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


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

Learn how strategic gap analysis in finance helps businesses identify performance gaps, set goals, and implement effective strategies. Get an example and understand how it works.

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

Welcome to another exciting blog post in our “Finance” category! Today, we are going to delve into the world of strategic gap analysis. Have you ever wondered how companies identify the gaps between their current and desired state? Well, that’s exactly what strategic gap analysis is all about. In this blog post, we will explore the definition of strategic gap analysis, understand how it works, and provide you with a real-world example. So, let’s jump right in and uncover the secrets behind this powerful strategic tool.

Key Takeaways:

  • Strategic gap analysis helps businesses identify the difference between their current and desired state
  • It provides valuable insights for strategic planning and decision-making processes

Defining Strategic Gap Analysis

Strategic gap analysis is a systematic process used by businesses to identify and analyze the gaps between their current performance or capabilities and their desired future state. It is a crucial step in strategic planning as it helps organizations understand where they currently stand and where they want to be.

By conducting a strategic gap analysis, companies can assess their strengths, weaknesses, opportunities, and threats (SWOT) and gain a comprehensive understanding of the internal and external factors that impact their performance. This analysis enables them to bridge the gap between their current situation and their long-term goals.

How Strategic Gap Analysis Works

The strategic gap analysis process typically involves the following steps:

  1. Identify the Current State: The first step is to assess the organization’s current performance, capabilities, and resources. This includes analyzing financial data, conducting market research, and evaluating internal processes.
  2. Define the Desired State: Next, companies need to clearly define their desired future state. This involves setting specific goals, objectives, and metrics that they want to achieve in the long run.
  3. Identify the Gaps: Once the current and desired states are defined, the next step is to identify the gaps that exist between them. This is done by comparing the data gathered in the previous steps and identifying areas where improvement is required.
  4. Create an Action Plan: After identifying the gaps, organizations need to develop a comprehensive action plan to bridge those gaps. This plan includes specific steps, timelines, and responsibilities assigned to various stakeholders.
  5. Implement and Monitor: The final step is to execute the action plan and closely monitor the progress. Regular monitoring and evaluation of the implemented strategies help ensure that the gaps are being effectively closed.

A Real-World Example

Let’s imagine a fictional retail company, XYZ Mart, that wants to expand its online presence and boost its e-commerce sales. XYZ Mart initiates a strategic gap analysis to identify the gaps between their current online performance and their desired future state. Here is a glimpse of their analysis:

  • Current State: The company has a basic e-commerce website with limited product offerings and inconsistent customer service.
  • Desired State: XYZ Mart envisions a robust and user-friendly online platform with a wide range of products, seamless checkout process, and exceptional customer support.
  • Identified Gaps: The gaps identified include the need to upgrade the website’s user interface and add more product categories, improve the checkout process, hire and train customer support representatives, and implement a better inventory management system.
  • Action Plan: XYZ Mart creates a detailed action plan, including website redesign, expanding product inventory, optimizing the checkout process, conducting training programs, and implementing an advanced inventory management system.
  • Implementation and Monitoring: The company executes the action plan, tracks key performance indicators (KPIs), gathers customer feedback, and regularly evaluates the progress.

By conducting a strategic gap analysis, XYZ Mart gains valuable insights into the shortcomings of their current online operations and develops a targeted plan to bridge those gaps. As a result, they see significant improvements in their online sales and customer satisfaction.


Strategic gap analysis is a powerful tool that helps companies align their current performance with their long-term goals. By systematically identifying and bridging the gaps between the current and desired state, businesses can enhance their strategic planning, decision-making, and overall success. So, if you’re looking to take your organization to the next level, consider conducting a strategic gap analysis and unlocking your full potential.