Gap Analysis: What is it and How you can do It?

August 17, 2022 Zahra Ijaz

If you want to move from the current state of performance for your brand or company to the desired, expected performance, you can use Gap Performance.

This analysis can help you to find whether your brand or company is meeting expectations and using its resources effectively.

A gap analysis is the means or way by which you can recognize the current state of your company or brand.

Moreover, you can do so by measuring factors like time, money, and labor.

Then compare it to its largest state.

By defining and analyzing these gaps, the management team can then create an action plan to move the organization forward and fill in the performance gaps.

Furthermore, the process of gap analysis can be useful when you want your company that is not using resources, capital, or technology to use to its full potential.

Additionally, you can use it to assess the difference between rate-sensitive assets and liabilities.


Keep on reading.

Understanding Gap Analysis

When any organization is not making the best use of its resources, capital, and technology, it may not be able to reach its full potential.

This is where gap analysis comes in.

A gap analysis is also referred to as a Need Analysis.

It is important for any type of organizational performance.

Moreover, it allows companies to determine where they are today and where they want to be in the future.

gap analysis 2

Thus, companies or brands can reexamine their goal through gap analysis to figure out whether they are on the right track to achieving their set goals.

Furthermore, it is important to note that gap analyses were widely used in the 1980s.

Typically in tandem with duration gaps, companies made use of them.

You may think of gap analysis as a hard process and not widely implement it, in comparison to duration analysis.

However, you can still use it to assess exposure to a variety of term structure movements.

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Gap Analysis Application

In information technology, project managers and process improvement teams can use gap analysis as a starting point for an action plan to produce operational improvements.

Moreover, gap analysis can help in benchmarking actual business performances.

So they can use it to measure optimal performance levels.

However, it is important to note that you can use performance gaps across multiple areas of the business.

These include customer satisfaction, revenue generation, productivity, and supply chain cost.

While a small business can benefit from performance gap analysis when they are in the process of figuring out how to allocate their resources.

gap analysis 1

In software development, gap analysis can help document which services or functions have been left out, which have been deliberately eliminated, and which ones can be developed.

On the other hand in compliance initiatives, this process can help compare what the company needs to certain regulations with what they are currently doing.

Furthermore, in human resources, HR, a gap analysis can help to examine which skills are present in the workforce.

And what additional skills can help to improve the competitiveness or efficiency of the organization.

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Types of Gap Analysis

The following are the four types of gap analyses:

Market Gap Analysis Also known as product gap analysis.

This type looks at the actual sales versus the budgeted sales.

Moreover, you can either conduct it internally or externally with the help of an analyst.

Product gaps look for opportunities where supply is less than the demand.

And the company or brand can use a market gap analysis to find underserved markets that it can capitalize on.

Strategic Gap Analysis This one is also known as performance gap analysis.

It helps to measure the actual performance versus the anticipated performance.

With the help of this analysis, you can benchmark your company or brand to competitors to see what you are doing, versus what you are doing.

Also, it helps you to seek out opportunities to add services or products that fill the overall mission of your business.

Profit Gap Analysis This one is a common gap analysis that helps to look at the profit goals in comparison to the actual profits.

By analyzing the gap, you can take a deeper dive into what your company is unable to meet the goals rather than just looking at the numbers.

Moreover, it is a way for your business to correct its course of action where necessary.

Skills Gap Analysis  Also known as HR gap analysis.

You can use this type to look at the personnel resources of the company to find whether or not it has enough people with the right skills to meet the goals of the company.

Furthermore, the gap would help to be the makeup of the current workforce versus the workforce you need to succeed.

The Four Steps of Gap Analysis

When conducting a gap analysis, there is a simple four-step process you can use.

It can help you to set action items that will help you to reduce or eliminate the gaps.

It is important to note that every company will have different factors or things they want to focus on during the process of gap analysis.

In fact, you can have different matrices to use for different departments when conducting your own analysis.

The four steps are as follows:

Identify your Current Situation During the first step, you need to define what is important in your department or organization.

For instance, a sales team may want to focus on lead generation and conversion rates while an accounting team may want to focus on efficiency and accuracy.

These metrics can help you to understand what is the most important metric to the success of your department or business.

Set S.M.A.R.T goals S.M.A.R.T goals are:

  • specific
  • measurable
  • achievable
  • relevant
  • time-sensitive

When you are specific, it helps to narrow down exactly what you want to achieve and removes ambiguity.

You want tasks to be measurable so that you can see growth towards the goal you have set.

While your goals should be aspirational, they should be achievable, others, you may see a lack of motivation and frustration creep into morale.

Moreover, relevant gaps can help you to achieve the overall goals of the company or brand,

While time-sensitive will help you give a deadline to measure progress and evaluate success.
gap analysis 3

Analyze gaps from where you are to where you want to be Next, it is time to evaluate the gaps and get to the root of the problems.

During this process, you will get to know the details of why you are not as successful as you want to be.

This why can wither be a hiring problem, a training problem, a resource problem, or something else.

Additionally, this is where you want to dig in deeper to discover more.

Establish a Plan What needs to happen to get to your goal for the business or brand?

During this step, you will have to develop an action plan to bridge the page between where you are and where you want to be.

Establish a clear strategy and actionable objectives to help you actualize your plan and get everyone on your team on board.

Now, let’s discuss some gap analysis tools:

Tools you can Use

A number of tools are available to help you bridge the gap.

Whichever you want to use, visualize and document each step of your gap analysis to help you keep your organization moving forward.

These gaps are:

SWOT Analysis This analysis is one of the oldest textbook marketing assets.

SWOT stands for strengths, weaknesses, opportunities, and threats.

You can perform SWOT analysis both quantitatively and qualitatively which will help you to determine internal and external threats to your organization.

Moreover, it will help you see where and how you stand out against the competition.

You cause the following diagram of SWAT analysis to help you organize your research:
SWOT analysis

Fishbone Diagram Popular for its distinctive shape, the fishbone diagram is also known as Ishikawa, cause and effect, or herringbone diagram.

With the help of this diagram, you can explore the possible causes of a root problem.

Moreover, this type of diagram is especially valuable when examining your current situation.

The most common categories you can use for investigation are:

  • measurements
  • materials
  • people
  • mechanics
  • methods
  • environment

fishbone analysis

Thus, you can choose any category that makes sense for the central or core problem or effect you are examining, as in the above diagram.

McKinsey 7S Framework The McKinsey 7S Framework was developed by its eponymous consulting firm.

It helps to find whether a company is meeting expectations and actualizes the shared values of an organization.

Moreover, it works through the 7S’s of an organization to see what values cross over.

McKinsey 7S framework

Furthermore, with the help of this framework, you can bridge the gap between the present and the desired state of the company.

Other Tools

Some other tools you can make use of are:

Nadler-Tushman Model This is one of the most dynamic models.

The Nadler-Tushman model helps to examine how each business process affects another and identifies which gaps affect efficiency.

Moreover, it helps to create a holistic view of the operational process of your organization from the beginning, i.e. input to the end, i.e. output.

Nadler-Tushman model

This model helps to find gaps by dividing the processes of an organization into three groups:

  • Input: Entire company culture and workforce, all resources that help to create product/service and operational environment
  • Transformation: The systems, teams, and processes that take the input value or value and turn them into output products
  • Output: The final product or service you get

PEST Analysis Just like SWOT analysis, PEST analysis will help you to identify threats and opportunities.

it will do so by examining the four primary external factors of your business environment:

  • political
  • economic
  • sociological
  • technological

PEST analysis

Moreover, with the help of this approach, you can eliminate gaps by pinpointing current issues.

Highlighting opportunities for change, and minimizing risk in the market.

However, if you want to conduct a more in-depth analysis of your market environment, you can use PESTLE analysis instead.

This one will help add legal and environmental factors to the PEST Analysis.


The gap analysis process is important for your business to streamline operations for efficiency and cost-effectiveness.

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With the help of gap analysis, you can look for reasons why you are unable to achieve certain business goals, It also considers where you are, and where you want to be.

And looks for reasons that are preventing your success. With such information, you can make informed decisions and create an action plan that closes such gaps.

Moreover, in a lot of ways, a gap analysis is an efficiency tracker and looks to help improve what you are not doing well. You can use this process in any department in your organization.

For instance, a sales team may not be hitting the desired sales number or a customer services department may need to spend too much time on call, causing long waiting periods.

Thus, these would be specific gaps that you need to address.

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