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What is Gap Analysis?

By N.M. Shanley
Updated May 16, 2024
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Business gap analysis can be used to help achieve certain goals. This analysis includes a description of the company's current situation, and what the company wants to achieve in the future. The difference between these two items is the gap. The analysis includes specific action steps the company must complete to close this gap and achieve its goals.

For example, Company X is the top doll distributor in New York state. Company X wants to be the top doll distributor in all of the United States. Company X completes an analysis illustrating how it got to be the top New York doll distributor. This would include an overview of every aspect of the business that contributes to the Company X's success, including marketing, accounting, information technology, management, and other departments.

Company X would then outline the advantages of achieving its goal of becoming the top distributor in the country. Goals should be specific and measurable. In this case, Company X will become the top nationwide doll distributor within three years. Company X would then study what it needs to do to arrive at this goal. The outcome of Company X's analysis would be a complete plan, or gap analysis document, that includes information on how to become the top nationwide doll distributor.

The analysis can include a review of business documents, files and financial information, as well as interviews with staff members in various departments. Once all information has been gathered, a gap analysis report is created. This document usually includes an introduction that states the purpose of the analysis and the methods used to complete the study.

The introduction is typically followed by a summary of the current situation, the goals the company wants to achieve, and the detailed plan to achieve these goals. This plan would include detailed action steps for each area of the business, a schedule to complete each step, and a budget that outlines how much the plan will cost. An appendix of documents supporting any claims or statistics in the final document may also be included.

The next step would be for management to approve the action plan and budget. If approved, the plan is put into action. Tracking of each step is required to ensure that the plan remains on schedule and within budget. If successful, the company will achieve the goal stated in the gap analysis report.

Businesses can use gap analysis to achieve company-wide goals, or those for a specific department or area. For example, a company that wants to lower overhead costs could complete a financial gap analysis. Or a firm that wants to expand its product distribution may create a marketing analysis. Gap analysis can help businesses remain competitive and help measure the potential profitability of a goal. This can help management and staff to understand, and be enthusiastic about, plans outlined in the analysis.

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Discussion Comments
By TrogJoe19 — On Jan 13, 2011

Skill gap analysis is a solid assessment of ones qualifications and a determination of the steps needed to help that individual reach his or her goals. Constantly analyzing where you are in a group and where you need to be to help such a group is an important key to forming a good business. If every member of the team works well, the team works well, and is enabled to beat the other team. It is a coach's job to perform skill gap analyses on his players.

By hangugeo112 — On Jan 11, 2011

Often the difference between delusion and ambition is planned and measured steps on paper. Ambition can lead to dreams becoming a reality when it is in solid and real terms. A business conducting a gap analysis makes sure that goals are able to be met in every department and scale. People are able to close loopholes and form alternate plans to ensure almost beyond doubt that things will be able to be done. There is always an element of unexpectedness, but a plan well made is much more likely to happen than a mere wish.

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