Managers are often forced to make decisions not in accordance with the existing plan, but based on the current situation. This happens for various reasons. The main task of the manager is to analyze the situation, develop and adopt the most optimal option for solving the problems that have arisen.
What it is
An analysis of the situation is a way of processing information, in which it is first divided into parts, and then each element is carefully examined separately to find the problem and solve it. For example, the profit of an enterprise may decrease due to an increase in costs or due to a decrease in revenue, an increase in receivables and other factors. In order to determine which factor influenced the change in the size of profit, it is necessary to study these factors.
Only after the cause is identified, the decision maker (DM) will be able to develop an action plan and solve the problem. In order to conduct an analysis of the situation, the authorized person collects a team of specialists who summarize the data and conduct analytical procedures, each in his own field of knowledge and skills.
Who does the analysis?
The analysis of specific situations is carried out not by one person, but by several groups. They are led by a manager or decision maker (DM). The team includes:
- First level experts. They are engaged in the collection and processing of primary information.
- Second level experts. They study reports and develop ideas for solving problems.
- Analytical group. He studies the ideas developed by second-level experts and selects the most realistic, from their point of view, options for the development of events. Analysts develop enterprise strategies and solutions.
- The decision maker selects from the proposed development strategies the one that, in his opinion, is most suitable for solving problems in the current situation. For this he is fully responsible.
Allow yourself to carry out large-scale work using several groups of specialists can only a large company. In most cases, the head of the company analyzes the situation with the involvement of one group - department specialists. The work of the second group and analysts is performed by people included in the company's management, accountants, marketers, engineers. They gather for a business meeting, discuss the situation and look for a solution to the problems.
Order of conduct
The analysis begins with the identification of deviations of the performance of the company from the planned. For example, in the reporting quarter a decrease in revenue of 30% was revealed, and the manager cannot explain the reasons for this level of decline. In this case, he must assemble a group of experts and study the situation. The process consists of the following stages of a situation analysis:
- Identification of deviations of indicators - definition of a problem.
- Organization of an expert group by a leader.
- Assignment to each expert of a site for work.
- Collection of information by department.
- Processing by experts of the information obtained using their specialized knowledge and skills.
- Preparation of progress reports by specialists.
- Study of these reports by the leader, discussion at the general meeting of the contents of the reports.
- Development of solutions to the problem and the application of one or more in practice.
Preparation for the report and its presentation
Managers are always busy with work, so they don’t have time to read long lengthy reports. This suggests that the information in the report should be presented briefly, succinctly and preferably in a clear and convenient way. It is better if instead of hundreds of pages written down and columns of numbers, the report will contain graphs, charts, calculation results and the opinion of the expert who conducted the analysis in a particular area. Naturally, the report should indicate the sources of information and the most important indicators, which, according to the expert, caused the deviation in the work of the company. Therefore, the technology for analyzing problem situations should be worked out before such a situation arises. The enterprise must have computers with special software to solve such problems.
The presentation of each report should not take more than 15 minutes, so that the study and discussion of the results of the analysis of the situation do not drag on for several days. Reports should be based on facts, and information should be relevant at the time of their preparation and presentation.
What does the leader do with the information received
Getting the results of a situation analysis in the form of a report is only half the battle. Further, this information should be studied and analyzed by the head of the company. And here a lot depends on his knowledge and experience. At the same time, experience means not only his personal, but also how well he knows about how such situations were resolved at other enterprises. Typically, the manager, before making a final decision, holds a meeting with other managers and experts, including those who were involved in analyzing the situation on the ground and preparing reports.
What kinds of situations are there
Problem situations are standard and non-standard. To solve standard problems, managers use situation analysis methods by analogy. That is, they compare their data on other enterprises with those obtained as a result of a study of their company. If the situations are similar, then they use the same methods to solve the problem.
If the situation is non-standard, methods of analysis of specific situations are used. To do this, use various computer programs to simulate possible development options, carry out calculations, study dynamics, etc. For this, the manager can use special computer simulation programs based on the data entered. For example, Project Expert is used not only to develop business plans, but also to forecast the work of existing enterprises.
The problem can be solved without the help of computer programs, but this will complicate the already complex calculations. In addition, experts will need to draw graphs and charts to prepare a report. It will take a lot of time. The manager may not use special software, but only if modeling on a computer is impractical. For example, in the event of force majeure, if you need to act quickly and the decision does not depend on the past state of affairs or dynamics. Moreover, the quantity and quality of incoming information is not enough to build a model on a computer.
Brainstorming as a Method for Finding a Solution
In difficult situations, when an extraordinary solution to a complex task is required from the head, he can resort to using such a method of analyzing a specific situation - to gather all experts, department heads and arrange a “brainstorm”. The essence of this method is that each participant in the meeting expresses his opinion about the possible cause of the problem and how to solve it. Everyone has the right to express their opinion and ideas, while none of the participants should, according to the rules, be sarcastic about the opinion of the other.
Naturally, the discussion of the problem should take place within the framework of business etiquette and be recorded. However, the decision is made anyway by the head or the person appointed for this. As a result of the brainstorming, the manager will immediately receive several valuable ideas. Such an analysis has both its advantages and disadvantages. The main advantages are speed and a large number of options, minus - such an analysis of the situation does not always reflect the real situation and often suffers from a lack of objectivity.
Problems of modeling the development of events
The main problem of the technology for analyzing specific situations is that experts have to work with large amounts of information, which may cause errors. Large volumes of data that need to be processed in a short time also constitute a problem of modeling the development of events. Either the analysis will take much more time and the result will lose relevance, or due to the limited amount of information the analysis results will be obtained with a high degree of distortion. As a result, the model may turn out to be ineffective at best, and at worst lead to bankruptcy.
Three main factors influence the effectiveness of the analysis. This is the expert’s qualification, the amount of information that he can process, and the time available to conduct an analysis of the situation.
SWOT analysis
A SWOT analysis is the study and assessment of the strengths and weaknesses of an enterprise, as well as its development opportunities and the threats it faces or may face. Below is a matrix for conducting a SWOT analysis.
The upper left cell indicates the strengths and opportunities that the company has that were identified during monitoring and in the first stage of the situation analysis. An example would be a situation where it became known that the company has a monopoly position in the market for the production of certain products, and due to the specific technology that it has, it can produce it even cheaper. The analysis will help to identify what kind of products are before competitors appear on the market.
The upper right cell indicates strengths and threats. For example, for some basic products of the company with which it makes the most profit, several competitive firms have appeared that produce similar products and sell them cheaper.
In the lower left cell are the disadvantages and capabilities of the enterprise. For example, despite the high cost, goods manufactured by the company are in demand.
The bottom right cell indicates the flaws and threats. The first may be the high cost of production or its low quality, and as threats - the actions of competitors or the solvency of consumers. What the SWOT analysis looks like can be seen in the table above.
The advantage of SWOT analysis when analyzing and assessing the situation is that it makes it possible to evaluate not only internal, but also external factors, which can be even more significant than internal ones.
Factor analysis
Factor analysis is a situation analysis method that involves making calculations based on data on the operation of the enterprise and building a multi-factor model of the current state and further development of the enterprise. Typically, this method is used to assess the financial condition of the company. Indicators such as liquidity, profitability, financial strength and the likelihood of bankruptcy are calculated.
Case analysis
This is a method of analysis when, after reading reports on the current state of the enterprise, meeting participants are divided into groups and disperse for a group discussion of the information received. After that, they meet again, and each group brings their ideas to the public for discussion.
The average group size is from three to seven people. They can express their ideas both at the general meeting and pass it directly to the person who must make the decision. The case analysis includes a description of the problem, its comparison with similar cases and a solution. That is, the groups should tell how they see the situation, what it seems to them like, and what steps should be taken to solve the problem.
Evaluation of the results
After carrying out the measures developed as a result of the analysis of the situation, it becomes necessary to evaluate these results, that is, re-analyze. Only in this case, it is not the state of the enterprise that is checked, but the effect after the decisions have been put into practice. To do this, use the method of comparing what was before and after the changes.
The role of analysis in the work of the company
Without a regular analysis of the situation, the normal development of the enterprise is physically impossible. The leader should always be aware of what is happening and be able to determine not only the state of the company, but also what are the prospects for its development. It helps not only to learn about what are the shortcomings in the enterprise, but also to identify external threats and opportunities to increase its competitiveness and development. At the same time, this must be done quickly and at minimal cost. Operational analysis makes it possible to maintain financial stability for the enterprise, identify existing shortcomings in work and find reserves for their elimination. In the future, the manager will be able to use the advantages that give him the experience and knowledge gained as a result of work.