SWOT analysis is a pillar of the business strategy, it is essential for companies to put in place their business plan, or a product launch. It is indispensable to make decisions are affecting the marketing strategy.
The SWOT acronym means Strengths, Weaknesses, Opportunites and Threats, this analysis will make you able a synthetic overview of the situation of the company classifying the strengths and weaknesses of the company but also the opportunities and threats. It is easy to use and faster applicable than Porter or Pestel analysis, which we will be talking about in Part 2 and 3 of this article on the key tools of strategic analysis. The purpose of the SWOT matrix is to gather and cross internal and external analyzes with micro and macro environments of the company.
This is the longest phase,
for this we can contact managers departments of the company to meet to do a typeof brainstorming.
Internally, we find the Strengths and Weaknesses:
– Strenghts are positives elements of the company that gives it lasting benefits over the competition.
– Weaknesses, conversely are the negatives elements of the company, but they can be improved.
Some information you will need to know for internal analysis:
- Managerial (political analysis of leaders): company management
- Organizational: company structure
- Technical: production capacity utilization
- Financial: Results, margins, profitability
- Human: Motivations, training, skills
- Logistics: stock management services, delays, location
- Commercial: Turnover, market share, 4P
The SWOT analysis, made by the company itself must be objective, which is not easy.
Externally, we find the Opportunities and Threats:
– Opportunities, are the external opportunities or situations which the company can take benefits.
– The threats they bring together problems, external obstacles that can affect, limit or prevent the development of the project.
Some information you will need to know for external analysis:
For the macro environment, we must take into account the political, legal, environmental, social, demographic, economic, socio-cultural, and technological.
For the micro environment, we interest first, to the offer, that is, the market (sales in volume and value), with the aim to conclude if it’s a mature market, carrier, or declining. Then we interest on the segments, that is, the category of products on the market, and finally to the competitors (their identity, market share, sales in value and volume, positioning.)
Always for the micro environment, we interest on the consumer demand, it is important to collect quantitative data (household consumption) as well as qualitative data (profile of consumers in the market).
Retain data that has the most impact on the business
That is, those who influence decisions to take, all the above information will not be necessarily relevant, keeping only those that are to be taken into account to determine the marketing strategy. So you have to prioritize and classify then in the matrix.
Determine the strategy, the main lines
– The expansion offensive strategy « Strengths-Opportunities »: Use the internal forces to act on the opportunities of the environment.
– The expansion defensive strategy « Weaknesses-Opportunities »: Affecting the weaknesses to seize opportunities.
– The defensive strategy « Strengths-Threats »: Use internal forces for protect itself from threats.
– The strategy of repositioning or diversification « Weaknesses-Threats »: Decrease weaknesses to reduce the fragility of the business to threats from the environment.