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What Is Context Analysis?

A SWOT analysis is a type of context analysis.
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  • Written By: M. McGee
  • Edited By: Lauren Fritsky
  • Last Modified Date: 03 October 2014
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Context analysis is a method of looking at the internal and external business environment as it relates to a specific company or department. While nearly every business uses these methods to some extent, the most common pursuers of context analysis are businesses that need to constantly fight to stay competitive. These businesses include companies that sell high-cost items, such as automobiles, or ones that face competition for store space, such as food and drink producers. One of the most common types of context analysis looks specifically at strengths, weaknesses, opportunities and threats (SWOT) facing a business in order to develop a strategic business plan.

The processes involved in a context analysis look at all parts of the business and the market to find likely avenues of success or failure. The largest part of the analysis looks at the company’s competitors and both their place and the business’s place in the market. If the processes are limited to just this aspect, the analysis is commonly called environmental scanning. True context analysis then looks at the business and finds ways to improve its position or become more competitive.

A context analysis can be as in-depth and complex as the company desires. There are so many things that the analysis could cover that a comprehensive study would never truly end. As a result, these methods have a tendency to fall into one of three groups that define the overall scope and end result of the process.

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When performing an ad-hoc analysis, the main goal is quick and specific information on a single thing. These studies would determine the likelihood of success against a specific competitor’s specific product. Ad-hoc analysis is often the first step in a greater strategy; it shows likely areas where a more in-depth process would be useful.

A regular analysis looks at the market at specified times. These may happen once a year or every time the company plans to release a new product. In every case, these methods are scheduled around an external time or event that doesn’t have anything to do with the analysis itself. Many businesses use these like annual checkups; the process looks at the business and finds out where the situation could be improved.

The final common type of analysis is continuous. These methods simply never stop examining the market, the business, the competition and everything else that could possibly influence the company. This type of analysis is very taxing on resources, so it is usually only performed by large and highly-competitive companies. The data gathered by these methods is often used as quickly as possible before it is superseded by later information.

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