In business and economics, gap analysis is a tool that helps a company to compare its actual performance with its

potential performance. At its core are two questions: "Where are we?" and "Where do we want to be?" If a company or organization is not making the best use of its current resources or is forgoing investment in capital or technology, then it may be producing or performing at a level below its potential. This concept is similar to the base case of being below one's production possibilities frontier. The goal of gap analysis is to identify the gap between the optimized allocation and integration of the inputs, and the current level of allocation. This helps provide the company with insight into areas which could be improved. The gap analysis process involves determining, documenting and approving the variance between business requirements and current capabilities. Gap analysis naturally flows from benchmarking and other assessments. Once the general expectation of performance in the industry is understood, it is possible to compare that expectation with the company's current level of performance. This comparison becomes the gap analysis. Such analysis can be performed at the strategic or operational level of an organization. Gap analysis is a formal study of what a business is doing currently and where it wants to go in the future. It can be conducted, in different perspectives, as follows: 1. 2. 3. 4. Organization (e.g., human resources) Business direction Business processes Information technology

Gap analysis and new products
The need for new products or additions to existing lines may have emerged from portfolio analyses, in particular from the use of the Boston Consulting Group Growth-share matrix, or the need will have emerged from the regular process of following trends in the requirements of consumers. At some point a gap will have emerged between what the existing products offer the consumer and what the consumer demands. That gap has to be filled if the organization is to survive and grow. To identify a gap in the market, the technique of gap analysis can be used. Thus an examination of what profits are forecasted for the organization as a whole compared with where the organization (in particular its shareholders) 'wants' those profits to be represents what is called the 'planning gap': this shows what is needed of new activities in general and of new products in particular.

What is Gap Analysis?

you modify the mix so that you get to where you want to be. So effectively. That is to say you change price. Firstly decide whether you view from a strategic or an operational/tactical perspective. The marketing mix is ideal for this. The diagram below uses Ansoff's matrix to bridge the gap using strategies: Strategic Gap Analysis You can close the gap by using tactical approaches. If you are writing strategy. or promotion to move from where you are today (or in fact any or all of the elements of the marketing mix).Your next step is to close the gap. you will go on to write tactics . .see the lesson on marketing plans.

competencies. This would include an overview of every aspect of the business that contributes to the Company X's success. This analysis includes a description of the company's current situation. accounting. Company X would then study what it needs to do to arrive at this goal.' Also called need-gap analysis. Company X will become the top nationwide doll distributor within three years. . management. Company X would then outline the advantages of achieving its goal of becoming the top distributor in the country. The difference between these two items is the gap. In this case.and that's gap analysis Definition Technique for determining the steps to be taken in moving from a current state to a desired future-state.Tactical Gap Analysis This is how you close the gap by deciding upon strategies and tactics . For example. and what the company wants to achieve in the future. Business gap analysis can be used to help achieve certain goals. Company X is the top doll distributor in New York state. information technology. and needs assessment. and other departments. It begins with (1) listing of characteristic factors (such as attributes. performance levels) of the present situation ("what is"). Company X wants to be the top doll distributor in all of the United States. that includes information on how to become the top nationwide doll distributor. including marketing. needs analysis. The analysis includes specific action steps the company must complete to close this gap and achieve its goals. The outcome of Company X's analysis would be a complete plan. and then (3) highlights the 'gaps' that exist and need to be 'filled. Goals should be specific and measurable. Company X completes an analysis illustrating how it got to be the top New York doll distributor. (2) cross-lists factors required to achieve the future objectives ("what should be"). or gap analysis document.

plans outlined in the analysis. This can help management and staff to understand. Tracking of each step is required to ensure that the plan remains on schedule and within budget. An appendix of documents supporting any claims or statistics in the final document may also be included. and be enthusiastic about. as well as interviews with staff members in various departments. Gap 1 y Inadequate market research orientation y Lack of upward communication y Insufficient relationship focus Gap 2 y Absence of customer driven standards y Inadequate service leadership y Poor service design Gap 3 y Deficiencies of human resource policies y Failure to match supply and demand y Customers not fulfilling roles Gap 4 y Ineffective management of customer . The next step would be for management to approve the action plan and budget. If successful. Gap analysis can help businesses remain competitive and help measure the potential profitability of a goal. This document usually includes an introduction that states the purpose of the analysis and the methods used to complete the study. For example.The analysis can include a review of business documents. and the detailed plan to achieve these goals. a gap analysis report is created. and a budget that outlines how much the plan will cost. If approved. a company that wants to lower overhead costs could complete a financial gap analysis. a schedule to complete each step. or those for a specific department or area. files and financial information. the plan is put into action. Businesses can use gap analysis to achieve company-wide goals. The introduction is typically followed by a summary of the current situation. the company will achieve the goal stated in the gap analysis report. Or a firm that wants to expand its product distribution may create a marketing analysis. This plan would include detailed action steps for each area of the business. the goals the company wants to achieve. Once all information has been gathered.

expectations y Overpromising y Inadequate horizontal communications .

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