What is 'Strategic Gap Analysis'

Strategic gap analysis is an evaluation of the difference between desired outcome and actual outcome, and what must be done to achieve a desired goal. Strategic gap analysis attempts to determine what a company should do differently to achieve a particular goal by looking at the time frame, management, budget and other factors to determine where shortcomings lie. After conducting this analysis, the company should develop an implementation plan (also known as an operational plan) to eliminate the gaps.

Breaking Down 'Strategic Gap Analysis'

A strategic gap analysis allows a company or organization to determine whether it is getting the best return out of its resources and abilities. It identifies the gap between the application of resources and the best possible result from that application of those resources. A strategic gap is the result if one subtracts what a company must do from what a company is doing. As such, performing a strategic gap analysis can point to potential areas for improvement and what resources are required to achieve an organization's strategic goals.

Strategic gap analysis stems from a variety of performance assessments, most notably, benchmarking. When the general performance of an industry or endeavor is known then it becomes possible to use that benchmark to determine whether a company's performance is acceptable or if it needs improvement. Such a comparison, with a strategy for improvement in mind, forms a strategic gap analysis. From there, a company or organization has the tools and data necessary to allocate resources, such as money, time and personnel to seek out a specific outcome.

Many businesses and other organizations fail to plan strategically. That means they have the capabilities and competencies to achieve their basic business targets but fail to realize their full potential. A strategic gap analysis would help such a business or institution bridge the gap between their current and potential positions.

Strategic Gap Analysis Example

If a small mom and pop restaurant wanted to become a top tourist destination but currently only served locals, a strategic gap analysis would look at the changes required for the restaurant to meet its goals. These changes might include relocating to an area with more tourists, altering the menu to appeal to out-of-town visitors, hiring more staff so the restaurant's hours become more convenient for travelers, and so on. The analysis would also determine how to make these changes happen. If a business doesn't know where it stands in relation to its goals, it is not likely to achieve them.

RELATED TERMS
  1. Gap Analysis

    Gap analysis refers to the process through which a company compares ...
  2. Gap

    A gap is a term related to price charts where a stock makes a ...
  3. Common Gap

    Common gap is a price gap found on a price chart for an asset. ...
  4. Production Gap

    The Production gap is an economic analytical term denoting the ...
  5. Gap Risk

    Gap risk refers to a security’s price changing from one level ...
  6. Interest Rate Gap

    An interest rate gap is the difference between the rates of liabilities ...
Related Articles
  1. Trading

    Playing the Gap

    Disruptions in stock patterns are known as gaps. Learn how you can earn money by analyzing these disruptions in normal price patterns.
  2. Trading

    Know How To Manage Gaps On Your Trading Strategy

    Gaps generate profitable strategies right after they print, as well as during retracements that test those levels, often months or years later.
  3. Investing

    Find Turning Points With Single-Day Patterns

    On their own, single-day patterns can be unreliable, but that doesn't mean they can't be used effectively.
  4. Investing

    Investors Overlooking 'Powerhouse' Old Navy: Jefferies

    Gap Inc.’s recent stock rally has much further to run as investors have yet to fully appreciate the exciting earnings potential of the clothing giant’s apparel chain Old Navy, according to analysts ...
  5. Insurance

    Do Drivers Really Need Gap Insurance?

    Gap insurance is worth it for drivers who are significantly upside-down on their car loan. That includes lessees and buyers with a small down payment.
  6. Investing

    Apparel Retailer Earnings to Watch for This Week

    After a period of decline, these two retailers are hoping to maintain long-term viability.
  7. Investing

    Consumers Bucking Gap for Other Brands (GPS)

    The once "cool" brand has been sidestepped by cost-conscious Millennial consumers looking for more individuality.
  8. Investing

    Gap Launches a Baby Clothes Subscription Box

    If the customers won't come to your stores, try to find a way to get them to buy from you digitally. Better yet, see if you can find an audience for a subscription box that creates recurring ...
  9. Investing

    Old Navy Boosts Gap: Is a Turnaround Likely? (GPS)

    Thanks to Old Navy Gap's June comps came in strong. How likely is a turnaround?
  10. Investing

    2 Of the Cheapest Large Cap Stocks to Buy (NOV, GPS)

    It might not be as exciting as owning a hot new tech company, but investing in an out of favor large-cap stock has some benefits.
RELATED FAQS
  1. What is the best method of analysis for forex trading?

    Learn more about the types of forex analysis used by currency traders such as charting tools, economic indicators and/or ... Read Answer >>
  2. What are some examples of ways that sensitivity analysis can be used?

    Understand the concept of sensitivity analysis and learn about the wide variety of disciplines to which it can be applied. Read Answer >>
  3. How is marginal analysis used in making a managerial decision?

    Discover why understanding marginal analysis helps to identify the optimal distribution of resources and planning for an ... Read Answer >>
Trading Center