The market, just like the economic environment, is highly turbulent and increasingly unstable. Constant fluctuations impose obligations on both younger and older companies: if they want to survive and maintain outstanding results, they have to define the right direction and move, exploring the do’s and don’ts, possible and beneficial changes, growth prospects, and potential threats. One person clearly can’t keep the entire list in mind, so the world has come up with a sustainable, robust solution: SWOT analysis.
The Nature of SWOT Analysis
The acronym SWOT first appeared in 1963 at one of Harvard’s conferences, where experts discussed various business-related issues. Each letter of the acronym has its own meaning:
S (strengths). Positive parameters that ensure the economic superiority of the company.
W (weaknesses). Negative factors that decrease the company’s productivity.
O (opportunities). External factors that can be used for further development of the company.
T (threats). External factors that can aggravate the situation, decelerating the growth rate.
As you can see, SWOT analysis (also known as SWOT matrix) is a multilevel model that can identify the aspects that can significantly enhance results by detecting:
the company’s issues and methods for their solution;
the company’s advantages and ways for their expansion;
how these issues can affect future decisions and increase the impact of the threats;
and how these advantages can unlock the power of the market and whether they can be used.
Conducting SWOT Analysis
Now, let’s get some practice and set your goals:
define strengths and weaknesses;
define the threats and how they can influence the company;
define the quantity and the quality of the potential marketing opportunities;
define the potential strengths which might appear after new solutions are implemented;
define whether the weaknesses are eliminated after the implementation of new solutions.
While every single point seems crucial, one still has to focus on the crux of the matter and set priorities, outlining the most significant aspect. Let us say, marketing is not our forte, and we attract clients through commercial campaigns on social media platforms, creative leaflets, signs, and theme parties. So, we need to compare effectiveness, efficiency, expenses, and the scope of all the methods to understand, which is the least beneficial. Or there is only one approach that exerts its detrimental impact on the negative effects of the marketing potential of the company, but we aren’t sure which, so we have to unravel this conundrum.
Building a Team
After you set your goals, decide who will conduct the analysis. In fact, one person might be enough, if this person has the accurate data at their disposal, but if you want to carry out a thorough analysis, not a quick review, you’d better confer with analysts working in different divisions of the company, including marketing specialists, and the corporate leader who is willing to control the process or appoint a chief to supervise the procedure.
Analyze Your Company
Finally, let us plunge into the nature of the S, W, O, and T indicators.
Searching for Strengths
That’s where we dwell on the competitive advantages. These are the parameters that make us stronger, not the ones on the same level or slightly deteriorating. Using the strengths as a base, you can create your unique value proposition.
What are the strengths? You decide. It can be a special marketing strategy, high quality of the products, loyalty programs, quick delivery, and so forth.
To define your strengths, answer the following questions:
Why are we better than other alternatives?
What makes our technologies so good?
Why are our prices better?
What makes our employees the best?
Still, these are indirect aspects, and you should concentrate on the main idea and find out what clients think about your company and what they say.
Searching for Weaknesses
Weaknesses are the disadvantages or faults of the company, everything that hasn’t been mentioned in the paragraph above: marketing, delivery speed, CRM quality, customer channels, re-order levels, funnels. It is highly possible that the lack of SWOT analysis can become one of the weaknesses.
Searching for Opportunities
Here we examine external parameters, such as global and local market conditions, political or economic news, or legal framework change. If you are familiar with the PESTEL analysis, you can safely apply it here as well. All the segments (Political, Economic, Sociological, Technological, Legal and Environmental) should be scrutinized: this is how you can detect the aspects that can benefit you.
Searching for Threats
Reverse the PESTEL analysis and do exactly the same: examine the external market, focusing on the negative aspects.
Flaws of SWOT Analysis
The majority of people commend on the technique, but there are experts, marketing specialists, and managers who find faults with the approach. We have collected the main complaints:
SWOT Analysis can show the current picture and focus on the upcoming events. When the opportunities or the threats finally take hold, the parameters immediately change, so all the indicators must be updated.
SWOT Analysis is not strict calculation based on mathematical correlation; let’s us, it is a supposition made by experts who will most likely be correct in their forecasts, but there is no ultimate accuracy.
SWOT Analysis can barely deal with large volumes. If you try analyzing a large project, the overall score will be far from perfect; if a branch or separate segments are prone to analysis, the result will be accurate only in isolation.
SWOT Analysis is not a detailed or mathematically accurate technique, but it can fuel ideas and power up the minds of those who are carrying it out: its illustrative purpose is beyond dispute. You can lay out the internal factors and overlap them with the external factors, eventually clarifying the direction.