their weaknesses,

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and maybe where are they vulnerable

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and how does that create
space and opportunity

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for you to successfully compete?

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Also next week we're gonna get
into depth about customers,

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but for now thinking about who they are,

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what do they want and how, and why,

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and where, and when do they buy?

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What is their behavior

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around buying your product or service?

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Another part of customers
is what are the segments?

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How do you break them
up into coherent groups

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to make them easier to reach?

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And three types of attributes
that we think about

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are demographic, geographic
and psychographic.

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And again, what we're
gonna go into more depth

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in, I think, two weeks on these,

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but I want to just sort
of introduce them now.

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Demographic demo is, so,
the Greek word for people.

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So it's the measurement,

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the graphic, of people, who they are.

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So this tends to be things like their age

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or gender identity, gender, race,

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ethnicity, income,
occupation, household ties.

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So things that sort of
describe them as a person.

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Geographic is where they are,

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where they live and or where they work.

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And then psychographic is maybe the more

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subtle and less familiar one,

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but very important in marketing.

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And this is sort of the
measurement of their psychology.

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How do they think, what do they value?

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How do they spend their time?

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What are their hobbies?

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What are their beliefs?

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What are their activities,
questions like this.

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And then also thinking about customers,

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when and why do they buy?

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Is your item something they buy every day?

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Is it a gift for a friend or
for someone that they love?

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When and how do they buy?

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Do they buy it in large
amounts all at once, in bulk,

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do they go every day, what's
their behavior around that.

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And by thinking about their
psycho, demo, geographic

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and their behaviors, that's
going to tell you a lot

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about how can you reach them.

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The next C is collaborators.

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So suppliers and distributors.

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Where do they buy the
things that they need

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for their operations, who do they sell to?

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Are they distributing it
through somebody else?

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Are they strategic partners?

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Are they a business who cares about you,

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who treats you as a valued partner?

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Or is it all about buy low, sell high?

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Are you replaceable?

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Are they gonna invest in maintaining

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the relationship with you?

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And how do they create
or impede value for you?

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Another type of collaborator

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is the networks in which you operate.

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So who do you learn from,
who do you collaborate with?

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Where do you get technical
support and assistance?

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What are those individuals
or organizations

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out there that you have
networked with that can help

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create value for your
business or organization?

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The last C, climate,
also serves as a segue

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into the external environment,

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and looking at the external factors

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in your situational analysis.

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So climate, again, in this context

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means the external environment.

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Most of the C's we've done before,

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most of those factors have to do

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with the internal environment.

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You have some control over the
attributes of your company,

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and the customers you seek out,

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and the collaborators that
you work with, and so forth.

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Now we're gonna focus on
the external environment.

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And one model that can
help you sort of outline

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that is the PEST model,
which stands for political,

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economic, social, and ecological.

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So the political environment is things

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like rules, taxes,
regulation, things like that.

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The economic environment is incomes,

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wages, taxes, things like that.

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Social is things like
demographics, psychographics,

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I'm sorry, trends, fads,
opinions, things like that.

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And then finally the technological

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is the state of the art of technology.

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And certainly today our economy

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is very dependent on
technology for information

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and automation, and regulation
and many, many other things.

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This is the end of part two.

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So when you're ready, please go and watch

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the video for part three, thank you.