In the current market reality, activities aimed at improving or maintaining the competitive position of the enterprise play an extremely important role. In management, various types of strategic analysis methods are often used to monitor the dynamic economic situation and draw conclusions. One of them is the critical success factor analysis (KSF). Read our article to find out more about critical success factor analysis.

Critical success factor analysis – table of contents:

  1. What is the analysis of critical success factors (CSF)?
  2. Critical success factors and assessment of the company’s position
  3. Assessing the company’s position using critical success factors (CSF)
  4. What are the benefits of CSF analysis?
  5. Assessing the company’s position using critical success factors (CSF) – examples
  6. Summary

What is the analysis of critical success factors (CSF)?

If you don’t know what critical success factors are, you must take a look at our article: Critical success factors of small and medium-sized enterprises.

Once you have determined which characteristics of your organization contribute to its growth, you can conduct a critical success factor analysis. This involves identifying the characteristics that strengthen the position of your company.

Conducting an accurate CSF analysis requires using one of the following two methods:

  • a two-stage analysis, which includes creating a list of criteria to assess the state of the company, and then a list of the entity’s strengths and weaknesses,
  • creating a list of CSF, as long as it covers the most relevant aspects of the business.

Next, it is necessary to set some reference point to the company being examined – a competing company or a company that has all the CSF. In the first case, the method may not be reliable, as it depends on the chosen entity. The second solution seems more favorable, as it presents a certain ideal model to which we may aspire.

Critical success factors and assessment of the company’s position

The company’s overall strategy is based on the company’s formulated goals and an examination of the internal and external environment. Then the nature of our target market and competitive advantage must be specified. This is the stage we call strategic positioning. Thus, the establishment of the company’s position is not only the final element of creating a strategy, but it can also be identified with selected elements of the competitive potential, such as critical success factors.

Assessing the company’s position using critical success factors (CSF)

Positioning a company in the market is aimed at presenting the benefits that a product or service can provide. How to assess an organization and establish its strategic position among competitors? To do this, you can use the analysis of critical success factors.

  1. Specify the list of CSF

    Determine what sector your company operates in and choose the critical success factors that give you a competitive advantage.

  2. Determine the CSF and assign weights to them

    Once you have determined the critical success factors for a given sector, you can assign weights to them.

  3. Identify the strengths and weaknesses of the organization

    At this stage you get the result in the form of a rating scale, and in addition – an analysis of strengths and weaknesses.

    4. critical success factors

    What are the benefits of CSF analysis?

    The analysis of critical success factors draws attention to aspects that should attract the attention of management. It shows which ones will help achieve a competitive advantage, as well as identify the strengths, weaknesses, opportunities and threats of the company. It can be carried out relatively quickly and it can be combined with other methods of strategic analysis.

    Undoubtedly, it is a useful tool that will work well when making important decisions in terms of strategic management.

    Assessing the company’s position using critical success factors (CSF) – examples

    To illustrate and explain how to use the given method, let’s use the example of company X and competitor company Y. It may be operating in the clothing industry, financial industry, automotive industry, etc. Depending on what type of business you do, particular critical success factors need to be modified.

    1. Specify a list of critical success factors – you should find 6-10 criteria. These can be: price level, qualified staff, brand image, range of services, effectiveness of promotion, quality of customer service, technological level, etc.
    2. Give weights to the selected factors. Ideally, their sum should be rounded to a whole number, e.g. 20. Then, use a Likert scale (1-5) to rate the individual elements:

      3. 1 – the enterprise is weak and performs much worse than the rest of its competitors,

      2 – the enterprise performs worse than its competitors,

      3 – the enterprise is average, and it does not stand out in any way,

      4 – the enterprise performs very well when compared to its competitors

      5 – the enterprise is a pioneer.

      In this way, evaluate company X and your competitor Y. Now you can get a weighted average.

      Table 1. CSF of company X

      critical success factors

      Table 2. CSF of company Y

      critical success factors
    3. Determine the strengths and weaknesses of the organization using the obtained strategic profiles.

    Table 3. Strategic profiles of company X and company Y

    critical success factors

    By marking each value in the table, we obtained strategic profiles of the examined companies. This will let you analyze the market position of your company in relation to the competition, what areas are your strengths (qualified personnel), and what you should still work on (effectiveness of promotion).

    Summary

    In conclusion, using the analysis of critical success factors is an interesting alternative in assessing the market position of a given business. It provides a lot of useful information that can contribute to correcting past mistakes and making positive changes in your business. 

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    Author: Andy Nichols

    A problem solver with 5 different degrees and endless reserves of motivation. This makes him a perfect Business Owner & Manager. When searching for employees and partners, openness and curiosity of the world are qualities he values the most.

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