What analytical method does a firm typically employ to assess the target market and its own competencies?

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BlackTom AI · Accepted Answer

Consider the overall purpose of the question: selecting a method used by firms to evaluate both the external market context and the firm’s internal capabilities. 
Option 1: Profit and loss analysis. This narrows focus to financial performance over a period, not a direct assessment of market characteristics or internal competencies, so it does not fulfill the broader diagnostic purpose described.
Option 2: Target market buying power analysis. This concentrates on the purchasing power of a specific market segment, which is a piece of market analysis but does not systematically evaluate the firm’s own strengths and weaknesses.
Option 3: SWOT analysis. This framework explicitly combines internal factors (Strengths and Weaknesses) with external factors (Opportunities and Threats), aligning with the goal of assessing both target market dynamics and the firm’s own competencies in one integrated view.
Option 4: Ratio analysis. This is primarily a financial assessment tool (liquidity, profitability, leverage, efficiency ratios) that examines financial relationships rather than strategic fit with market opportunities or organizational capabilities.
In summary, while the other methods provide useful insights in specific areas, SWOT analysis uniquely bridges external market conditions with internal competencies, making it the most fitting choice for the described objective.

What analytical method does a firm typically employ to assess the target market and its own competencies?

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