- [Instructor] Hello, welcome to week two, part two,
where we will be talking in depth
about situational analysis, why do you do it,
and then I'll walk you through some models
that will help you gather some of the pieces
that you will need to do this analysis.
To make sure that you get off onto the right foot
and really understand the environment
in which you are operating,
it's important to do a situational analysis.
And here is a definition from the American
Marketing Association that I will let you read.
So a situational analysis is a description
of the internal and external environments
of the business or the organization.
So this is an important distinction,
that the internal ones are things
that you have some control over.
It tends to be things like the strengths, assets,
your resources, the challenges you face, the partnerships,
the lack of things that you have,
the things that you really have control over,
versus the external environment tends to be things
that you have little or no control over,
And being able to sort the right things
into the right boxes in this case
is an important part of your homework assignment.
So think about, again, internal being things
that you have some control over.
External being things that you have
little or no control over.
So an example, just an easy one is an external
factor might be whether it rains today or not.
You don't have a lot of control,
but the internal is, did you bring an umbrella.
Do you have one?
Did you buy one, or do you have a rain suit?
Do you have that asset that you need
to face that external factor.
So my thoughts on this is, really was shaped
by kind of an early mentor of mine,
who I worked with at Michigan State University,
Professor Chris Peterson.
And he talks about how,
that why having the right assumptions and beliefs
are so important to the performance of the organization.
So if you have the right assumptions and beliefs,
then you will develop strategies
which are sort of big picture,
how do we go about our businesses,
which will leverage the opportunities,
leverage your strength and help
to overcome your weaknesses and threats.
And in that way, those strategies will inform
the operations, the sort of day to day, how do you put
these strategies into place, how do you allocate
your own time, your labor, your resources,
where do you sell and what do you do,
and things like that on a more day to day,
which then will result in some sort of performance.
And too often, and Professor Peterson's work suggests
that when you don't get the performance
that you want, that too often folks only go one step back,
and they tweak the operations,
and they tweak those day-to-day things without understanding
that those operations based on a faulty strategy.
And the strategy is faulty because your assumption
and beliefs about the world, about your own organization,
and the environment in which it operates is faulty.
So with bad assumptions, you're gonna have
a faulty strategy, and no amount of tweaking of operations
that are based on faulty strategy
will ever give you the performance that you want.
I'm going to walk you through several
models of situational analysis.
The first one is five W's and an H,
who, what, where, when, why, how,
which is really for the internal.
And then the five C model, and the so-called PEST model,
which we'll look at both internal and external.
And I think like, I believe that looking at and thinking
about both of these models will give you a very broad view
of the environment that you'll be operating in.
So the five W's and an H is just those five familiar
questions, six, who, what, when, where, why and how.
So by asking and answering those,
it'll tell you a good bit about your business organization.
First, who, who is or are the entrepreneurs,
what drives them, why are they in business?
What is motivating them?
And what are their strengths?
What are their skills and assets?
And what are the weaknesses that they may have?
And are there team members who are helping
to shore up those weaknesses.
Who might also apply to the customers.
Who are the current ones, who were the target ones?
Who are they going after now?
Who's buying it?
The what is what is the product or the service?
What do they sell?
What is the thing that they are providing?
Where looks at location.
Where is the business located?
What are the advantages or disadvantages?
And one way of thinking about that is,
so if you're on a storefront, if you are on Church Street,
the obvious advantage is foot traffic.
People are just gonna walk by and go in there.
The disadvantages, the rent is going
to be probably quite high there.
In the same way, that selling in a big city
gives you the advantage of having
a lot of potential customers there,
but the downside is you're probably
going to have more competitors as well.
The other where question is, how do your goods
or services get to the customers?
Do they, do you sell them directly?
Do you use intermediaries?
Some of the when questions include
how long have they been in business?
How has it changed over time?
And what stage are they in?
Are they in the startup phase,
or is it all the way at the end,
where they're thinking about succession,
of who will take this business over,
I'm ready to retire or I'm ready to sell,
or I'm ready to move on.
Those are all when questions.
Next come the why questions.
What drives them to be in business?
What is motivating them?
Is it because they have a passion for what they do?
Is it the autonomy, like they want to be their own boss.
A lot of folks do.
Are they in it for the money?
What combination of this?
And when you look at the mission and vision,
which we already learned about,
that's gonna tell you a lot about why.
Finally, how, what is the performance?
How are they doing?
Are they fulfilling the mission and goals?
How do they operationalize the values and goals?
How do they actually put these values?
How do they put the mission and vision into place?
And finally, a word that we're gonna learn a lot later,
what is its position in the marketplace?
What space do they occupy compared to their competitors?
And stay tuned for a lot more on position as we go through.
'Cause that's a very important marketing concept.
Another model is the five C's.
And here are those five C's, company, competitors,
customers, collaborator, and climate.
The climate is really, going to be thinking
about the external environment.
And I'll walk through each one.
So for company, what are its goals, its mission and vision?
What does it sell?
What's its position in the marketplace?
What is its performance?
Next week we're gonna talk at length about competitors,
and help you think about who they are.
And why are the, why did you choose those as competitors?
What are your competitors' goals, assets,
strategies, strengths, position,
and what are their weaknesses,
and maybe where are they vulnerable
and how does that create space and opportunity
for you to successfully compete?
Also next week we're gonna get into depth about customers,
but for now thinking about who they are,
what do they want and how, and why,
and where, and when do they buy?
What is their behavior
around buying your product or service?
Another part of customers is what are the segments?
How do you break them up into coherent groups
to make them easier to reach?
And three types of attributes that we think about
are demographic, geographic and psychographic.
And again, what we're gonna go into more depth
in, I think, two weeks on these,
but I want to just sort of introduce them now.
Demographic demo is, so, the Greek word for people.
So it's the measurement,
the graphic, of people, who they are.
So this tends to be things like their age
or gender identity, gender, race,
ethnicity, income, occupation, household ties.
So things that sort of describe them as a person.
Geographic is where they are,
where they live and or where they work.
And then psychographic is maybe the more
subtle and less familiar one,
but very important in marketing.
And this is sort of the measurement of their psychology.
How do they think, what do they value?
How do they spend their time?
What are their hobbies?
What are their beliefs?
What are their activities, questions like this.
And then also thinking about customers,
when and why do they buy?
Is your item something they buy every day?
Is it a gift for a friend or for someone that they love?
When and how do they buy?
Do they buy it in large amounts all at once, in bulk,
do they go every day, what's their behavior around that.
And by thinking about their psycho, demo, geographic
and their behaviors, that's going to tell you a lot
about how can you reach them.
The next C is collaborators.
So suppliers and distributors.
Where do they buy the things that they need
for their operations, who do they sell to?
Are they distributing it through somebody else?
Are they strategic partners?
Are they a business who cares about you,
who treats you as a valued partner?
Or is it all about buy low, sell high?
Are you replaceable?
Are they gonna invest in maintaining
the relationship with you?
And how do they create or impede value for you?
Another type of collaborator
is the networks in which you operate.
So who do you learn from, who do you collaborate with?
Where do you get technical support and assistance?
What are those individuals or organizations
out there that you have networked with that can help
create value for your business or organization?
The last C, climate, also serves as a segue
into the external environment,
and looking at the external factors
in your situational analysis.
So climate, again, in this context
means the external environment.
Most of the C's we've done before,
most of those factors have to do
with the internal environment.
You have some control over the attributes of your company,
and the customers you seek out,
and the collaborators that you work with, and so forth.
Now we're gonna focus on the external environment.
And one model that can help you sort of outline
that is the PEST model, which stands for political,
economic, social, and ecological.
So the political environment is things
like rules, taxes, regulation, things like that.
The economic environment is incomes,
wages, taxes, things like that.
Social is things like demographics, psychographics,
I'm sorry, trends, fads, opinions, things like that.
And then finally the technological
is the state of the art of technology.
And certainly today our economy
is very dependent on technology for information
and automation, and regulation and many, many other things.
This is the end of part two.
So when you're ready, please go and watch
the video for part three, thank you.