8-1-3 Analysis Techniques Explained

Key Concepts

Key concepts related to 8-1-3 Analysis Techniques include SWOT Analysis, PEST Analysis, and Porter's Five Forces.

SWOT Analysis

SWOT Analysis is a strategic planning technique used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.

An analogy to understand SWOT Analysis is to think of it as a self-assessment tool. Just as a student assesses their strengths and weaknesses to improve their performance, a business assesses its internal and external factors to develop strategies.

Example: A tech startup might identify its innovative product as a strength, limited funding as a weakness, the growing demand for tech solutions as an opportunity, and competition from established companies as a threat.

PEST Analysis

PEST Analysis is a strategic tool used to understand the macro-environmental factors that might affect an organization. PEST stands for Political, Economic, Social, and Technological factors. It helps in identifying the external factors that could impact the business environment.

An analogy to understand PEST Analysis is to think of it as a weather forecast. Just as a weather forecast helps in preparing for upcoming conditions, PEST Analysis helps in preparing for external factors that could affect the business.

Example: A retail company might analyze political stability (Political), economic growth rates (Economic), changing consumer preferences (Social), and advancements in e-commerce technology (Technological) to understand its market environment.

Porter's Five Forces

Porter's Five Forces is a framework for industry analysis and business strategy development. It consists of five forces that determine the competitive intensity and attractiveness of a market: Threat of New Entrants, Bargaining Power of Suppliers, Bargaining Power of Buyers, Threat of Substitute Products or Services, and Industry Rivalry.

An analogy to understand Porter's Five Forces is to think of it as a game. Just as a game has different players and rules that influence the outcome, Porter's Five Forces identify the key players and dynamics that shape an industry.

Example: A pharmaceutical company might analyze the threat of new entrants (low due to high R&D costs), the bargaining power of suppliers (moderate), the bargaining power of buyers (high due to insurance companies), the threat of substitute products (low), and industry rivalry (high due to many competitors).