Must have Analysis Tools

Must have Analysis Tools

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Here are six frameworks that consultants and business analysts commonly use, and that you might consider adding to your own set of tools.

1. Benchmarking

Benchmarking is the process of comparing your company metrics to the metrics of your industry competitors or to those of innovative companies outside the industry.

Common metrics for benchmarking include:

·         Revenues

·         Production costs

·         Employee turnover

·         Process cycle time

2. Porter’s five forces

Developed by Michael E. Porter, Bishop William Lawrence University Professor at Harvard Business School, Porter’s five forces is a framework for industry analysis that is used as an input to a strategic plan.

The five competitive forces that influence profitability in any industry are outlined in Porter’s model:

·         Competitor rivalry

·         The bargaining power of buyers

·         The bargaining power of suppliers

·         The threat of new entrants

·         The threat of substitute offerings

 

3. Balanced scorecard

The balanced scorecard is a framework for tracking important aspects of company strategy and for facilitating organizational improvement or change. It measures metrics beyond typical financial metrics to help companies keep long-term strategic goals in focus and spot trouble before it appears in the financial statements.

The scorecard is a comprehensive and quantitative set of objectives that can be measured over time. Common components include:

·         Revenues

·         Earnings

·         Market share

·         Quality

·         Employee morale

·         Customer satisfaction metrics

 

4. The BCG growth-share matrix

This quadrant matrix, developed by Boston Consulting Group (BCG), is a tool companies use to assess the relative strength of product lines within their portfolios.

Product lines are assigned to one of four quadrants:

·         Cash cows

·         Stars

·         Question marks

·         Dogs

 

5. The GE-McKinsey nine-box matrix

 

This matrix was developed by McKinsey & Company in the 1970s to help General Electric prioritize its investments in its numerous business units. It’s widely used to help companies assess the relative merits of various opportunities.

Business units or opportunities are categorized as “high,” “medium,” or “low” within the two axes of the matrix, which are “industry attractiveness” and “competitive strength of the business unit.”

 

6. Core competencies

The process of identifying your company’s core competencies helps you define your company’s positioning and competitive advantage. A core competency is a proficiency in an area that is not easily replicated by competitors. It allows your company to deliver unique value to customers, thus giving the company a “leg up” on the competition. One example is how the employees and unique culture of Southwest Airlines allows them to provide better customer service and faster turnaround times for planes.

 

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