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SWOT Analysis

Disciplines > Marketing > Marketing Planning > SWOT Analysis

Strengths | Weaknesses | Opportunities | Threats | Analysis | See also

SWOT Analysis is a method for understanding your strengths, weaknesses, opportunities and threats and so build a better business and marketing strategy.

Strengths

Strengths are the things that you are good at that you can use to your advantage. They can be used to grab opportunities, fend of threats and compensate for weaknesses.

It is surprising how often companies have strengths that they do not realize or use. They can be discovered by looking for unexpected successes, talking to people in all areas.

There are many possible strengths, including:

• Cash or the ability to raise funds.
• Large and loyal customer base.
• Skilled employees in various disciplines.
• Intellectual property that cannot be copied.
• Technology

Weaknesses

Weaknesses are those things where you lack skills, resources or other means. In particular they are areas where others could take advantage of you. In many ways, they are the opposite of strengths as both are internal factors within the organization (as opposed to opportunities and threats). It has been said that every strength is also a weakness, for example where you could be stronger in this area, or where the strength pulls you in its direction and away from weaknesses.

Because we do not like to think about our weaknesses, we often ignore them. This gives opportunity for others. Paradoxically, to understand, accept and address weakness requires strength.

Areas of weakness in business are, perhaps unsurprisingly, often found in the same list as strengths.

Opportunities

Opportunities are external situations where there is a chance of gaining something. To take advantage of an opportunity requires action. This should lead to you gaining something desirable, such as sales, market share, profit, brand exposure and so on.

There are two problems with opportunities. First, you may be so busy with other activities you do not take up opportunities. This is worsened when you think about the investment so far in current work. This would be wasted if you dropped this in order to take up the opportunity. This indicates the second problem, that to take up opportunities means stopping doing something else. Getting either of these wrong can lead either to opportunities being missed or opportunities taken that eventually fail.

To take up an opportunity, you first have to see it, which requires constant scanning and creative perception. You also need to truly understand what it would required to take the opportunity, including resource, skills and time (it is very easy to under-estimate these). Taking opportunities is often risky, so you also need to balance opportunity activity to more stable and understood activity that is more likely to be successful (albeit less profitable).

A way to give you the space to take up opportunities is to have a certain slack in the organization, with people who can respond quickly to these. It can also help to know beforehand what work you would stop in order to work on the opportunity.

Threats

Threats are risks. They are external things that could happen to you that would cause you problems. This includes costing your money, losing you customers and generally reducing your ability to trade normally.

Threats include:

• Actions of competitors, such as price wars, new product introductions and employee poaching
• Demand in markets declining
• Market prices declining
• Supplier prices or operational costs increasing
• Governments (including overseas) introducing onerous new laws or becoming more aggressive
• Weather or other natural events that could cause you problems

Handle threats first by understanding them and then by finding ways to either decrease their likelihood or decrease the impact they would have on you. You can also build contingency plans to handle them should they occur.

Analysis

Doing SWOT analysis means first seeking out candidates for each of the SWOT elements. It is often easy to get a big list for each, so the next stage is to reduce them to the most significant items that you may need to address. A way to do this is to write each on a post-it note and stick it up on a big chart with the X and Y axis indicating the strength of probability and impact. This can then be used for discussion, research and prioritization so you can seek the greatest value while ensuring safety.

In this work you can also look for ways to match strengths to achieving opportunities and defeating threats, while shoring up or defending weaknesses. In this way, the whole SWOT matrix can be used as a coherent tool for planning, in particular for what otherwise might be unexpected.

See also

Change Management