Business analysis techniques

List of Business Analysis Techniques | Analysis, Examples, Why? How to do it?

Business analysis techniques

List of Business Analysis Techniques | Analysis, Examples, Why? How to do it?

List of Business Analysis Techniques

Business analysis techniques helps you identify and understand the factors that affect your sales performance. Its findings allow informed decisions to be made on how best to improve. Each system and each question is unique, and the angle from which it’s best examined may vary when it comes to the business analysis techniques. This article delves with list of business analysis techniques to improve your business.

Focus on the essentials to know to when it comes to business process techniques, to minimize problems:

  • PESTLE
  • Heptalysis
  • STEER
  • MOST
  • SWOT
  • CATWOE
  • De Bono’s Six Thinking Hats
  • Five whys
  • MoSCoW
  • VPEC-T
  • SCRS
  • Business Analysis Canvas
  • Business Process Analysis

Details of Business Analysis Techniques

Business analysis techniques encompass a range of methodologies, tools, and frameworks used to gather, analyze, and interpret data and information about a business in order to identify opportunities, solve problems, and drive strategic decision-making; these techniques include SWOT analysis, PESTEL analysis, Porter’s Five Forces analysis, stakeholder analysis, value chain analysis, cost-benefit analysis, market research, benchmarking, and data mining, among others.

Benchmark in Excel and How do you write a benchmark report?

PESTLE Analysis

PESTLE represents the political, economic, social, technological, legal, and environmental factors that influence the life cycle and operation of a business.

Political factors refer to government policies as they have a significant impact on the growth and operations of any business within this jurisdiction.

Similarly, legal factors include copyright, insurance, and health laws, while economic factors refer to inflation, unemployment, economic growth, and context.

Social factors play a major role in business profitability and target market, including population growth, age distribution, and consumer trends. As the world continues to evolve, technology has taken over the business environment. Technological factors such as automation, innovation and software solutions must be taken into account in the analysis of a company. Finally, environmental factors include climate change and pollution.

Heptalysis

Heptalysis is one of the business analysis techniques. This is used to perform an in-depth analysis of early stage businesses/ventures on seven important categories:

  • Market opportunity

A market opportunity product or a service, based on either one technology or several, fulfills the need(s) of a (preferably increasing) market better than the competition and better than substitution-technologies within the given environmental frame (e.g. society, politics, legislation, etc.).

  • Product/solution

A product is an article manufactured or a substance refined for commercial purposes. Solution. A way to solve a problem or deal with a difficult situation. If the product could be a tool, the solution would always represent its purpose.

  • Execution plan

It is the set of plans necessary for the companies for the realization of the works.
The execution plan(s) must define, in accordance with the technical specifications appearing in the contract, all the shapes of the works, the nature of the facings, the shapes of the parts and all the elements and assemblies. They have an essential role to ensure a coherent realization and in accordance with the planned plan(s).

  • Financial engine

The engine of a business is finance. When you want to create a business, it is not enough to have ideas, to find partners, but above all to find financing. And according to the analysis of the experts, it will be necessary to expect a background holding for five years of execution.

The interests for the company of having good financial management.
Once the portfolio of the company is in good hands, the company can consider creating a new annex or other activities will be held there. They can also think about improving its equipment, office design, train staff to master sophisticated but more efficient tools, and why not think about increasing employee salaries. Read also: Accounting and Financial Management Solutions

  • Human capital

Just like your customers, human capital, represented by your employees, plays a decisive role in the success of your business. This human capital is a set of productive capacities that an individual acquires by accumulating general or specific knowledge, know-how, etc.

How do human resources constitute such “capital”? Not first as a production force: we can imagine a future without factories, or at least without humans; but as a force of meaning and intelligence, as a force for renewal. In other words, human capital does not primarily represent a potential for execution – that of slaves or machines – but a potential for development.

Company Values is the Quality of Working Relationships

  • Potential return

It is a means of judging the effectiveness of a business, in comparison with the yields obtained in other environments or with other techniques or varieties. It has relationship between the product or services obtained and the means used. The action plan to be put in place to ensure the growth of your organization will depend on this positioning.

  • Margin of safety

As part of an investment strategy, the margin of safety is the difference between the intrinsic value of a stock and its market price.

The margin of safety represents the difference between the turnover or revenue achieved and the break-even point. These two indicators, the margin of safety and the break-even point, are part of the financial ratios essential to the sustainability of a company.

In break-even analysis, which is an accounting discipline, the margin of safety represents the decline in revenue that can be sustained by the business without incurring losses. The breakeven point is a scenario with no profit or loss.

Read also: Financial Analysis | Measuring performance and profitability

STEER

It is essentially another take on PESTLE. It factors in the same elements of PESTLE and should not be considered a tool on its own except when an author/user prefers to use this acronym as opposed to PESTLE. STEER puts into consideration the following:

  • Socio-cultural
  • Technological
  • Economic
  • Ecological
  • Regulatory factors

MOST

This is used to perform an internal environmental analysis by defining the attributes of MOST to ensure that the project you are working on is aligned to each of the four attributes.

The four attributes of MOST are:

  • Mission (where the business intends to go)
  • Objectives (the key goals which will help achieve the mission)
  • Strategies (options for moving forward)
  • Tactics (how strategies are put into action)

SWOT analysis

As one of the most commonly used techniques, SWOT analysis extends to different industries and types of activities. SWOT is abbreviated for Strengths, Weaknesses, Opportunities, and Threats.

This method of analysis combines knowledge of internal (strengths, weaknesses) and external (opportunities, threats) factors to determine the most appropriate business solutions. A company’s strengths refer to the competitive advantages it possesses, such as brand image or customer service. Weaknesses can be location, company size and even brand reputation.

On the other hand, opportunities may come in the form of investments in other companies or startups, partnerships or collaborations. Threats exist when competitors have an advantage over the business in some way.

SWOT analysis | Unleashing Business Potential with Examples and how to address the weaknesses and threats identified

CATWOE

CATWOE is an acronym which stands for: customers, actors, transformation process, worldview, owners and environmental constraints. To successfully implement solutions within an organization, the CATWOE analysis advocates rigorous justification, employee empowerment and awareness of potential constraints.

These letters mean:

  • Customers – Who are the customers of the process studied? Winners, losers… how are they impacted by the issue studied?
  • Actors – Who are the actors involved in the situation?
  • Transformation – What systems and processes are involved?
  • World View – beyond the systems and processes defined above and in a broader way, what are the impacts of the problem or the decision to be taken? Positively and negatively.
  • Owners – Who owns or is responsible for the situation or processes involved? What is their role in choosing and implementing the solution?
  • Environmental Constraints – What are the environmental constraints of the studied unit that have an impact on the solution?

De Bono’s Six Thinking Hats

It is a business analysis technique that can be described as the different thought processes used to solve business problems. These hats are classified according to their colors as follows:

  1. Blue The control hat, which involves setting guidelines, plans, and focus
  2. Yellow The optimistic hat, used to see the positive side of things
  3. Black The judgment hat, use for critical judgment and logic
  4. White The factual hat, which refers to the acquisition of all important information
  5. Green The creative hat, used to generate ideas and alternatives
  6. Red The hat of intuition, which uses feelings and instincts

Six Thinking Hats Technique | Enhancing Decision-making with the Six Thinking Hats Technique: Examples of Implementation in Business

Five whys

The Five Whys is the basis of a problem-solving method offered in many quality systems.

It is a question of asking the relevant question starting with a why in order to find the source, the main cause of the failure. This working method is mainly made to find the main cause of the problem encountered.

With five questions starting with “why”, we try to find the most important reasons that caused the failure to arrive at the main cause.

Examples
First example

My car won’t start (the problem)

Why ? – The battery is not charged.
Why (is the battery not charged)? – The alternator does not work.
Why (…) ? – The alternator belt is broken.
Why ? – I exceeded the duration recommended by the manufacturer and the belt was worn.
Why ? – I did not respect the manufacturer’s recommendations (the root cause).

Second example

My expenses are higher than expected (the problem)

Why ? – I have to pay 10% more tax.
Why (do I have to pay 10% more tax)? – I didn’t make my statement in time.
Why (…) ? – I did not have all the necessary information about my assets.
Why ? – I have not had certain inherited assets appraised by an expert.
Why ? – I didn’t find an expert in time. (the root cause).

Moscow (Must or Should, Could or Will)

One of the most important functional requirements of a business analyst is the ability to choose between alternatives. Moscow’s technique consists in asking questions of necessity. This way, each business problem is assessed on whether resources should be allocated to solving it or better spent on a different problem.

VPEC-T

The VPEC-T analysis is a thinking framework comprising a set of filters or mental guides in the business analysis techniques. This technique is used when analyzing the expectations of multiple parties having different views of a system in which they all have an interest in common, but have different priorities and different responsibilities.

  • Values

Constitute the objectives, beliefs and concerns of all parties participating. They may be financial, social, tangible and intangible. these values are said to be perfect and make desirable as well as estimable the beings or the behaviors to which they are attributed.

  • Policies

Constraints that govern what may be done and the manner in which it may be done. A set of concepts and principles that become guidelines and the basis of plans in the implementation of a job, leadership, and ways of acting.

  • Events

Real-world proceedings that stimulate activity. The event is an image vector for organizations that use this concept, through an increase in their notoriety or the promotion of their products and services.

  • Content

The meaningful portion of the documents, conversations, messages, etc. that are produced and used by all aspects of business activity. “Content” refers to the information provided through the medium and the medium on which it is delivered. However, the medium brings little or no value to the end user without the information that makes up this content.

  • Trust

Between users of the system and their right to access and change information within it. To trust, one must be able to believe in others and accept the risk of addiction. This is why trust is never “neutral”. It is fundamental because, without trust, it would be difficult to envisage the very existence of human relationships; from working relationships to friendship or even love. Without trust, we could not even envisage the future and seek to build a project that develops over time.

Read also: Executive Summary is the Art of Presenting Your Project | Practical Guide and Examples

Cash Flow Analysis: Understanding and Managing Your Business’s Financial Health

SCRS

The SCRS approach in business analysis claims that the analysis should flow from the high-level business strategy to the solution, through the current state and the requirements. SCRS stands for:

  • Strategy
  • Current state
  • Requirements
  • Solution

Business Analysis Canvas

The Business Analysis Canvas is a tool that enables business analysts to quickly present a high level view of the activities that will be completed as part of the business analysis work allocation. The Business Analysis Canvas is broken into several sections.

  • Project objective
  • Stakeholder
  • Deliverable
  • Impact to target operating model
  • Communication approach
  • Responsibilities
  • Scheduling
  • Key dates

The Canvas has activities and questions the business analyst can ask the organization to help build out the content.

SMART

SMART goals are a popular goal-setting framework that stands for Specific, Measurable, Achievable, Relevant, and Time-Bound. SMART goals are effective because they provide a clear and concise framework for defining and pursuing objectives.

SMART goals are like a map that helps you reach your destination. They are specific, so you know exactly where you are going. They are measurable, so you can track your progress. They are achievable, so you know you can reach your goal with effort. They are relevant, so they are important to you. And they have a deadline, so you stay focused and motivated.

Here is an example of a SMART goal:

  • Goal: I want to lose 10 pounds in 3 months.
  • Specific: This goal is specific because it clearly defines what you want to achieve (lose 10 pounds) and how long you want to achieve it (in 3 months).
  • Measurable: This goal is measurable because you can track your progress by weighing yourself regularly.
  • Achievable: This goal is achievable because it is realistic and attainable with effort.
  • Relevant: This goal is relevant because it is important to you (maybe you want to lose weight to improve your health or appearance).
  • Time-Bound: This goal has a specific deadline (in 3 months).

By setting SMART goals, you can achieve your desired outcomes more effectively.

Business Process Analysis

As the scope of business analysis is very wide, a business process analysis begins with a mission objective (an external event) and ends with the achievement of the business objective of providing an outcome that generates customer value.

Example of business process analysis:
  • By the beginning and the end of the activity, in the case of complex processes, in order to avoid confusion with the name of a direction (for example: “concept to prototype” instead of product development or “prospect to order” instead of sales).
  • Using a verb, to avoid confusion with the result of the process (for example: “pay invoices”, “process customer orders” and “invoice customers”).
  • For each process we can clarify the boundaries with other processes:
    • describe the objectives and activities.
    • identify the inputs (e.g. materials, finance, labor, information) that will be consumed by the process.
    • identify the outputs (i.e. the products (e.g. material, financial, or intangible services) that will be produced,
    • the organizational entities or actors involved.
    • as well as the internal or external suppliers and customers.

Broadly speaking, business processes analysis can be grouped into three types:

  • Operational processes

Which constitute the core business and create the main flow of value, for example, entering customer orders, opening an account, and manufacturing a component. They focuses on correctly executing the operational tasks of an entity; this is where the staff “does things”.

  • Management processes

the processes that oversee operational processes, including corporate governance , budget oversight, and employee oversight. They ensures that operational processes are carried out appropriately; this is where managers “ensure efficient and effective work processes”.

  • Support processes

Which support core operational processes, for example accounting, recruitment, call centre , technical support and health and safety training. They ensures that the entity operates fully with the necessary legal regulations, guidelines and shareholder expectations; this is where executives make sure the “rules and guidelines for business success” are met.


Method of risk analysis in a company | Examples and steps of the process


Photo credit: 15299 via Pixabay


Ready to get started?

Are you a consultant? How we can help you with Solutions? Please hit the let’s get in touch button to contact us.

Are you seeking appropriate and objective advice? If so, please click the ‘Request for Proposal’ button to get in touch with us and find out how we can assist you today. 

Leave a Reply

Your email address will not be published. Required fields are marked *


The reCAPTCHA verification period has expired. Please reload the page.