SWOT analysis is a tool for auditing an organization and
its environment. It is the first stage of planning and helps marketers to focus
on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats.
Strengths and weaknesses are internal factors. Opportunities and threats are
external factors.
In a SWOT analysis, strengths and weaknesses are internal factors. For example:
A strength could be:
* A special marketing expertise.
* Unique, innovative products or services.
* The location of your business.
* Quality processes and procedures.
* Other aspects of your business that add value to your product or service.
A weakness could be:
* Lack of marketing expertise.
* Undifferentiated products or services, regarding your competitors.
* Bad location of your business.
* Poor quality goods or services.
* Damaged reputation.
In SWOT, opportunities and threats are external factors. For example: An
opportunity could be:
* A developing new market, such as the Internet.
* Mergers, joint ventures or strategic alliances.
* Moving into new market segments that offer improved profits.
* A new international market.
* A market vacated by an ineffective competitor.
A threat could be:
* A new competitor in your home market.
* Price wars with competitors.
* A competitor developes a new, innovative product or service.
* Competitors have superior access to channels of distribution.
* Taxation is introduced on your product or service.
The following seven simple rules below, can help you succeed with your
SWOT analysis:
Rule Number 1: Start your SWOT analysis by defining a desired end state or objective.
Rule Number 2: Be realistic about the strengths and weaknesses of your own
organization when conducting SWOT analysis.
Rule Number 3: The SWOT analysis should distinguish between where your
organization is today, and where it could be in the future.
Rule Number 4: Your SWOT should always be specific. Avoid grey areas.
Rule Number 5: Always apply SWOT in relation to your competition i.e. better
than or worse than your competition.
Rule Number 6: Keep your SWOT short and simple. Avoid complexity and over
analysis.
Rule Number 7: Remember that SWOT is subjective. Two people rarely come-up
with the same final version of SWOT.
Without a clearly stated objective, or end state, for the SWOT, it runs the
risk of being useless. Be sure to describe the subject for the SWOT analysis
clearly so that people contributing to the analysis, and those seeing the
finished SWOT analysis, properly understand the purpose of the SWOT assessment
and implications.
Once key issues have been identified with your SWOT analysis, they feed into
marketing objectives. SWOT can be used in conjunction with other tools for audit
and analysis, such as PEST analysis and Porter's Five-Forces analysis. SWOT
is a very popular tool with marketing people because it is quick and easy to
learn and to use. During the SWOT analysis, simply list factors in the relevant boxes.
It's that simple.
