Strategic Gap Analysis: Definition, How It Works, and Example

What Is Strategic Gap Analysis?

Strategic gap analysis is a business management technique that requires an evaluation of the difference between a business endeavor's best possible outcome and the actual outcome. It includes recommendations on steps that can be taken to close the gap.

Strategic gap analysis aims to determine what specific steps a company can take to achieve a particular goal. A range of factors including the time frame, management performance, and budget constraints are looked at critically in order to identify shortcomings.

The analysis should be followed by an implementation plan.

Understanding Strategic Gap Analysis

A strategic gap analysis is one method that is used to help a company or any other organization determine whether it is getting the best return from its resources. It identifies the gap between the status quo and the best possible result. Performing a strategic gap analysis can point to potential areas for improvement and identify the resources that are required for an organization to achieve its strategic goals.

Strategic gap analysis emerges from a variety of performance assessments, most notably benchmarking. When the performance level of an industry or a project is known, that benchmark can be used to measure whether a company's performance is acceptable or if it needs improvement. Such a comparison informs a strategic gap analysis.

From that point, the organization can determine what combination of resources such as money, time, and personnel are needed for a better outcome.

Many businesses fail to plan strategically. They have the resources and competencies to achieve their basic business targets but fail to realize their full potential. A strategic gap analysis could help such a business bridge the gap between their current and potential performance levels.

Example of Strategic Gap Analysis

A small mom-and-pop restaurant in a seaside town has a loyal clientele of locals but its owners yearn to serve the summer vacation crowd as well. A strategic gap analysis identifies the changes required for the restaurant to meet its goals.

These changes might include relocating to a busier street, staying open later to appeal to vacationers, and updating the menu. The restaurant owners don't have to take any of these recommendations. But it might do so if it wants to reach that higher level of business success.