Using the QUEST analysis to study changes in the market

Market conditions are highly volatile. An effective management strategy should be consistent with the emerging challenges to ensure profits for the company. The better you are able to adapt, the better competitive position you will get. The way to do this is to study the market using the QUEST analysis, which we will explain in the following article. Read on.

QUEST analysis – table of contents:

1. What is the QUEST analysis?
2. How to use the interaction matrix?
3. Environmental scanning
4. The elements of environmental scanning
5. How to conduct the QUEST analysis?
6. The benefits of the QUEST analysis
7. Summary

What is the QUEST analysis?

The name of the QUEST analysis is actually an acronym for “quick environmental scanning technique”. It assumes a quick and easy study of the market and the internal situation of the company, to solve the most relevant issues in the shortest possible time. It helps to distinguish internal and external variables and estimate their impact on the operation of the company.

Just like the Delphi method we have already described, it is used for determining the direction of long-term development based on past data and changes in the environment. Managers and decision-makers in the company take on the role of experts to provide their insights and identify problems to be solved. One of the tools that can be used in the analysis is the interaction matrix, which allows you to explore the impact of particular events on the risk of others.

How to use the interaction matrix?

The process of analysis involves identifying factors of the external and internal environment that affect the operation of the company and the opportunities and threats that arise from them. Simply put, we need to know what to look for and where to look. Therefore, the relevance of a given factor will depend on the following questions:

• Does the factor affect the operation of the company?
• If so – to what extent?

To assess the degree of this impact, you can use the interaction matrix. First, “high-priority” and “critical” factors should be carefully analyzed and then, a proper strategy should be adjusted based on them. Other factors will only need to be observed.

Environmental scanning

Environmental scanning allows you to detect weaknesses, opportunities, trends and threats, which is useful when creating or improving the company’s strategy. It is a process that monitors elements of the internal and external environment – the technique lets you consider all relevant aspects of the business. The QUEST analysis is one of several variants of environmental scanning – another example would be the popular SWOT analysis or PEST analysis, which we have discussed before.

The elements of environmental scanning

The business environment can be divided into two types – external and internal:

External environmental factors

These are elements that go beyond the enterprise. At the micro level, these are consumers, suppliers, competitors, industry specifics, while at the macro level, these are demographic characteristics, the economic and legal-political situation, culture, technology, etc.Internal environmental factors

These are factors to look for inside the company. They are, among others, a mission, values and goals, organizational structure, financial capital, as well as human and technological resources.In addition, it is worth considering determinants that may be dual in nature:

• Trends – these are some tendencies in the market that give rise to certain events. They can be both positive and negative.
• Events – they are important to the overall condition of the company, and can occur inside and outside the organization.
• Problems – as a result of events and prevailing trends, troublesome issues may arise that need to be addressed. Sometimes, identifying them can be difficult and requires a thorough analysis.
• Expectations – the company has common interests with certain groups. Therefore, stakeholders have certain claims that must be met.

How to conduct the QUEST analysis?

Prepare for the study

The first steps you should take are the following:

• Observing trends and events associated with them – this will let you outline the current market situation,
• Identifying problems and challenges,
• Choosing research participants – managers, strategists (about 12-15 people).

Analyze the business environment

Information is collected on the basis of management discussions, conducted surveys and interviews among consumers, suppliers, staff, academic publications and articles on the subject. It’s worth looking at what your competitors are doing and compare their strategies to yours.

Create a report

The collected information should be summarized in a report. It should include a description of the current strategy and 3-5 scenarios for the company’s development, taking into account the issues raised during the discussion.

Draw conclusions

Then, the strategists are to present the report to the participants and analyze the possible solutions together. The main purpose of the discussion is to highlight issues that require corrective action. Next, executives may decide to develop a new management strategy.

The benefits of the QUEST analysis

When running your own business, market research plays a significant role that shouldn’t be underestimated. Undoubtedly, it requires a lot of effort and time, yet with the acquired knowledge you can get a competitive advantage and avoid financial losses. What are the benefits of the QUEST analysis?

• You will learn about the strengths, weaknesses, opportunities and threats associated with running your business, which will ultimately help you make strategic decisions.
• You can take inspiration from what your business competitors are doing and shape your strategies based on that.
• By gathering feedback from consumers, you can better understand their needs, expectations, and, consequently, provide them with the highest quality service.
• The analysis of internal environmental factors will reveal possible problems with the allocation of your resources.

Summary

The QUEST analysis is one of the alternatives worth using in the strategic management process. A complete picture of the company’s situation and its resources is necessary to tap its potential, and the presented technique can significantly facilitate this task.

Read also: The Delphi technique and its use in strategic management.

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