How to Identify and Define Issues and Conduct a Situation Analysis

a. Identifying and defining the issues in a case is one of the most crucial steps because all further analysis and action hinges on the issue you choose and the way you specify the issue.

b. How do you identify and define issues? An issue occurs any time reality does not meet the organization’s objectives.  For example, if an organization sets a goal of obtaining a 20 percent share of the market but only achieves a 15 percent share, not achieving the 20 percent share target is an issue.  As you read through cases, be alert for executives expressing disappointment or irritation over a particular situation. Normally, you will identify several issues in any case, and your next task is to place some priority on the issues. Deal first with the issue you think is most important to the organization and then proceed to the second and third issues in a similar fashion.

c. If you brainstorm the issues in a case, you may come up with a long list.  No case analysis can deal with more than one or two major issues. Look to simplify down to a short list by searching for related issues which can be collapsed into a broader issue. For example, if you see a company that has started out with a product idea and run with it for a period of time and is not generating enough sales and revenue because customer demand is not up to expectations, you might start out by listing issues like not enough revenue, not enough customers, unclear how to increase sales, no repeat sales.  In fact, these are likely symptoms of an underlying issue for the company of failure to identify who its market is and what segments it will serve with what benefits.  This company needs to do a market analysis and develop a focused strategy.

Start the internal analysis with the organization’s overall or marketing objectives. Objectives should address the problem identified and should be clear, specific, numeric, and limited to a particular time period.

You must be aware of the strengths and weaknesses of the organization in terms of finance, research and development, manufacturing (production and human resources), and marketing.  You should isolate what the organization’s distinctive competence is; that is, what does this organization do significantly better than any competitor?  The marketing strategy should try to take advantage of this distinctive competence. All too often companies embark on a strategy for which they do not have the required resources.  In the late 1960s General Electric and RCA both set themselves certain market-share objectives in the computer business which required financial resources that the two companies simply could not generate even with all their non-computer businesses.  Both companies later dropped out of the computer business.

2. Situation Analysis

a. Do not simply regurgitate the facts of the case. Your job is to analyze the situation by applying critical reasoning skills.

b. Keep in mind the level of analysis required by the case. Are you analyzing a single company or an entire industry?

c. Clearly distinguish between factors external to the focal firm or industry (Opportunities and Threats) and those factors over which the firm has at least some degree of control because they are internal to the focal firm or industry (Strengths and Weaknesses)

d. Now, clearly distinguish between Opportunities and Threats and between Strengths and Weaknesses. Do not assume that because you view something as an opportunity that the reader will automatically see things the same way – you need to explicitly state whether you evaluate a factor as a strength or weakness, opportunity or threat.

e. Make sure you discuss how the trend influences the focal firm or industry. It is not enough to identify a trend without saying why this trend matters to the firm. For example, you may identify as a trend the fact at the Canadian population is aging. Is this an opportunity or threat for your firm? Why? Are you targeting an older demographic? Is your service something that an older population needs? Does your product replace one currently being used by this segment? How will this trend affect the firm’s ability to resolve the problem you have identified?

f. Place the extended discussion in a chart in the appendix, but make sure you refer to it in the body of your report.

g. You must identify what the organization’s objectives are and how they relate to the main issue you have identified. If the cases do not present information on organization’s objectives or you are using a company or product/service that you wish to create for your comprehensive group project, you will need to establish some objectives yourself. See Chapter 2 in the text regarding setting goals/objectives and your class notes regarding what makes a good objective.

h. If the cases do not present organization’s information or you are creating a company/product/service for the comprehensive group project, you may need to make some assumptions to conduct the internal analysis. Make sure you state what your assumptions are, for example, “We are assuming that an adequate information technology infrastructure can be put in place in time for our company to open for business by [date].” Or, “We will need to train our employees to provide superior customer service. We anticipate this will take 6 weeks.”

2.1. Internal Analysis - Strengths and Weaknesses

i. Any assumptions you make must be reasonable. For example, no business, large or small, has ‘unlimited funds’ to commit to marketing communications.

Changes in the environment tend to produce opportunities such as unmet buyer needs, new technology or new forms of communication.  You should be alert for new possibilities and jot them down as you analyze a case. These changes can also wipe out markets, change the structure of competition, render products obsolete, affect prices and availability of supplies, etc. You need to consider how these changes can be dealt with to best advantage.

Here you are concerned about the major trends in each of the six areas (i.e., Culture, Demographics, Political, Economic, Social, and Technological) that may affect our organization, competitors, channel members (retailers and wholesalers), and buyers.  For example, if you had been marketing managers for a manufacturer of baby food such as Gerber, the trends toward wider use of birth control methods, later marriage, and smaller family size in the 1960s and early 1970s would have tremendous implications for our marketing strategy.

You need to understand the key success factors in the market and how our competitors stack up against each of these factors.  You must attempt to understand each of their strategies. The better you understand why our competitors are succeeding, the better you can gauge the prospects for our possible strategies and how our competitors might react to each of our strategies.  A good approach is often to list direct and indirect competitors and conduct a feature-by-feature comparison of their offering with our offering, and with the target market’s benefits sought.

a. Even if the main issue you identify is not one directly linked to lack of proper segmentation, you must include a segmentation analysis as part of the case report.

b. Along what dimensions (e.g., demography, geography, behaviour) are they most appropriate to segment the market?

c. Consider multiple segmenting variables for the analysis.

d. The next step would be to estimate the size of the market segment. You could do this in terms of sales volume ($), the number of customers in each segment, or by suggesting that one segment may be ‘large’ while another is ‘small.’ Be sure to state how you arrived at your estimate of segment size.

e. Segments must meet five main criteria:

1. Homogenous needs within a segment

2. Heterogeneous needs among segments

3. Identifiable segments

4. Accessible segments

5. Sizable

f. You should also use a perceptual map to illustrate how your firm is positioned in the market in relation to its competitors. This is a good way of confirming for yourself if your firm has a competitive advantage in a specific market segment, and what the nature of that advantage is (e.g., consumers perceive the product/service to be of high quality, the firm occupies the ‘lowest price’ position in the market, etc.)

g. Make sure you state how you came up with the data for the perceptual map (remember, it is the position the product/service occupies in the customer’s mind not in your mind). Indicate any weaknesses your analysis may contain (e.g., a small sample size was used to develop the perceptual map; the firm may need to conduct another analysis with a larger sample size to be assured the results are accurate).