BASIC METHODS IN

BUSINESS ANALYSIS
Santi Novani

School of Business & Management

Institut Teknologi Bandung
2016

Santi Novani received her Doctoral degree from Tokyo

Santi
S.Si,
MT, PhD
Institute Novani,
of Technology,
Department
of Value and Decision
Science supervised by Prof. Kyoichi Kijima in 2013. Her
interest research is in Service system science, i.e., Value
Co-creation in Service System using Modeling and
Simulation. From 2000 to 2008 she worked at private
university in Bandung and joint as research assistant of
interest group Decision Making and Strategic Negotiation.
From 2008 up to now she is a lecturer at School of Business
and Management ITB. She earned Master of Engineering
from Industrial Engineering and Management Department,
ITB in 2005. She has several International publications,
including Journal Systems Research and Behavioral
Sciences, Wiley & Son, Procedia, International Journal of
Entrepreneurship and Small Business and Journal of Service
Science Management. She had presented several papers in
International Seminars at Sweden, Canada, US, Tokyo and
Indonesia. She has also as a member of project, including2
research Award from 2005 up to now by DGHE, JSPS and
LPPM ITB. Currently, she actives as a Secretary of

Assist Knowledge Development, 2012

WHY DO WE NEED BUSINESS

ANALYSIS?
To investigate ideas and problems, formulate
options for a way forward and produce business
cases setting out their conclusions and
recommendations.
To ensure that all business changes are in line
with the mission, objectives and strategy of the
organization.
Key foundation for understanding and evaluating
all ideas, proposals, issues and problems put
forward by managers.

HOW DO WE ANALYZE THE

BUSINESS?

Business Analysis is:

the process of conducting research on the business

environment within which an organization operates
and on the organization itself, in order to formulate
strategy.

BNET Business Dictionary

a theoretically informed understanding of the

environment in which an organization is operating,
together with an understanding of the organization's
interaction with its environment in order to improve
organizational efficiency and effectiveness by
increasing the organization's capacity to deploy and
redeploy its resources intelligently.

Professor Les Worrall, Wolverhampton Business School

WHAT ARE THE PROCESSES?

Identification and evaluation of data relevant to
strategy formulation.
Definition of the external and internal
environment to be analyzed.
A range of analytical methods that can be
employed in the analysis.

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WHAT KINDS OF (BASIC) METHODS?

SWOT analysis
PEST analysis
Porters five forces analysis
Four corners analysis

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SWOT ANALYSIS

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PURPOSE OF SWOT ANALYSIS

Help decision makers share and compare ideas
Bring a clearer common purpose and
understanding of factors for success
Organize the important factors linked to success
and failure in the business world.
Analyze issues that have led to failure in the past
Provide linearity to the decision making process
allowing complex ideas to be presented
systematically.

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OVERVIEW

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The strategy is to look at the organizations current performance (strengths and weaknesses) and
factors in the external environment (opportunities and threats) that might affect the organizations
future.

INTERNAL-EXTERNAL ANALYSES
Internal Analysis:
Examine the capabilities of the organization by
analyzing the organization's strengths and
weaknesses.
External Analysis:
Look at the main points in the environmental
analysis, and identify those points that pose
opportunities for the organization, and those that
pose threats or obstacles to performance.
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Basic Concepts of Strategic Management

Environmen
tal
Variables

1-21

OVERALL PICTURE

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STRENGTHS: OPERATIONAL
DEFINITION
Something that we truly do well,
Something that we excel at versus the
competition,
Something that we can build on,
Something that truly differentiates our business,
A key metric that is improving.

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STRENGTHS: QUESTIONS
What makes us stand out from competitors?
What advantages do we have over other
businesses?
What are the major sources of our revenue and
profit?
What is our market share of our various product
lines?

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STRENGTHS: QUESTIONS, CONTD

Do we have strong brands?
Is the marketing/advertising effective?
What is our major focus as a company?
Do we have a pool of skilled employees?
Is the morale of the employees high?

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WEAKNESSES: OPERATIONAL
DEFINITION
A real gap, a deficiency, a problem, or a key
metric that is going south;
Something were not doing very well and that we
should be doing better;
Something thats dated that no longer applies
even though it used to;
Something important that we really
dont know or arent sure about.

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WEAKNESSES: QUESTIONS
What do our customers complain about?
What are the unmet needs of our sales force?
What are the least profitable product lines for the
company?
In what areas is the company not able to recover
costs?

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OPPORTUNITIES:
OPERATIONAL DEFINITION
A favorable external condition;
Something (that we havent acted on or taken
advantage yet) that could impact us positively;
New things that can be done to potentially
improve the businessthat turn into
recommendations and actions.

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OPPORTUNITIES: QUESTIONS
Are there emerging trends that fit with our
company's strengths?
What are the interesting trends? Is our company
positioned to take on those trends?
Is there a product/service area that others have
not yet covered?
What favorable circumstances are we facing?
Are we entering new markets?
Are we advanced in technology?

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THREATS: OPERATIONAL
DEFINITION

Something external to the business that can

potentially impact us negatively:
competitors
changing

conditions in the marketplace,

the overall economy,
government regulations.

Part of the playing field that cant be ignored.

Some internal threats, e.g. hanging onto the
status quo when change is required

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THREATS: QUESTIONS
Are our competitors becoming stronger?
Are there emerging trends that amplify our
weaknesses?
Do we see other external threats to the company's
success?
Internally, do we have financial, development, or
other problems?

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THREATS: QUESTIONS, CONTD

What obstacles do we face?
What is our competition doing?
Are the required specifications for our products
or services changing?
Is changing technology threatening our position?
What policies are local and national lawmakers
backing? Do they affect our industry?

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SWOT TEMPLATE
SWOT Analysis
Internal
Strengths

Weaknesses

External
Opportunities

Threats

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PEST ANALYSIS

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Business Analysis Models

-PEST Analysis
What is PEST analysis?
PEST analysis is an analysis model examining the
external environment and the global factors that may
affect a business.
It can provide a quick understanding of the external
pressures facing a business and their possible
constraints on its strategy.
It is usually divided into four external influences on a
business political, economic, social and
technological.

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BUSINESS ANALYSIS MODELS

-ILLUSTRATIONS FOR PEST ANALYSIS MODELS

Political

To find how political

development, locally, nationally,
internationally affect the
strategy of a business.

Areas to be considered, e.g.:

1.

Consumer laws and regulation

2.

Political pressures,

3.

PhotoDisc

Purposes:

Government views of certain

business activities, including
local, national or international
government political issues 36
affecting a business

BUSINESS ANALYSIS MODELS

-ILLUSTRATIONS FOR PEST ANALYSIS MODELS
Political

Economic

1.
2.

3.
4.
PhotoDisc

Purposes:
To find how economic factors may
affect on the business.
Areas to be considered, e.g.:
Consumer activities, such as
spending patterns
Economic conditions, such as
inflation, unemployment, growth,
etc.
Government policies, such as fiscal,
monetary, exchange rates, etc.
The changes in production and37
labor market

BUSINESS ANALYSIS MODELS

-ILLUSTRATIONS FOR PEST ANALYSIS MODELS
Political

To find what competitive advantage a

business may gain by social changes.

Economic

Social

PhotoDisc

Purposes:
Areas to be considered, e.g.:

1.

Aging population trend, which may

increase services for old people

2.

Birth rate increase, which may affect

baby product markets

3.

Security condition, e.g. increase in crime

may cause a business to increase
insurance costs

4.

Pressure groups, such as environmental

groups, local community groups, etc. 38
which may prevent a business from
polluting a river (environment)

BUSINESS ANALYSIS MODELS

-ILLUSTRATIONS FOR PEST ANALYSIS MODELS

Political

Economic

1.
2.

Social

Technological
PhotoDisc

3.
4.

Purposes:
To find how new
technologies might affect the
business activities.
Areas to be considered,
e.g.:
The rate of technological change
The development of IT
The wide use of Internet
The creation of new materials for
production

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Variables in Societal Environment

4-40

PORTERS FIVE FORCES

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PORTER'S FIVE FORCES

Developed in 1979 by Michael E. Porter of

Harvard Business School as a simple framework
for assessing and evaluating the competitive
strength and position of a business organization.

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BASIC CONCEPT
There are five forces which determine the
competitive intensity and attractiveness of a
market.
Porters five forces helps to identify where power
lies in a business situation.
This is useful both in understanding the strength
of an organization's current competitive position,
and the strength of a position that an
organization may look to move into.

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THE FIVE FORCES(1)

Supplier power: An assessment of how easy

it is for suppliers to drive up prices. This is
driven by:
the

number of suppliers of each essential input

the uniqueness of their product or service
the relative size and strength of the supplier
the cost of switching from one supplier to another.

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THE FIVE FORCES(2)

Buyer power. An assessment of how easy it

is for buyers to drive prices down. This is
driven by:
the

number of buyers in the market

the importance of each individual buyer to the
organization
the cost to the buyer of switching from one supplier to
another.

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THE FIVE FORCES(3)

Competitive rivalry.
The key driver is the number and capability of
competitors in the market.
Many competitors, offering undifferentiated
products and services, will reduce market
attractiveness.

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THE FIVE FORCES(4)

Threat of substitution.
Where close substitute products exist in a
market, it increases the likelihood of customers
switching to alternatives in response to price
increases.
This reduces both the power of suppliers and the
attractiveness of the market.

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THE FIVE FORCES(5)

Threat of new entry.
Profitable markets attract new entrants, which
erodes profitability.
Unless incumbents have strong and durable
barriers to entry, for example, patents, economies
of scale, capital requirements or government
policies, then profitability will decline to a
competitive rate.

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PORTER'S FIVE FORCES DIAGRAM

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FOUR CORNERS ANALYSIS

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FOUR CORNERS ANALYSIS

Developed by Michael Porter
The four corners analysis is a useful tool for
analyzing competitors.
It emphasizes that the objective of competitive
analysis should always be on generating insights
into the future.

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USE OF THE MODEL

Develop a profile of the likely strategy changes a
competitor might make and how successful they
may be
Determine each competitors probable response to
the range of feasible strategic moves other
competitors might make
Determine each competitors probable reaction to
the range of industry shifts and environmental
changes that may occur.

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A SUMMARY OF PORTER'S FOUR CORNER'S

ANALYSIS

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THANK YOU

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