Top 10 Business Analysis Tools and Techniques

Analyzing business and making the most relevant plan to improve the process and hence improve business performance is key to success today. It is vital that appropriate tools and technique is used for any problem. Below list of top 10 business analysis tools and techniques can give you  insight into your business analyzing skills:

 

1. ‘SWOT’ Analysis

This is the most popular name used for analyzing the status of the business. In SWOT, S stands for strength, W stands for weakness, O stands for opportunity and T stands for threat. As names suggest under business analysis tool and techniques this tool provides good things of the business, scope of improvements, opportunity against competitors, and risks for the business. This is key tool for analyzing the present status and scope for future of the business.

  1. Strengths – This analysis figures out all advantages that the company has regarding products or services, price, location, the company’s skilled manpower, capital resources, infrastructure, organization structure, and so on.
  2. Weaknesses – On the contrary to Strength this analysis figures out all disadvantages that the company has regarding products or service, price, location, company’s skilled manpower, capital resources, infrastructure, organization structure, and so on.
  3. Opportunities – This step focuses on identifying the outside environment to figure out the favorable element as well as deterrence to the development of the company.
  4. Threats – This analysis alarms the effects from competitors, demographic change, change in consumer behavior, rules and regulations from local governments, economic situation, and so on.

Having to know these four areas strategic planning for the expansion of the business or improvement in the current business performance becomes effective.

 

2. ‘MOST’ Analysis

MOST analysis is a powerful business analysis technique using which the business analysts analyze what an organization does and plans to achieve the goal and what it should do to maintain strategic alignment. Hence, MOST analysis is a clear way to understand an organization on its ability and purpose.

The term MOST stands for its four elements – M-Mission, O-Objective, S-Strategy and T-Tactics

  1. Mission – Every business starts or runs with a mission. It is the main factor for an organization that defines its purpose and the goals it wants to achieve in the future. The clear mission of an organization provides the right direction to plan its objectives, strategy, and tactics to achieve the goal.
  2. Objectives –Organizational objectives are short-term and medium-term goals that an organization seeks to accomplish. Objectives play a vital role in achieving the mission of the organization.
  3. Strategy – These are the steps or actions that an organization takes to achieve the objectives and finally to accomplish the mission. A strategy is a group of tactics.
  4. Tactics – Though tactics sound very much similar to the strategy in reality these are the discrete and straightforward methods that an organization follows to carry out the strategies.

 

3. Six Sigma

Six Sigma tools are defined as the problem-solving tools used to support Six Sigma and other process improvement efforts.

The Six Sigma expert uses qualitative and quantitative techniques to drive process improvement. Below Six Sigma tools are commonly used to analyze and improve systems:

  1. DMAIC – The define, measure, analyze, improve, and control process is a data-driven quality strategy used to improve processes. It is an integral part of a Six Sigma initiative, but can also be implemented as a quality or process improvement techniques such as lean.
  1. 5S – 5S stands for the 5 steps of this methodology: Sort, Set in Order, Shine, Standardize and Sustain. It is designed to organize a workplace that is clean, uncluttered, safe, and well organized to help reduce waste and optimize productivity. It’s designed to help build a quality work environment, both physically and mentally.
  2. Seven wastes – A core principle of lean is to reduce and eliminate wastes in the organization. The seven wastes are overproduction ahead of demand; waiting for the next process, worker, material, or equipment; unnecessary transport of materials; over-processing of parts due to poor tool and product design; inventories more than the absolute minimum; unnecessary movement by employees during the course of their work; and production of defective parts.
  3. Value stream mapping – Value stream mapping (VSM) is a pencil and paper tool used in two stages. First, follow a product’s production path from beginning to end and draw a visual representation of every process in the material and information flows. Second, draw a future state map of how value should flow.
  4. Flow – The Flow is the progressive achievement of tasks along the value stream so a product proceeds from design to launch, order to delivery, and raw to finished materials in the hands of the customer with no stoppages, scrap, or backflows. 

 

4. Fishbone Diagram 

In the cause and effect diagram, the “herringbone” diagram is a visual presentation technique for analyzing the root cause of a problem. Since the visual diagram looks like “fishbones,” it is called a fishbone diagram. This is the Japanese method and also known as the Ishikawa method of root cause analysis.

It is a more structured approach than some other tools available to generate ideas about the causes of a problem. The problem or effect shows in the head or mouth of the fish. Possible contributing causes are listed in the smaller “bones” under various categories of causes.

The elements considered to analyze the root cause are man, machine, environment, method, material, and measurements. The problem is in the fish’s mouth, while six elements are fish bones where man, machine, and environment are on one side and method, material and measurement are on the other side.

Also, it can be divided into sub-causes in each category/item.

Once the diagram is completed with all possible causes of the problem, the results can be analyzed. The results may need further testing and analysis.

        

5. 5 Why Technique

The 5-Why method is simply asking the question “Why” enough times until you get past all the symptoms of a problem and down to the root cause. The 5-Why method is often used during the Analyze phase of the DMAIC process and the Plan phase of PDCA activities.

It is often used in coordination with other analysis tools such as the Cause and Effect Diagram but can also be used as a standalone tool. 5 Why is most effective when the answers come from people who have hands-on experience of the process being examined. By repeating the question “Why” you can drive down to the root cause of the problem.

It is one of the best business analysis techniques used today in both the manufacturing and service industries.

 

6. Regression Analysis

A statistical tool for understanding the relationship between output and input variables, and making predictions based on the relationship. Regression analysis is used to describe the relationships between a set of independent variables and the dependent variable.

Regression analysis produces a regression equation where the coefficients represent the relationship between each independent variable and the dependent variable. You can also use the equation to make predictions. In short, this technique of business analysis gives comparative study of resources, productivity and sale.

For Example – Suppose a sofa company wants to expand its manufacturing unit to a newer location. Before moving forward; the company wants to analyze its revenue generation model and the various factors that might impact it. Hence, the company conducts an online survey with a specific questionnaire.

After using regression analysis, it becomes easier for the company to analyze the survey results and understand the relationship between different variables like electricity and revenue – here revenue is the dependent variable.

In addition to that, understanding the relationship between different independent variables like pricing, number of workers, and logistics with the revenue helps the company to estimate an impact of varied factors on sales and profits of the company.

 

7. Critical Path Analysis

The critical path method (CPM) is a project modeling technique that’s used by project managers to find important deadlines and deliver a project on time. In a project, the critical path is the longest distance between the start and the finish, including all the tasks and their duration. Once a critical path is determined, you’ll have a clear picture of the project’s actual schedule.

The technique for figuring out the critical path in your project can be boiled down to five essential steps.

 

  • Break Down the Project: List all the tasks needed to complete the project. You can use a work breakdown structure, which is a hierarchical decomposition of the project, which includes every deliverable.
  • Estimate Task Duration: Now comes the tricky part, you want to know how long each task will take. If possible, get advice from others who have, so you can have the most accurate estimation of the duration of the various tasks possible.
  • Determine Task Dependencies: If there are any task dependencies, you want to note them, too. A task dependency is when one task cannot start until another one has been finished. It’s a key element of good task management.
  • Add Milestones: What are the milestones in your project? Having milestones helps to keep you on track, so you can make sure you’re meeting your baseline schedule.

 

8. Trello

Trello describes its product as a collaboration tool that organizes your projects into boards. In one glance, Trello tells you what’s being worked on, who’s working on what, and where something is in a process. It provides secure collaboration with a team and allows to view team activity across boards.

Trello draws on the principles of Kanban, a method of visualizing workflows to provide an overview of a project from start to finish.  This is done using Trello’s boards, lists, and cards. 

 

9. Catwoe

CATWOE Analysis is a method of problem-solving that asks you to look at an issue from six unique perspectives. This in-depth approach requires that you think about any given problem in a variety of ways, and you will find that you have a better understanding and appreciation for the issue after you do so. The six elements that are to be considered in a CATWOE analysis are as follows:

  • Customers
  • Actors
  • Transformation Process
  • World View
  • Owner
  • Environmental Constraints

 

10. MoSCoW

MoSCoW as a prioritization method is used to decide which requirements to complete first, which must come later and which to exclude. The MoSCoW method can help. MoSCoW stands for must, should, could, and would:

  • M – Must have this requirement to meet the business needs
  • S – Should have this requirement if possible, but project success does not rely on it
  • C – Could have this requirement if it does not affect anything else on the project
  • W – Would like to have this requirement later, but delivery won’t be this time

The o’s in MoSCoW are added to make the acronym pronounceable and are often in lowercase to show they don’t stand for anything. Unlike a numbering system for setting priorities, the words mean something and make it easier to discuss what’s important. The “Must” requirements need to provide a coherent solution and alone lead to project success.

The “Must” requirements are non-negotiable. Failure to deliver even one of them will likely mean the project has failed. The project team should aim to deliver as many of the should requirements as possible. Could and would requirements are nice to have and do not affect the overall success of the project. Could requirements be the first to go if the project timeline or budget comes under pressure?

Hope this article is helpful to you in making use of the right tool for your business analysis. Please do write your feedback and suggestion in the below comment section.

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