Chapter - 6

Business Analysis Techniques

Business Analysis Techniques
● Business analysis techniques are methodologies used to understand,
assess, and improve business operations.
● Common techniques include SWOT analysis, PESTLE analysis, Business
Process Modeling (BPM), ERRC, Six Thinking Hats, The 5 Whys, MOST,
MOSCOW Analysis, and CATWOE Technique.
● These techniques help in identifying problems, understanding
requirements, and developing effective solutions.
SWOT Analysis
SWOT Analysis
● A SWOT analysis is a strategic planning tool used to assess the
Strengths, Weaknesses, Opportunities, and Threats (SWOT) of a
business, project, or even a personal situation.
● It helps in understanding the current state and developing strategies
for improvement or success.
● The core of the technique lies in identifying and analyzing these four
key elements through a structured approach.
SWOT Analysis
Strengths Weaknesses

❑ Things your company does well ❑ Things your company lacks

❑ Qualities that separate you from your competitors ❑ Things your competitors do better than you
❑ Internal resources such as skilled, knowledgeable staff ❑ Resource limitations
❑ Tangible assets such as intellectual property, capital, ❑ Unclear unique selling proposition
proprietary technologies, etc.

Opportunities Threats

❑ Underserved markets for specific products ❑ Emerging competitors

❑ Few competitors in your area ❑ Changing regulatory environment
❑ Emerging need for your products or services ❑ Negative press/media coverage
❑ Press/media coverage of your company ❑ Changing customer attitudes toward your company
Internal Analysis (Strengths and Weaknesses)
● Strengths: Identify the positive attributes, resources, and capabilities that
give you a competitive advantage.
● Examples include a strong brand reputation, skilled workforce, efficient
processes, or a unique product offering.

● Weaknesses: Identify the negative aspects or limitations that hinder

performance.
● Examples include lack of resources, outdated technology, poor customer
service, or high employee turnover.
External Analysis (Opportunities and Threats)
● Opportunities: Identify potential positive trends or favorable situations
that can be exploited.
● Examples include emerging markets, changing customer preferences, new
technologies, or favorable government regulations.

● Threats: Identify potential negative factors or challenges that could

hinder success.
● Examples include increased competition, economic downturns, changing
regulations, or technological disruptions.
SWOT Analysis (Example)
Strengths Weaknesses

❑ Unique and trendy clothing designs ❑ No physical store for walk-in customers
❑ Strong social media presence (Instagram, TikTok) ❑ Limited budget for marketing and advertising
❑ Loyal customer base with repeat purchases ❑ Dependent on third-party delivery services
❑ Low overhead costs due to online-only model ❑ Small team with limited manpower

Opportunities Threats

❑ Increasing demand for affordable fashion ❑ High competition from big brands (e.g., H&M, Zara)
❑ Growing trend of online shopping ❑ Rising shipping costs
❑ Opportunity to collaborate with influencers ❑ Negative customer reviews spreading online quickly
❑ Expansion to international markets ❑ New government regulations on e-commerce
Case Study: The Artisan Bakery
The Artisan Bakery is a small, family-owned business specializing in high-quality,
handcrafted sourdough bread and pastries. They have a small but extremely
loyal customer base who value their unique 100-year-old sourdough starter and
slow-fermentation process.
However, their baking equipment is old and frequently breaks down, leading to
production delays. Recently, a large, national chain supermarket, "FreshFoods,"
opened a block away, offering cheap, mass-produced bread. At the same time,
the local city council announced a new "Buy Local" initiative offering grants and
free marketing support to small businesses.

Identify the four factors (Strengths, Weaknesses, Opportunities and Threats) of

SWOT analysis of this business.
PESTLE Analysis
PESTLE Analysis
● A PESTLE analysis is a strategic tool used to assess the macro-
environmental factors that can impact an organization or project.
● It examines six key areas: Political, Economic, Social, Technological,
Legal, and Environmental.
● By understanding these external factors, businesses can identify
potential opportunities and threats, make informed decisions, and
develop effective strategies.
PESTLE Analysis Framework
● Political: This section explores government policies, political stability,
trade restrictions, and other political factors that could affect the
organization.
● Economic: This involves analyzing economic growth, interest rates,
inflation, exchange rates, and other economic indicators that can
impact business performance.
● Social: This examines cultural norms, demographics, lifestyle trends,
consumer attitudes, and other social factors that can influence
consumer behavior and market demand.
PESTLE Analysis Framework
● Technological: This focuses on technological advancements, research
and development, automation, and other technological trends that
could affect the organization's products, services, and operations.
● Legal: This involves analyzing relevant laws and regulations, such as
employment law, consumer protection laws, and environmental
regulations, that can impact business practices.
● Environmental: This explores ecological factors, climate change,
sustainability concerns, and other environmental issues that can affect
the organization's operations and its impact on the environment.
PESTLE Analysis Example: Cinema Industry
● Political: Censorship laws, government regulations on public venues,
cultural policies.
● Economic: Affected by disposable income, competition from streaming,
ticket and concession pricing.
● Social: Shift toward home entertainment, demand for diverse content,
social trends influence genres.
● Technological: Advancements like IMAX/4DX, rise of streaming platforms,
mobile booking systems.
● Legal: Copyright laws, distribution rights, labor regulations, safety
compliance.
● Environmental: Energy consumption, waste from concessions, movement
toward green cinemas.
Case Study: AeroEat
AeroEat is a new startup aiming to launch an autonomous drone-based food delivery service in a
major metropolitan area and requires a thorough macro-environmental assessment to secure
long-term funding. The regulatory landscape presents mixed signals: while the Federal Aviation
Authority (FAA) has proposed a national rule restricting drone flight over private property
unless specific owner permission is secured, State legislators are independently pushing for
"drone highways" in public airspace above major roads. Economically, a recent regional increase
in the minimum wage for all service sector employees is driving up labor costs for traditional
delivery competitors, potentially giving AeroEat a cost advantage.
Societal reception, however, is complicated; although there is a growing consumer trend toward
speed and instant gratification in food service, many residents have expressed privacy concerns
and worry about excessive noise pollution from drone traffic over their homes. Technologically,
the cost of specialized drone battery technology continues to drop rapidly, increasing the
feasibility of large-scale operations, though AeroEat's competitors are also investing heavily in
similar proprietary routing AI. Finally, local governments are prioritizing "green logistics"
initiatives and offering tax incentives for companies that can demonstrate a measurable
reduction in urban carbon emissions compared to traditional vehicle fleets, aligning well with an
electric drone fleet.
Student Task: PESTLE Analysis
Using the information above, identify the most relevant data point for EACH of the six
PESTLE categories. Then, classify each factor as either a major Opportunity (O) or a
significant Threat (T) for AeroEat.

PESTLE Factor Relevant Finding from Scenario Classification (O or T)

Political
Economic
Social
Technological
Legal
Environmental
 ERRC Framework
A tool from the Blue Ocean Strategy
Red and Blue Ocean Strategy
The terms "Blue Ocean" and "Red Ocean" are metaphors used to describe
different types of market environments, and they help explain business
strategies more vividly.
The “red ocean” represents businesses in competitive and price-driven
markets.
The “blue ocean” emphasizes the creation of new, uncontested market spaces.
Red Ocean vs Blue Ocean
Feature Red Ocean Blue Ocean
Market Space Existing, crowded New, uncontested
Competition Very high Irrelevant or non-existent
Strategy Beat rivals Create new value
New or untapped
Focus Existing customers
customers
Break the trade-off (have
Cost-Value Trade-Off Must choose one
both)
Growth Potential Limited High
ERRC Framework
ERRC stands for:
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It helps businesses identify opportunities to break away from competition by
simultaneously focusing on eliminating and reducing certain industry factors,
while also raising and creating others, ultimately leading to a new value curve
and a "blue ocean" of uncontested market space.
ERRC Framework
❑ Eliminate: This step involves identifying factors that the industry takes for
granted but that don't contribute significantly to customer value. Eliminating
these can free up resources and potentially lower costs.
❑ Example: In the software industry, some companies are eliminating complex
installation processes and focusing on cloud-based solutions, making their
software easier to access and use.
❑ Reduce: This focuses on identifying factors where the industry's standard is
too high, leading to unnecessary costs or complexity. Reducing these factors
can create cost advantages.
❑ Example: In the hotel industry, some hotels are reducing the number of
amenities offered (like spas or concierge services) to focus on providing
comfortable and affordable rooms.
ERRC Framework
❑ Raise: This involves identifying factors where the industry's standard is too
low, potentially creating opportunities for differentiation and enhanced
customer satisfaction. Raising these can lead to increased value for
customers.
❑ Example: In the smartphone industry, companies are raising the quality of
their cameras and processing power to offer a better user experience.
❑ Create: This crucial step involves introducing entirely new factors or value
propositions that the industry has never offered before. This can lead to
significant differentiation and attract new customers.
❑ Example: In the music industry, streaming services like Spotify and Apple
Music created a new way for people to access and enjoy music, eliminating
the need for physical CDs or downloads.
ERRC Grid Example: Budget Airline Industry
Eliminate Reduce

- Free in-flight meals and drinks - First/business - Airport lounge services - Ticket flexibility -
class seating Baggage allowance

Raise Create

- On-time performance - Aircraft usage efficiency - Ultra-low fares - Online self-check-in - Paid add-
- Number of direct routes ons (meals, seats, luggage)
ERRC Explained with Questions:

Element Key Question Purpose

What factors that the industry takes for granted Remove costly or unnecessary
Eliminate
should be eliminated? practices
What factors should be reduced well below the Cut down features that are over-
Reduce
industry standard? designed or over-delivered
What factors should be raised well above the industry Improve aspects where customer
Raise
standard? value can be increased
What factors should be created that the industry has Innovate by adding new elements
Create
never offered? to attract customers
Six Thinking Hats Techniques
Six Thinking Hat Techniques
❑ The Six Thinking Hats technique, developed by Edward de Bono, is a
method for exploring issues and making decisions from different
perspectives.
❑ It uses six "hats" or modes of thinking to guide individuals or groups
through a structured approach, fostering creativity, critical analysis, and
better decision-making.
Six Thinking Hat Techniques
Six Thinking Hat Techniques
❑ Blue Hat:
Organization and control. This hat focuses on managing the thinking
process, setting the agenda, and summarizing conclusions.
❑ White Hat:
Facts and information. This hat encourages the gathering and presentation
of objective data and neutral information.
❑ Red Hat:
Feelings and intuition. This hat allows for the expression of emotions, gut
feelings, and subjective reactions without needing to justify them.
Six Thinking Hat Techniques
❏ Black Hat:
Caution and critical thinking. This hat focuses on identifying potential
problems, risks, and weaknesses in an idea or plan.
❏ Yellow Hat:
Benefits and optimism. This hat encourages positive thinking, identifying
the good points, and exploring the potential benefits of an idea.
❏ Green Hat:
Creativity and new ideas. This hat promotes brainstorming, exploring
alternatives, and generating new possibilities.
 Six Thinking Hat Example: Launching an Organic Juice Product
Hat Focus Thoughts/Questions
Market for health drinks is growing. Competitors already
White Hat
What do we know? offer similar products. Production cost is 20% higher than
(Facts & Data)
regular juice
Excited about promoting a healthy lifestyle. Concerned
Red Hat
What do we feel? about customer reaction to higher price. Team feels
(Feelings & Intuition)
strongly connected to eco-values
Higher cost may deter customers. Organic ingredient
Black Hat
What are the downsides? supply may be inconsistent. Strong competition could limit
(Caution & Risks)
market share
Yellow Hat Promotes health and sustainability. Builds a positive brand
What's good about it?
(Benefits & Value) image. Taps into a loyal niche market
Green Hat Partner with local organic farms. Offer a subscription
What are new ideas?
(Creativity & Alternatives) model. Use eco-friendly packaging and branding
Blue Hat Conduct a market survey. Develop a small test batch.
What's the next step?
(Process & Control) Create a marketing and launch timeline.
The “5 Whys” Technique
The “5 Whys” Techniques
❏ The "5 Whys" technique is a
simple yet powerful method for
exploring the root cause of a
problem by repeatedly asking
"why" until the fundamental issue
is identified.
❏ It helps move beyond surface-level
symptoms to uncover the
underlying causes that need to be
addressed for effective problem-
solving.
➔ How it works:
◆ State the problem: Begin with a clear and concise description of the problem
you're trying to solve.
◆ Ask "Why?": Ask "Why did this happen?" or "What caused this problem?".
◆ Continue asking "Why?": For each answer, ask "Why?" again, continuing this
process until you reach a root cause that, when addressed, will prevent the
problem from recurring.
➔ Example:
◆ If a machine malfunctions, you might ask:
◆ Why did the machine malfunction? (Answer: The motor overheated)
◆ Why did the motor overheat? (Answer: There wasn't enough lubrication)
◆ Why wasn't there enough lubrication? (Answer: The lubrication pump failed)
◆ Why did the pump fail? (Answer: The pump was old and worn out)
◆ Why was the pump not replaced? (Answer: There was no routine maintenance
schedule for the pump)
MOST Techniques
MOST Technique MOST stands for:
⮚ Mission: The organization's
In business analysis, MOST stands overarching purpose or reason for
for Mission, Objectives, Strategies, existence.
and Tactics. ⮚ Objectives: Specific, measurable,
It is a strategic analysis technique achievable, relevant, and time-bound
used to understand and align an (SMART) goals that help achieve the
organization's goals, from the high- mission.
level mission down to the specific ⮚ Strategies: High-level plans or
actions. approaches to achieve the objectives.
⮚ Tactics: Specific actions or steps taken
to implement the strategies.
MOST Technique: Example
Let's consider an online education company called Edu Grow.
Element Description
To make quality education accessible and affordable for all through
Mission
technology.
Increase student enrollment by 30% in one year.
Objectives
Launch 10 new courses in emerging tech fields.

Partner with industry experts to design courses and use digital

Strategy
marketing to reach new learners globally.
Run targeted social media campaigns. Offer discounts for early sign-ups.
Tactics Conduct live webinars with instructors. Use SEO to improve website
traffic.
MoSCoW Techniques
MoSCoW Technique
MoSCoW is a prioritization technique used in business analysis, project
management, and product development to determine which requirements
matter most to stakeholders.

Letter Meaning Description

Critical requirements. The project will fail
M Must Have
without these.
Important but not critical. Can be delayed if
S Should Have
necessary.
C Could Have Nice to have if time/resources permit.
Agreed to be left out of the current scope but
W Won’t Have (this time)
may be considered in the future.
Example: Online Food Delivery App
Imagine you are building a food delivery mobile app

Priority Feature Description

Must Have User registration & login Core for user access.
Must Have Order placement & payment Essential for business function.
Very helpful, but app can
Should Have Order tracking
launch without it.
Useful for engagement, not
Could Have Restaurant reviews
urgent.
Out of current project scope.
Won’t Have Table booking feature
May add later.
CATWOE Techniques
CATWOE Techniques
❏ CATWOE is a business analysis technique that helps analysts understand
complex situations by examining six key perspectives: Customers, Actors,
Transformation, Worldview, Owner, and Environmental constraints.
❏ It's used to explore problems, define solutions, and ensure a comprehensive
understanding of a system or process before making changes.
CATWOE Stands For:
Customers: Who benefits from the system or process? This includes direct users, other
businesses, or even internal stakeholders.
Actors: Who are the individuals or groups that perform the tasks within the system or
process?
Transformation: What change does the system or process produce? This could be a
change in raw materials, information, or a problem being solved.
Worldview: What is the overall purpose of the system, and how does it fit into the larger
context?
Owner: Who has the authority to make changes to the system?
Environment: What external factors, such as regulations or market trends, affect the
system?
CATWOE Technique
Example: Digital Library System for a University
CATWOE Element Example
Customers Students, faculty, and researchers using the library.
Actors IT team, librarians, content digitization staff.
Transformation Physical books and journals → Digital, searchable online library.
Education should be accessible, and technology can remove learning
Worldview
barriers.
Owner University administration and board.
Environmental
Budget limits, copyright laws, internet access in remote areas.
Constraints
Business Process Management (BPM)
Business Process Management (BPM) Technique
Business Process Management (BPM) in business analysis involves systematically
analyzing, designing, modeling, and optimizing business processes to enhance
efficiency, reduce errors, and align operations with strategic goals.
Key Components of BPM
Component Description
Visual representation of how work flows (using tools like
Process Modeling
BPM).
Identify bottlenecks, inefficiencies, and improvement
Process Analysis
opportunities.
Process
Creating new processes or improving existing ones.
Design/Redesign
Implementing the process using people, systems, or
Process Execution
automation.
Monitoring & Control Track performance with KPIs, dashboards, etc.
Continuously refine and improve the process using
Optimization
feedback.
Example of BPM
Process: Online Order Fulfillment in an E-commerce Business
Step Description

1. Order Placement Customer places an order online

2. Payment Processing System verifies and processes payment
3. Inventory Check System checks product availability
4. Packing and Shipping Warehouse team packs and ships the product
5. Delivery Confirmation System confirms delivery and updates order status
End of Chapter!