At the initial stage of strategic management process company needs to identify its current position and this is called as “situational analysis”. (Refer the Strategic Management Model) There are many tools to perform situational analysis and some of the widely used tools re PEST analysis, Porters 5 forces model, Porters Value chain, Customer profitability anaylysis, leadership analysis, SWOT analysis and so on. In this tutorial we are going to learn about the 4C model of situational analysis introduced by Japanese Scholar Kenichi Ohmae. This model integrates all other model and it is a simple model to understand.
4C model can be visually represented as follows:
Factors of 4C model can be described as follows:
Company level factors are the factors that are internal to the organization which act as strengths and weakness to the organization. Company level factors identify the Strengths and Weaknesses of SWOT analysis (S,W). Typical considerations at the company level factors include leadership of the company, organizational culture, procedures and policies of the organization, skills of the staff, technology that is used production, goodwill of the company, brand/company image, research and development, patents company possess, assets owned by the company and so on. This internal company level factors will act as strength or a weakness to the organization.
Apart from company level factors other 03 factors act as external factor which are derived from the task and the general/macro environment of the organization which results in opportunities and threats to the organization. These factors give rise to opportunities and threats in SWOT analysis (O,T)
Customer refers to the factors that are related to the target market of the company. Typical considerations under this would be size of the target market, marker share owned by the company, customer preference, purchasing power of customers, customer loyalty, repeat purchasing, switching costs, frequency of purchase, values and beliefs of the customer, psychological factors affecting the customer and so on. These factors may act as opportunities or threats to the organization.
Competitors refers to the factors related to other players who are competing for the same market share. To keep up with the competition company needs to know well about its competitors. Typical considerations under this would be market share of competitors, strengths and weaknesses of competitors, future orientation of competitors and the level of impact that they can have on the company. These factors may act as opportunities or threats to the organization.
Climate refers to the macro environment in which the company operates. Typically this includes the PEST (Political, Economic, Socio cultural and technological) factors that affect the organization. PEST analysis would be discussed in detailed in the next article. (Click here to read the article on PEST analysis)
Additionally another C factor has been proposed to make this model the 5C model which is collaborators which includes suppliers and distribution channels.
Note of Credits : This is article is based on a lecture done by Mr. Marlon Gunasekara at APIIT-Sri Lanka on Strategic Management on 04/01/2011.