A situational analysis is an investigation into the state of the internal and external factors which affect a business, in order for managers/owners to determine plans for its future. This assessment requires an evaluation of potential customers and the competition in order to speculate on the financial future for the business and inform decison making. This analysis of a business underpins the marketing or a business plan which managers use to review the business aims and objectives. An assessment of a business underpins the marketing or a business plan which managers use to review the business aims and objectives. An assessment of the business environment is undertaken using various techniques which are outlined below.

This is a framework for evaluating external factors and their impact on the business to inform business strategy. PESTLE analysis is like looking at different factors that can affect a business, similar to checking the weather before planning an outdoor event.

Political: This considers how government decisions and policies can impact a business. For example, a change in import taxes might affect a company that relies on imported materials. This article on Trump's Tariffs is a useful read. https://www.bbc.co.uk/news/articles/cj3j7z73yv2o

Economic: It looks at economic conditions like inflation, employment, and consumer spending. If people have less money to spend due to a recession, it might affect a luxury car company.

Social: This examines societal trends and attitudes. For instance, a growing concern for health might impact a fast-food chain's sales.

Technological: It focuses on technological advancements and how they can change industries. The rise of online shopping has greatly affected traditional retail stores.

Legal: This considers laws and regulations that a business must follow. A new data protection law might require companies to change how they handle customer data.

Environmental: This involves the impact of the environment on businesses and their practices. Stricter environmental regulations could affect industries like manufacturing.

 A SWOT analysis helps to examine the internal and external elements in a business. It is a useful approach to undertake alongside a PESTLE analysis. The two can then be compared and challenged. SWOT analysis is like making a list of a business's strengths, weaknesses, opportunities, and threats. It's similar to a sports team understanding their skills and the challenges they face.

Strengths: These are the things a business is good at. A strong brand and efficient production process are strengths. Such as employees, products etc.?

Weaknesses: These are areas where a business might struggle. Limited marketing budget or outdated technology could be weaknesses.

Opportunities: These are external factors a business can use to its advantage. A growing market or a new trend are opportunities.

Threats: These are external factors that can harm a business. Competition or economic downturns are threats.

This type of analysis is used to inform the marketing of a business having undertaken other forms of situational analysis, such as PESTLE and SWOT. Each category is analysed by responding to questions which seek to identify, for example, the components that make up each of the 5Cs. This type of analysis is used to inform business operations as it focuses on current internal operations using data and statistics. 5Cs analysis looks at five key areas to understand a business's position and strategy.

Company: This involves analysing the business's internal strengths and weaknesses including...

• Product image and branding

• Technology

• Culture

• Aims, vision

Competitors: This considers the strengths and weaknesses of other businesses in the same market including...

• Current and potential

• Market Share

• Strengths and weanknesses

Customers: It focuses on understanding the needs and preferences of the target customers including...

• Demographic

• Where, what and why they buy

• Pricing

• Frequency and quantity purchased

Collaborators: This involves partners or suppliers who contribute to the business including...

• Suppliers

• Stakeholders

• Distributors

Climate: It considers the broader environment and how it affects the business.

• Political and environmental

• Financial: interest rates, exchange rates

• Technology

 This is used to evaluate the position  of a business  in terms of its competition.  Porter’s Five Forces is like examining the playing field in a game. It helps a business understand how competitive their industry is.

Threat of New Market Entrants: How easy or difficult is it for new businesses to enter the market? For example, starting a new software company might be relatively easy compared to starting a car manufacturing plant.

Power of suppliers: How much power do suppliers have to influence prices or terms? If there's only one supplier for a critical component, they might have strong bargaining power.

Bargaining Power of Buyers: How much power do customers have to demand lower prices or better quality? In a competitive smartphone market, buyers have more power.

Threat of Substitutes: Are there alternatives that customers might choose instead? For instance, streaming services are a substitute for traditional cable TV.

Existing Competitive Rivalry : How intense is the competition in the market? A crowded fast-food market with many similar options might have high rivalry.

Remember, these techniques help businesses understand their environment, make informed decisions, and develop effective strategies to succeed. Just like checking a map before going on a journey, assessing the business environment helps companies navigate their path to success.

Thus evaluation can also be used in conjunction with SWOT and PESTLE analyses, by using the results of each analysis to evaluate each factor of Porter's Five Forces.