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There are various analytical tools that are used to assess the performance of a business and to get an understanding of the business environment. These tools help in enhancing the profitability and competitiveness of an enterprise.
Some of the widely used tools are discussed below.
SWOT Analysis
It is the most widely used analytical tool. It covers four factors: strengths, weaknesses, opportunities, and threats to a business. It provides a complete analysis of the business as it considers both the internal factors- like strengths and weaknesses- and external factors like opportunities and threats. The internal factors are easy to define because the management knows them. Still, a thorough study of the business environment is required to determine the external factors that the outside environment has to offer.
Porter’s 5 Forces Analysis
Given by Michael E. Porter, the model covers the competitive aspect of a business enterprise. It caters to the forces of- competition in the industry, the potential of new entrants in the industry, the bargaining power of suppliers, the bargaining power of customers, and the threat of substitute products. These forces help determine the profitability potential of the business.
PESTLE analysis
PESTLE Analysis stands for Political, Economic, Social, Technological, Legal and Environmental Analysis. All of these elements pertain to the external factors of a business enterprise, which is why every element under this model is highly volatile. It is one of the most effective tools of analysis. If a business desires auspiciousness, it should keep assessing all these factors by performing PESTLE analysis regularly.
BCG Matrix
Created by the Boston Consulting Group, the matrix is a product-based analysis tool. The matrix considers a product's market growth rate and relative market share to determine the business portfolio. It has four quadrants in which products or services are sorted- Dogs (Low market growth rate and low relative market share), Cash Cows (Low market growth rate and high relative market share), Question Marks (High market growth rate and low relative market share) and Stars (High market growth rate and high relative market share).
4Ps Analysis
Also known as marketing mix, the 4Ps analysis is used to fully understand the products or services offered by a business. It is a detailed evaluation of the Products, Price, Place and Promotion of a business. This tool of analysis covers a complete overview of the product assortment, the price ranges related to different product categories, the place of operations both online and offline, and the different promotional techniques followed by a business.
For working in a business, it is essential that all the factors, external and internal, are considered when making decisions relating to investments. Try using the above analysis to set goals and objectives. In the comments section, let us know which analysis worked best for your business.
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