SWOT analysis is a tool for auditing an organization and its environment. SWOT analysis 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 SWOT factors. Opportunities and threats are external SWOT factors. A strength is a positive internal factor. A weakness is a negative internal factor. An opportunity is a positive external factor. A threat is a negative external factor. Here is your FREE SWOT template for you to have a go – after you’ve read our SWOT analysis lesson of course!.
We should aim to turn our weaknesses into strengths, and our threats into opportunities. Then finally, SWOT will give managers options to match internal strengths with external opportunities. SWOT is that simple. The outcome should be an increase in ‘value’ for customers – which hopefully will improve our competitive advantage.
The main purpose of SWOT analysis has to be to add value to our products and services so that we can recruit new customers, retain loyal customers, and extend products and services to customer segments over the long-term. If undertaken successfully, we can then increase our Return On Investment (ROI).
- Be realistic about the strengths and weaknesses of your organization when conducting SWOT analysis.
- SWOT analysis should distinguish between where your organization is today, and where it could be in the future.
- SWOT should always be specific. Avoid grey areas.
- Always apply SWOT in relation to your competition i.e. better than or worse than your competition.
- Keep your SWOT short and simple. Avoid complexity and over analysis
- SWOT analysis is subjective.
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. So SWOT is a very popular tool with marketing students because it is quick and easy to learn. During the SWOT exercise, list factors in the relevant boxes. It’s that simple. Below are some FREE examples of SWOT analysis – click to go straight to them.
A SWOT strength could be:
- Your specialist marketing expertise.
- A new, innovative product or service.
- Location of your business.
- Quality processes and procedures.
- Any other aspect of your business that adds value to your product or service.
A SWOT weakness could be:
- Lack of marketing expertise.
- Undifferentiated products or services (i.e. in relation to your competitors).
- Location of your business.
- Poor quality goods or services.
- Damaged reputation.
In SWOT, opportunities and threats are external factors.
A SWOT opportunity could be:
- A developing 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 SWOT threat could be:
- A new competitor in your home market.
- Price wars with competitors.
- A competitor has a new, innovative product or service.
- Competitors have superior access to channels of distribution.
- Taxation is introduced on your product or service.
A word of caution – SWOT analysis can be very subjective. Do not rely on SWOT too much. Two people rarely come-up with the same final version of SWOT. TOWS analysis is extremely similar. It simply looks at the negative factors first in order to turn them into positive factors. So use SWOT as guide and not a prescription.
Some of the problems that you may encounter with SWOT are as a result of one of its key benefits i.e. its flexibility. Since SWOT analysis can be used in a variety of scenarios, it has to be flexible. However this can lead to a number of anomalies. Problems with basic SWOT analysis can be addressed using a more critical POWER SWOT.
SWOT as taught is today’s business schools is little more than Scientific Wild Ass Guess (SWAGs) according to Cranfield’s Professor Malcolm McDonald. He makes the point that many threats are the same regardless of the business environment that is being audited. For example, common-all-garden threats would include the weather, competitors, changes in technology, regulation and deregulation, and the impacts of competing countries. In strengths you’ll get good products – but that could mean anything. Under weaknesses you get equally general and vacuous points such as the price is too high. This type of SWOT analysis is too general and is not much use to marketing managers. SWOT needs to be segment specific. SWOT should look at groups of customers and their perception of your brand, what price they will pay, the place where they buy it, the products that they buy and so on. Otherwise your SWOT analysis is averaged and not specific.
SWOT analysis should be focused upon a segment of the market. Then you can ask – what are the Critical Success Factors(CSFs) that are pivotal to the buyer decision process – in that segment? Then you need to weight the CSFs so that you can separate those drivers that are most important. When considering strengths and weaknesses, in true marketing fashion you need to take the consumers’ perspective when completing the SWOT. You also must factor in the customers’ view of your business in relation to the competition i.e. relative to competitors. So you can match key CSFs to opportunities. You can rank those opportunities that are most profitable or sustainable. Then you need to factor in the impact of threats. Finally you should dovetail SWOT with the rest of your strategic thinking.
Having arrived on this page you have probably surfed the Internet and scoured books and journals in search of the history of SWOT Analysis. The simple answer to the question What is SWOT? is that there is no simple answer, and one needs to demonstrate a little academic wisdom in that nobody took the trouble to write the first definitive journal paper or book that announced the birth of SWOT Analysis. There are a number of contrasting, if not contradictory views on the origin of SWOT. Here are a few of the leading thinkers on the topic (and if you have more please let us know so that we can add them). More . . .
A summary of FREE SWOT analyses case studies are outlined as follows (those in the table above are far more detailed and FREE!):
SWOT Analysis Yahoo!