Gap Analysis

Encyclopedia of Management

Summary:
According to the article, gap analysis is defined as, "studying the difference between standards and the delivery of those standards." As a method of analyzing a business model, it is important to conduct a "before-and-after" analysis prior to conducting the actual gap analysis. The before-stage is identified, such as customer expectation, and then the after-stage is identified, such as actual customer experience. The difference between the two is the "gap", and once identified the gap can be addressed.

According to the article, "Gap analysis involves internal and external analysis." In the business model, this means that a business must address the customer's needs and expectations, as well as the appropriate business response to those needs and expectations. In order to implement the external analysis, the article represents the use of focus group interviews, consisting of ten to twelve customers, who are invited to share their experiences with a business. After recording the experiences of the focus group, the article recommends the implementation of a quantitative method to rank order the identified expectations and experiences, such as a 1-10 scale. The gaps can then be easily identified according to the gaps on the scale between experiences and expectations.

Gap analysis is a useful method to identify shortcomings within a business model. The article applies to the gap analysis method exclusively to the development of better customer relations, however gap analysis can be also be applied exclusively for internal analysis as well, such as what employees may expect from employers, and vice versa.