Often viewed as a key step related to planning, SWOT analysis is deceptively simple despite the immense value it delivers. The system combines information from the environmental analysis and separates it into two components: internal issues (strengths and weaknesses) and external issues (opportunities and threats).
The process of SWOT analysis evaluates your company’s strengths, weaknesses, market opportunities and potential threats to provide competitive insight into the potential and critical issues that impact the overall success of the business. Further, the primary goal of a SWOT analysis is to identify and assign all significant factors that could positively or negatively impact success to one of the four categories, providing an objective and in-depth look at your business. Highly useful for developing and confirming your organizational goals, each of the four categories provides specific insights that can be used to cultivate a successful marketing strategy, including:
Strengths – Positive attributes internal to your organization and within your control. Strengths often encompass resources, competitive advantages, the positive aspects of those within your workforce and the aspects related to your business that you do particularly well, focusing on all the internal components that add value or offer you a competitive advantage.
Weaknesses – Factors that are within your control yet detract from your ability to obtain or maintain a competitive edge such as limited expertise, lack of resources, limited access to skills or technology, substandard services or poor physical location.
Opportunities – Summary of the external factors that represent the motivation for your business to exist and prosper within the marketplace. These factors include the specific opportunities existing within your market that provide a benefit, including market growth, lifestyle changes, resolution of current problems or the basic ability to offer a higher degree of value in relation to your competitors to promote an increase in demand for your products or services.
Threats – External factors beyond the control of your organization that have the potential to place your marketing strategy, or the entire business, at risk. The primary and ever-present threat is competition.
Though these forces are external and therefore beyond your control, SWOT analysis may also aid in the creation of a contingency plan that will enable you to quickly and effectively address these issues should they arise. Once you’ve established specific values related to your business offerings within the four quadrants of SWOT analysis, you can develop a strategic plan based on the information you’ve learned. Plan that will enable you to eliminate or minimize them while improving defensive strategies related to your offerings.