Conduct a SWOT…and be honest!

By claire |

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Posted By: Sumontro Roy, strategy@perksconsulting.com

SWOT Analysis is a powerful technique for understanding your Strengths and Weaknesses, and for looking at the Opportunities and Threats you face. It helps you carve a sustainable niche in your market by taking the best advantage of your resources, talents, capabilities and opportunities. In general, Strengths and Weaknesses are often internal to your organization while Opportunities and Threats often relate to external factors.

What makes SWOT particularly powerful is that it helps you uncover opportunities that you are well-placed to exploit. And by understanding the weaknesses of your business, you can manage and eliminate threats that could affect you negatively.
Using the SWOT framework to assess your strengths and that of your competitors’, you can analyze the competitive landscape and develop a strategy that helps you differentiate yourself from your competitors, so that you can compete successfully in your market.

To carry out a SWOT Analysis, start with:

Strengths:
•    What advantages does your company have?
•    What do you do better than anyone else? Is this a critical part of your offering? Are you delivering it effectively?
•    What unique (differentiated) attributes or cost-advantages do you have?
•    What do your target-audience view as your strengths?
•    What factors clinch your sale?

Quick tip: If you are having difficulty with this, make a list of your characteristics. Some will be “positive” and, in turn, your strengths. Others will likely be your “negative/limitations” and your weaknesses.
While assessing your strengths, think about them in relation to your competitors – for example, if all your competitors have strong and efficient distribution networks, then that is not a strength in the market-space, it is a necessity.

Weaknesses:
•    What do your competitors do better than you do?
•    What could you improve upon?
•    What should you avoid? (E.g. market segments)
•    Are you focused enough?
•    What do people in your market (customers, competitors) likely to perceive as weaknesses?
•    What factors drive customers to choose your competitors over you?

Quick tip: analyze them from an internal and external basis: Do other people identify weaknesses that you do not see? Are your competitors doing any better than you? Make sure you are brutally honest in your answers: it is easy to be blind to what you don’t want to see!swot2

Opportunities:
•    Where opportunities/openings are available for you?
•    What are the coming trends that you are aware of?
•    Useful opportunities can come from such things as:

Changes in markets needs (micro and macro levels)
Changes in laws, rules and regulations
Changes in technology, social patterns, population profiles, lifestyle changes, local environments etc.

Quick Tip: A good practice is to identify your strengths and see whether these open up any opportunities. Similarly, look at your weaknesses and see how they are limiting you and whether eliminating them –or managing them better – could create opportunities by eliminating them.

Threats:
•    What obstacles do you face?
•    What is your competition doing that you should be worried about?
•    Are the required specifications for your job, products or services changing?
•    Is changing technology threatening your position?
•    Do you have bad debt or cash-flow problems?
•    Could any of your weaknesses seriously threaten your business?

Endnotes:

  • Do a similar SWOT Analysis on your competitors. This will help you in understanding how they stack up against you and how and where you should plot your strategies against them.Only accept precise, verifiable statements (“can charge up to $5 more per unit”, rather than “can command a premium”)
  • Make an exhaustive list of attributes, prioritize them and give appropriate importance to each
  • Conduct it at the right level i.e. the level at which the opportunity/problem exists (e.g. brand, product, corporate)
  • Supplement it with other Situation Analysis tools (PEST, 5C) since none is likely to be completely comprehensive.
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