A gap analysis is performed to compare a strategy with the external environment and the internal environment, to see if there are any inconsistencies between the strategy and the environment. Therefore, the gap analysis is usually done by an organisation rather than an industry.

So, for example, if Officeworks has the strategy of pursuing growth by being the best and cheapest supplier of office needs to the small business and home markets in Australia, then their gap analysis would be done to compare their internal environment with that strategy, and their external environment with that strategy. Therefore, they compare their capabilities, performance and key stakeholder expectations against that strategy to see if they are all consistent with it; if they find gaps, then they will need to decide what they are going to do to close those gaps. An example might be that Officeworks might not have the capabilities required to be the cheapest supplier, so they need to address those capabilities to improve that deficiency.

They would also compare the remote environment trends they identified through their TEMPLES analysis of how the remote environment impacts on their business to see if they will get sufficient growth now and into the future, given the external trends and their strategy. Another external analysis is the Porter’s analysis of the industry environment, to determine the likely impacts on their profitability when pursuing that strategy going into the future. Again, gaps identified in any of these analyses will require some action to be planned to be taken to ensure success going into the future. An example might be that the small business sector’s adoption of computing might be growing strongly, so to maintain the growth Officeworks wants they need to make sure they supply the right amount and type of computing office supplies for them.

A gap analysis can be done on an industry, and would tend to be done for an industry by, say, an Industry organisation, like CPA Australia for example. In this situation, they would look at the overall accounting industry, or look at different segments of the accounting industry to review what the current strategy is. They would look at the external environment – what are the future trends in Accounting? They would look at the pressures in the industry – how is profitability impacted by the power of buyers, new entrants etc? They would do an internal environment analysis of capabilities, performance and key stakeholder expectations. Based on this, they make suggestions to the accounting industry and run workshops, professional development, lobby the Government etc whatever actions they thought were necessary to “close the gaps” and achieve the outcomes they want for their owners; their members in this case.