GAP ANALYSIS

TEENA LAKSHMI
2019604006
 Gap Analysis

• Gap Analysis can be understood as a strategic tool used for

analyzing the gap between the target and anticipated

results, by assessing the extent of the task and the ways, in

which gap might be bridged.

• It involves making a comparison of the present performance

level of the entity or business unit with that of standard

established previously.
Core of the Concept-just two simple questions:
Where are we?&Where do we want to be?
Gap analysis can be used in many areas, such as:

• Sales • Cost control

• Financial performance • Employee satisfaction

• Human resource management • Energy conservation

• Productivity • Market competitiveness

• Quality assurance • Management skills

The list is endless….

 It can be performed on
Strategic level: Performance level:
• Comparing the • Comparing the current
condition of your state of your business
business with that of performance with the
the industry state you desire
 Types of gap
There are four types of Gap:

• Performance Gap: The difference between expected performance and the

actual performance.

• Product/Market Gap: The gap between budgeted sales and actual sales is

termed as product/market gap.

• Profit Gap: The variance between a targeted and actual profit of the

company.

• Manpower Gap: When there is a lag between required number and

quality of workforce and actual strength in the organization, it is known as

manpower gap.
 Steps involved in gap analysis

Step I Step II Step III Step IV Step V

Decicde a Identify Identify &

specific your Determine describe
problem ‘Current the the gap Determining
area to State’.i.e., desired between how the
focus on defining state i.e., ‘where you Gap should
during where you where you are’ and be filled
thegap are right want to be ‘where you
analysis now want to be’,
 STEP I
• Deciding the area/business unit where gap analysis is to be

conducted i.e., to finalize the challenge that want to be tackled:

Sample Areas
– Revenue/Profitability

– Market Share

– Product Functionality/Features

– Cost Control

– Employee Performance
 STEP II
• Identify the ‘Current State’ .i.e., defining where you are right now

and it has to be based on metrics or attributes.

• List out all the attributes you want to improve.

• Your focus can be as wide (ex: the whole business) or narrow

(ex: HR policies) based on the objective mentioned in Step I.

• It can be quantitative(currently get 50 orders per day),

qualitative(lack of employee morale in workplace) or both.

• The key thing is to be specific, measurable and factual with an

emphasis on identifying weaknesses.

 STEP III
• Identify where you want to be over a specific time frame. The ‘future state’

represents the ideal condition of organization to be in.

• This state can be highly specific(ex: ‘increase order count to 100 per day’) or

generic(‘enhance employee morale’).

• Your gap analysis template should record all the attributes as they correspond

to the current state.

• Sometimes, you may not even have a clear conception of an idealized future

state and might be conducting a gap analysis as an exercise towards self-

improvement. In this case, you can record ‘N/A’ under the future state column
 STEP IV
• Identify & describe the gap between ‘where you are’ and ‘where

you want to be’, based on Step III.

1) Gap Identification: Next column in the template should record

whether a gap exists or not. A simple ‘Yes’ or ‘No’ will suffix.
‘Yes’ or ‘No’ will suffix.

2) Gap Description: The gap description should record all the

elements that make up the gap between the current and future
state.
 STEP V
Determining how the Gap should be filled. This is the final & vital

step in the entire process and this is where the real challenge is.

• Factors Responsible for Gap: First you should identify the factors

responsible for the difference between the factors responsible for

the difference between current & future performance.

•All the factors responsible for the gap should be listed in this column of the
template
•The list should be specific, objective, relevant & exhaustive (like ‘flawed order
processing’ or ‘outdated employee manual’).
•This data will help come up with remedies and action plans required to tackle
the gap.
Based on the factors mentioned above, the remedies are
to be proposed.
• Remedial Actions & Proposals: The final & vital step in
the gap analysis is listing out all the possible remedies
for bridging the gap between the current remedies for
bridging the gap between the current and ideal state.
•The remedies and proposals should directly address the factors mentioned in the
previous column.
•The same should be specific, action oriented & time bound (‘training of relevant
staff or update the technology’ not just ‘effective measures to improve order
processing’).
Gap Analysis Chart
 GAP ANALYSIS TOOLS

• SWOT analysis
• Fishbone
• Servqual methodology
• McKinsey 7S
 SWOT Analysis

• SWOT analysis focuses on

– Strengths and Weaknesses in the internal environment
and
– Opportunities and Threats in the external
environment.

• It helps you determine where you stand within

your industry or market.
 Steps for SWOT analysis
• Gather around a team from relevant departments

• Create a SWOT analysis matrix

• List down the internal strengths and weaknesses of your business

• Note down the opportunities and threats present in the industry/ market

• Rearrange each bullet point in the order of highest priority at the top, and

lowest at the bottom

• Analyze how you can use your strengths to minimize weaknesses and fight

off threats, and how you can use the opportunities to avoid threats and

get rid of weaknesses.

SWOT matrix
• Advantages • Disadvantages
– Problem Domain – No weighting factors
– Application neutrality – Ambiguity
– Multi-level Analysis – Subjective analysis
– Data integration
– Simplicity
– cost
 Fishbone
• Fishbone diagram, also known as cause and effect
diagram, helps you identify the root cause of an
issue or effect.
• It provides a systematic approach to deeply analyze
a problem when there are many possible causes.
• They were first introduced by Kaoru Ishikawa in
1968 which is why they are sometimes referred to
as Ishikawa diagrams.
 In manufacturing
• The 6 Ms are globally recognize standard,
– Manpower-human resources you need

– Methods-processes you need

– Metrics-measurements you need

– Machines-automation or technology you need

– Materials-material resources you need

– Minutes-time you need

• But some expand it further to add management and maintenance.

 In marketing
• Marketing have 7 P’s and they are
– Product

– Place

– Price

– People

– Promotion

– Processes

– Physical evidence
 In sales

• Sales is another area where fishbone diagram can be

very effective. They are call the 5 S’s and they are:
– Samples

– Schemes

– Synchronous

– Skin

– Search
 Example
Step 1: identify the problem

Step 2: Work out the major factors involved

Step 3: identify possible causes
• Step 4: Analyze diagram
– Depending on the complexity and importance of the
problem, you can now investigate the most likely
causes further.
– This may involve setting up investigations, carrying
out surveys, and so on.
– These will be designed to test which of these possible
causes is actually contributing to the problem.
 Advantages
• It identifies cause and effect relationships in problems.

• The method operates through the function of joint brainstorming discussions.

• Brainstorming allows for broad-ranging thinking, steering teams away from

"in a rut" thinking patterns.

• These diagrams ask "why does this happen" again and again at each stage as

each potential cause is identified.

• Fishbone allows for prioritizing relevant causes so the predominating,

underlying root cause is addressed first.

 SERVQUAL methodology
• SERVQUAL is a multi-dimensional research instrument,

designed to capture consumer expectations and

perceptions of a service along the five dimensions that are
believed to represent service quality.

• SERVQUAL is a service quality framework, developed in

1985 by Zeithaml, Parasuraman & Berry, aiming at

measuring the scale of Quality in the service sectors.
• SERVQUAL was originally measured on 10 aspects of service quality:

reliability, responsiveness, competence, access, courtesy, communication,

credibility, security, understanding the customer, and tangibles, to measure

the gap between customer expectations and experience.

• In 1988 the 10 components were collapsed into five dimensions (RATER).

Reliability, tangibles and responsiveness remained distinct, but the

remaining seven components collapsed into two aggregate dimensions,

assurance and empathy.

• Parasuraman et al. developed a 22-scale instrument with
which to measure customers’ expectations and perceptions
(E and P) of the five RATER dimensions. Four or five
numbered items are used to measure each dimension.
• The questionnaire is designed to be administered in a face-
to-face interview and requires a moderate to large size
sample for statistical reliability.
 Summary of SERVQUAL items
Dimensions No. of items Definition

Reliability 5 The ability to perform the promised service

dependably and accurately

Assurance 4 The knowledge and courtesy of employees and

their ability to convey trust and confidence

Tangibles 4 The appearance of physical facilities,

equipment, personnel and communication
materials

Empathy 5 The provision of caring, individualized attention

to customer

Responsivess 4 The willingnes to help custoers and to provide

prompt service
Conceptual model of seruqual
 Gap 1
• Commonly known as the management perception gap

• Gap 1 results from a difference between what customers expect and

what management perceives these expectations to be.

• It indicates a problem with the understanding of the market. This can

occur, as a result of insufficient research or communication failures.

• E.g. : XYZ Events Ltd organised a wedding with the usual white and

blue decorations, when the customer had expected something new

and original.
 Causes of Gap 1

• Lack of a marketing orientation to quality

• Poorly interpreted information about customer’s

expectations
• Research not focused on demand quality

• Too many layers between the front line personnel &

• top level management

 Gap 2
• Commonly known as quality specification gap.

• Gap 2 results from a difference between management perceptions of

what customers expect and the specifications that management draws up

when detailing the service quality delivery actions that are required.

• Service design and performance standards are prerequisites for bridging

this gap.

• E.g. : XYZ Events Ltd perceived that the customer wanted a very nice

reception with at least 2 waiters at each table, but management

eventually decided otherwise to reduce costs.

 Causes of Gap 2

• inadequate commitment to service quality

• lack of perception of feasibility
• inadequate task standardization
• the absence of goal setting
• Insufficient planning of procedures
 Gap 3
• Commonly known as the Service performancre gap.

• Gap 3 results from a mismatch between the service delivery specifications

required by management and the actual service that is delivered by front line staff.

• It is the difference between customer-driven service design & standards, and the

service delivery of the provider.

• Managers need to audit the customer experience that their organization currently

delivers in order to make sure it lives up to the expected level.

• E.g. : XYZ Events Ltd had promised the most exquisite catering and birthday cake,

but the food was not appreciable and the birthday child didn’t like the cake at all.
 Causes of Gap 3
• Poor employee or technology fit - the wrong person or
wrong system for the job

• Deficiencies in human resource policies such as ineffective

recruitment, role ambiguity, role conflict

• Failure to match demand and supply

• Too much or too little control

• Lack of teamwork within the organisation

 Gap 4
• Commonly known as market communication gap.

• This is the gap between the delivery of the customer experience and what is

communicated to customers, i.e. the discrepancy between actual service and

the promised one

• All too often organizations exaggerate what will be provided to customers, or

discuss the best case rather than the likely case, raising customer expectations

and harming customer perceptions.

• E.g. A company commercialising slimming products boasts that customers

may lose up to 4-5 kgs/week. But they do not specify that a strict diet and

regular exercise must accompany the treatment for it to have the desired

effect.
 Causes of Gap 4

• inadequate horizontal communication

• Over-promising in external communication

campaign
• Failure to manage customer expectations

• Failure to perform according to specifications

given to customers
 Gap 5
• Commonly known as the perceived service quality gap.

• Gap 5 may be identified as the overall difference between the

expected service and the perceived service experienced. Gap 5
results from the combination of Gaps 1 to 4

• Customers' expectations have been shaped by word of mouth, their

personal needs and their own past service experiences.

• Unless Gap 5 is kept under check, it may result in lost customers,

bad reputation, negative corporate image.
• Advantages
– Enables assessing service quality from the customer’s perspective
– We can track customer expectations and perceptions over time, together
with the discrepancies between them
– Servqual enables comparison to competitors on common aspects
– We can assess the expectations and perceptions of internal customers –
e.g. other departments or services we deal with.
• Disadvantages
– The uniform applicability of the method for all service sectors is difficult.
– The use of expectations in measuring service quality has currently come
under a lot of criticism.
– Does not measure service outcome perceptions.
 McKinsey 7S
• McKinsey 7S can help you with any of the following purposes

– To help understand the gaps that may appear in the business

– Identify which areas to optimize to boost business performance

– Align processes and departments during a merger or acquisition

– Examine the results of future changes within the business

• The key point of the model is that all the seven areas are

interconnected and a change in one area requires change in the

rest of a firm for it to function effectively.

• These elements are divided into two groups;
– hard elements - are tangible as they can be controlled, and

– soft elements - are intangible as they cannot be controlled.

• Hard elements
 Strategy - the plan of actions that will help your business gain a competitive advantage

 Structure - the organizational structure

 Systems - business and technical infrastructure employees use to do their daily tasks

• Soft elements
 Shared values - a set of beliefs or traits the organization upholds

 Style - the leadership style of the organization and the culture of interaction

 Staff - the general staff

 Skills - key skills of employees

 Procedure

• Identify the areas that are not effectively aligned

• Determine the optimal organization design

• Decide where and what changes should be made

• Make the necessary changes

• Continuously review the 7s

Identify the areas that are not effectively aligned

• During the first step, your aim is to look at the 7S

elements and identify if they are effectively aligned with
each other.

• Normally, you should already be aware of how 7

elements are aligned in your company, but if you don’t
you can use the answer the set of questions
 Structure –
Strategy –
• How is the organization organized?
• What is the organization’s strategy seeking
• What are the reporting and working
to accomplish?
relationships (hierarchical, flat, silos, etc.)?
• How does the organization plan to use its
• How do the employees align themselves
resources and capabilities to deliver that?
to the strategy?
• What is distinct about this organization?
• How are decisions made? Is it based off of
• How does the organization compete?
centralization, empowerment,
• How does the organization adapt to
decentralization or other approaches?
changing market conditions?
• How is information shared (formal and

informal channels) across the

organization?
Systems – Shared Values –

• What are the primary business and • What is the mission of the organization?

technical systems that drive the • What is the vision to get there? If so,
organization? what is it?
• What and where are the system • What are the ideal versus real values?
controls?
• How do the values play out in daily life?
• How is progress and evolution tracked?
• What are the founding values that the
• What internal rules and processes does
organization was built upon?
the team utilize to maintain course?
Style –

• What is the management/leadership style like? How do they behave?

• How do employees respond to management/leadership?

• Do employees function competitively, collaboratively, or cooperatively?

• Are there real teams functioning within the organization or are they just nominal

groups?

• What behaviors, tasks and deliverables does management/leadership reward?

Staff –

• What is the size of the organization?

• What are the staffing needs?

• Are there gaps in required capabilities or resources?

• What is the plan to address those needs?

Skills –

• What skills are used to deliver the core products and/or

services? Are these skills sufficiently present and available?

• Are there any skill gaps?

• What is the organization known for doing well?

• Do the employees have the right capabilities to do their jobs?

• How are skills monitored, assessed, and improved?

Determine the optimal organization design

• This step is not as straightforward as identifying how seven areas are currently

aligned in your organization for a few reasons.

• First, you need to find the best optimal alignment, which is not known to you

at the moment, so it requires more than answering the questions or collecting

data.

• Second, there are no r predetermined organizational designs that you could

use and you’ll have to do a lot of research or benchmarking to find out how

other similar organizations coped with organizational change or what

organizational designs they are using.

 Decide where and what changes should
be made
• If you find that your firm’s structure and management
style are not aligned with company’s values, you
should decide how to reorganize the reporting
relationships and which top managers should the
company let go or how to influence them to change
their management style so the company could work
more effectively
• Make the necessary changes- The implementation is
the most important stage in any process, change or
analysis and only the well-implemented changes have
positive effect
• Continuously review the 7s- A change in one element
always has effects on the other elements and requires
implementing new organizational design.
Thus, continuous review of each area is very important.
Thank you..!