Introduction
Business analysis of a company is the foundation of effective management and strategic decision-making. Its purpose is to identify areas for improvement, optimize processes and, as a result, increase the company's efficiency and profitability. In today's dynamic economic environment, the ability to conduct a comprehensive business analysis is becoming a key competency for managers and business owners.
Business analysis of a company as well as a specific project can be carried out regardless of the industry or stage of development of a particular company. It is used primarily by larger companies that know its value and are able to afford it. However, it is worth knowing what it is about and learning its advantages, also in the case of a smaller business project or a company that is only at the conceptual or early development stage.
In this article, we will provide a detailed discussion of the most important aspects of a business analysis and practical tips for carrying it out. Importantly, the exact shape as well as the purpose of a business analysis are always tailored individually to the needs of those commissioning the analysis. These goals may vary, and this affects the final scope of the analysis as well as the tools used to conduct it.
What is business analysis?
Business analysis is a systematic process of examining and evaluating all aspects of a company's operations. It involves the collection, processing and interpretation of data to identify areas for improvement and opportunities for growth. It is a tool to support decision-making and strategic planning. Sometimes a business analysis is simply to answer the question "does this business project make economic sense?". In this case, such a business analysis is often compared to a so-called feasibility study.
Business analysis can cover various areas, such as:
- Finance: Analysis of revenues, costs, profitability, liquidity, performance indicators.
- Marketing: Market research, competitive analysis, customer segmentation, marketing strategies.
- Sales: Analysis of distribution channels, sales effectiveness, customer satisfaction.
- Operations: Analysis of production processes, logistics, inventory management.
- Human Resources: Analysis of employment structure, employee competence, incentive systems.
Key areas of business analysis
1. financial analysis
Liquidity ratios
- Current ratio;
- Quick liquidity ratio;
- Cash ratio.
The correct interpretation of these indicators makes it possible to assess a company's ability to pay its short-term obligations.
Profitability indicators
- Return on sales (ROS);
- Return on assets (ROA);
- Return on equity (ROE).
These indicators show the efficiency of a company's resource management and ability to generate profit.
Debt ratios
- Overall debt ratio;
- Debt-to-equity ratio;
- Interest coverage ratio.
2 Market analysis
Competitor analysis
- Identification of major competitors;
- Analysis of their strengths and weaknesses;
- A study of competitive strategies;
- Monitoring market share.
Customer analysis
- Market segmentation;
- Research customer needs and preferences;
- Analysis of buying behavior;
- Customer satisfaction survey.
Analysis of market trends
- Identification of major industry trends;
- Analysis of technological change;
- Exploring changes in consumer behavior;
- Forecasting market development.
3. operational analysis
Process efficiency
- Business Process Analysis;
- Identification of bottlenecks;
- Workflow optimization;
- Employee Performance Survey.
Resource management
- Analysis of the use of material resources;
- Evaluating the effectiveness of inventory management;
- Capacity utilization study;
- Analysis of warehouse management.
4. human resources analysis
Employment structure
- Analysis of employee qualifications;
- Staff turnover study;
- Evaluation of training effectiveness;
- Analysis of the incentive system.
Organizational culture
- Employee satisfaction survey;
- Analysis of internal communications;
- Leadership Assessment;
- Employee engagement survey.
Popular tools used in business analysis
1. SWOT analysis
- Strengths (Strengths);
- Weaknesses;
- Opportunities (Opportunities);
- Threats (Threats).
2 PEST analysis
- Political factors;
- Economic factors;
- Social factors;
- Technology factors.
3 Porter's 5 forces model
- Bargaining power of suppliers;
- Bargaining power of buyers;
- Threat of new entries;
- The threat of substitutes;
- Competition in the sector.
The process of conducting a business analysis
The business analysis process can be divided into several stages:
- Defining the purpose of the analysis: At the outset, it is important to clearly define what you want to achieve with the analysis.
- Data collection: In this stage, we collect data from various sources, such as company records, information systems, market research, surveys, interviews.
- Data analysis: We subject the collected data to analysis, using appropriate tools and techniques, such as SWOT analysis, financial analysis, statistical analysis.
- Interpretation of results: Based on the analysis of the data, we formulate conclusions and recommendations.
- Implementing change: The final stage is to implement the recommendations and monitor their effects.
1. planning
- Defining the objectives of the analysis;
- Identification of data sources;
- Choice of methods and tools;
- Setting a schedule.
2. data collection
- Internal data collection;
- External data acquisition;
- Verifying the reliability of sources;
- Systematization of the collected information.
3. data analysis
- Data processing;
- Identifying patterns and trends;
- Interpretation of results;
- Formulation of conclusions.
4 Reporting
- Report preparation;
- Presentation of results;
- Formulating recommendations;
- Corrective Action Planning.
Challenges in business analysis
1. data quality
- Incomplete data;
- Undated information;
- Data errors;
- Difficulty in accessing data.
2 Interpretation of results
- Subjectivity in evaluation;
- The complexity of the phenomena analyzed;
- Environmental variability;
- Multiple factors affecting performance.
The importance of business analysis in business management
1. decision support
- Providing objective information;
- Reducing business risk;
- Identification of alternatives;
- Assessing the potential impact of decisions.
2. strategic planning
- Determining development directions;
- Formulation of strategic objectives;
- Resource allocation;
- Monitoring of strategy implementation;
- Increased profitability and productivity.
Summary
Business analysis is an essential tool in modern business management. It allows a systematic evaluation of all aspects of the company's operations, identifying areas for improvement and opportunities for development. The key to success is to regularly conduct comprehensive analyses and skillfully use their results in the management process.
It is worth remembering that business analysis is not a one-time activity, but a continuous process that should be systematically implemented and adapted to changing market conditions. Only such an approach will allow the effective use of this tool in building a competitive advantage for the company.
If you do not have experience in creating professional business analysis, it is worth considering the support of specialists. Especially before making strategic decisions and committing significant capital to a project.
