Have you or your company performed a SWOT analysis lately? If not, now is a great time to use a it to build a big-picture view of your company.
A SWOT analysis looks at an area from a few directions, specifically:
- Strengths – characteristics that are helpful in achieving your goals
- Weaknesses – characteristics that are harmful to achieving your goals
- Opportunities – external conditions that are helpful in achieving your goals
- Threats – external conditions that may reduce the chance of achieving your goals
A SWOT analysis helps you understand the “lay of the land.” It’s a chance to put everything on the table and understand the environment you are working in. It helps identify both the internal and external factors that influence the ability to reach your goals. As part of any annual planning, your SWOT analysis should be updated and goals appropriately adjusted.
SWOT Analysis Description
Looking specifically at each area of the SWOT analysis, here are just some of the suggested characteristics to review:
Strengths – Customer satisfaction and loyalty metrics, brand recognition, intellectual property and patents, exclusive or advantageous contracts with highly desired suppliers or products, first-mover advantage, and high barrier to entry.
Weaknesses – Essentially, weaknesses will be the opposite of strengths. Low customer satisfaction, low brand recognition, low barrier to entry, little IP, high costs, lack of any advantageous supplier agreements.
Opportunities – New technologies, unfulfilled customer need or demand, loosening of external policies and laws, increased access to international markets.
Threats – Products that are out of favor or end of life, increase in copy-cat products across the market, introduction of new regulations, unfavorable economic conditions.
Analyze for Competitive Advantage
The goal of most companies is to sustain a competitive advantage. Michael Porter describes competitive advantage as two types: cost advantage and differentiation advantage.
Competitive advantage is achieved by using your company’s resources (capital, human, brand equity, IP, etc.) and your company’s ability to create efficiencies, quality, and innovation. These are the areas that should be included in your SWOT.
Marketing is often the owner of the SWOT task, using SWOTs to build detailed profiles of competitors in the market. Areas of analysis include your competitor’s cost structure, profit margin, resources (including capital and human), expertise, brand positioning, product differentiation, and market penetration (rates and trends).
Collecting this information is no easy task! It is time-consuming and requires a bit of sleuthing, especially if your competitor is a privately-held company. Be sure to perform your own SWOT in the same manner so you have an aligned comparison.
Putting it all together, your SWOT analysis is the key to identifying areas that currently support and currently threaten your competitive advantage. This works whether you are performing a SWOT analysis for a large corporation or your own small business. You can even create your own personal SWOT – great for those New Year’s resolutions!