Home / Entrepreneurship / Most Popular Business Analysis Tools And Techniques Experts Use

Most Popular Business Analysis Tools And Techniques Experts Use

Business analysis tools and techniques are models or strategies applied by different business stakeholders to determine the needs of a business and proffer solutions that will attract success.

Ideally, each business has environmental constraints, government policies, competitions, opportunities, market, technology and so on. All these factors and so many others affects a business directly or indirectly. Therefore, there is need to measure and adjust these factors to suit the business.

Business analysis asks those questions like Why? How? When? Who? and What is to be done to achieve the desired result or goal.

Most business fail, not because they lack the resources, but because they fail to discover and address the needs of the business. In other words, proper business analysis is the bridge between the need and outcome of a business.

So, how are these needs of the business to be measured?

This is simply what the Business analysis tools and techniques does – It asks questions that helps discover these needs.

However, there are different business analysis tools and techniques, but each depends on the stage of the business and the aim of the business analyst.

Business analysis tools

There are different types of business analysis tools and techniques used by business analyst and other stakeholders. Sincerely speaking, there is no model more important than the other nor a strategy that is the best. Therefore, the use of any particular technique is subjective to the analyst choice or the parameter the business is measuring at any point.

Here, are some of the most common Business analysis tools and techniques or models that are widely used by experts;

SWOT analysis

The SWOT analysis is usually useful at the stage when a business project is still about to kick off and can also be used during evaluation and planning.  Notwithstanding, it is one of the most common business analysis tools and techniques.

SWOT analysis is an acronym that stands for Strength, Weakness, Opportunities and Threat to a business. On close observation, the SWOT analysis measures both the internal (Strength,Weakness) and External (Opportunity, Threat) factors of a business.

Meanwhile, those internal (Strength and weakness) factors are what the business can change or modify to solve the need . But, the external factors (Opportunity and Threat) will require the business to adjust to suit the change.

Strength

  • It contains those stuffs that the business does well.
  • Internal resources such as skilled staffs.
  • The assets of the business including intellectual, technology, land e.t.c.

Weakness

  • Things the business lacks
  • Resource limitation
  • Things competitors do better than the company

Opportunities

  • Few competitors in your area.
  • Emerging need for your products or services.
  • Popularity of your product to consumers
  • Government promotion.

Threats

  • More competitors in your area.
  • Policies that affect your business.
  • Alternative product or brand.
  • Changing customer attitude to your product.

PESTLE analysis

In PESTLE analysis, the business assumes that the internal factors are already in control and need to look at external factors that can influence the business. The PESTLE stands for; P – Political, E -Economic, S – Social, T – Technological, L -Legal and E – Environmental.

However, PESTLE analysis can also be called the PEST analysis. Consequently, the legal is integrated into Political while Environmental is with the Social.

  • Political factors: The political factors determine the extent to which a government may influence the economy of a certain industry. Some of these factors includes policies such as Tax, Fiscal, tariffs, import duties, regulatory laws e.t.c
  • Economic factors: These factors determines how the immediate economy of the environment impacts the activities and interest of the business. The economic factors include; inflation rate, interest rates, foreign exchange rates e.t.c.
  • Social Factors: The social factors points at the ways the social environment tend to affect the success of the business.The social factors includes; Demographics, population distribution and statistics, culture, believes e.t.c.
  • Technological factors: This describes how new technological innovations influences a business both positively or negatively. Some technological innovations can boost output of a business while others can serve as a replacement to the product or services the business offers.

Porter’s 5 Forces Analysis

The Five Forces model is named after Harvard Business School professor, Michael E. Porter. This model identifies and analyzes five competitive forces that can influence the productivity and profitability of a business. As a result, the Porter’s 5 forces helps to determine the power a business wields in relation to external forces.

The forces are;

  1. Competition in the Industry: This describes the power a company wields in relation to the number of competitors that offers the same services. Therefore, it means that the more the competition,the more options the customers and suppliers have. Consequently, the lesser the power of the business and vice versa.
  2. Supplier power: This measures the ease with which a supplier can change the price of goods a business purchases. Meaning that, if there are more suppliers, the suppliers have lesser power and are kept in check.
  3. Consumer power: This force capitalizes on the power the buyer has to drag the price of your products down and their strength in the profit of the company. This means that, Smaller but more powerful customers can easily ask for lower prices than larger and independent buyers will.
  4. Threat of substitution: When there are close substitutes to the products a company offers, it gives buyers the options to forgo a product if the prices are raised. Therefore, close substitutes for a particular product pose a threat to its acceptability by consumers.
  5. Flexibility of entrance: The last of the Porter’s 5 forces is the threat of easy entrance into the business industry. This means that, the easier it is to join the market, the lesser the power the company has over its goods and price determination. On the contrary, the more strict the business is for new users, the more authority the business has.

CATWOE business analysis tools

The CATWOE analysis is majorly used to discover and solve issues with contrasting views among the stakeholders. In other words, CATWOE analysis puts consideration to worldviews on a particular project and reach a consensus on the best method to solve the problem.

Meanwhile, this analysis is an acronym for the words;

  • Clients: Clients or customers are  the end consumers or those who benefit from the product and services. The analysis is to understand them and decide how your decision will affect them either positively or negatively.
  • Actors: A CATWOE analysis requires listing out the stakeholders responsible for implementing the changes, usually employees.
  • Transformation: Transformation is the intended change that will affect the clients. In other words, it lists all the inputs that will bring about the output.
  • Worldview: In CATWOE analysis, this stage is regarded as the most important because it has to do with the different views of all the stakeholders including the clients and Actors. Therefore, there are different contradicting views and interest at this stage and will require an ethical approach to reach a consensus.
  • Owner: The owner is usually the entrepreneur or the investor, who has the authority to make the changes, stop the project, or decide on whether to go ahead with the change.
  • Environmental constraints: This stage focus on the external factors that can affect the implementation of the project. The external constraints may include; Political, law, Economic e.t.c. which PESTLE analysis can do.

VMOST analysis

VMOST business Analysis tools is also known as the MOST analysis. It is concerned with 5 fundamental key points which are; Vision, Mission, Objectives, Strategy and Tactics. It is a technique for analyzing what an organisation aims to achieve (Vision, mission & objectives) and how it aims to achieve this (strategy & tactics).

Notwithstanding, the VMOST strategy is best applied when drawing a business plan to determine the direction the business will go. Also, it helps to discover business needs and how to address them during evaluation stage of a project management.

Ansoff Matrix

The Ansoff Matrix, also called the Product/Market Expansion Grid, was developed by a business manager H. Igor Ansoff. This business analysis focuses on the strategies for business growth and expansion. Meanwhile, the Ansoff matrix has 4 cardinal strategies for business growth which includes;

The four strategies of the Ansoff Matrix are:

  1. Market Penetration: It focuses on increasing sales of existing products to an existing market.
  2. Product Development: It focuses on introducing new products to an existing market.
  3. Market Development: Its strategy focuses on entering a new market using existing products.
  4. Diversification: It focuses on entering a new market with the introduction of new products.

SCRS business analysis tools

The SCRS tool is another technique in business analysis that has to do with planning and growth. SCRS is an acronym for 4 letter words, Strategy, Current state, Requirement and Solution.

  • Strategy: This has to do with the aims, objectives, mission and planning. It answers the questions; What does the company need? How can we achieve it e.t.c.
  • Current State: This has to do with the situation of things in the business such as Capital, Intellectuals, staffs, structure e.t.c.
  • Requirement: The requirement is drawn from the current state and what seems to be lacking. Therefore, it measures what the business needs for growth.
  • Solution: This deals with how to fix things to get an output.

Cost-Benefit Analysis

This is a strategy businesses use to analyze a decision by weighing the cost of the action against the benefit. Then, the difference between the benefit and the cost will determine the direction of the investment. Most experts use this analysis to determine if a project is financially feasible or not.

However, the challenge with using this business analytic tool is that some cost parameters can not be measured. Also, all the parameters cannot be in the same unit for addition and subtraction.

Therefore, experts try to assign monetary values to these costs or benefits that cannot be measured so as to carry out the cost benefit analysis.

In Summary

There are different business analysis tools; each with its unique feature and unique parameter that it measures. However, there is no ideal tool for any parameter. In other words, the stakeholders can combine so many strategies or techniques to reach a common goal.

Finally, you can subscribe to our email channel at the right side of the page for more business information or click the share button to help us reach out to others,

Thanks!!!

Check Also

Cost of fish farming business

Cost Of Starting A Fish Farming Business In Nigeria

People usually ask the cost of starting a fish farming business in Nigeria or how …

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!