SWOT Analysis: Definition
SWOT analysis is defined as an acronym for Strengths, Weakness, Opportunities, and Threats which is an effective market research analysis technique. Usually, SWOT analysis is used to evaluate an organization’s performance in the market and is used for developing effective business strategies.
This analysis framework, which is now a trusted assessment source that organizations rely on to understand the scope of opportunities and threats by analyzing the strengths and weaknesses.
Strengths and weaknesses are primarily for internal analysis of an organization (in terms of market reputation, manufacturing line location, patents, etc.). To improve these factors, constant work needs to be put in over a course of time. But, opportunities and threats are external (in terms of competition, prices, associated partners, etc.) to an organization and they have no control over the changes that might occur to these external factors.
SWOT analysis is also used in micro situations such as –
- When an organization’s strength is the product quality and there are chances of conversion of a particular deal, it will be advisable for the organization to assign a capable workforce for the closure of this deal.
- Identifying weaknesses and their corresponding hindrances, the organization can strategize on how to overcome the weaknesses. For instance, if the sales results are a definite weakness for a company, they can try to minimize or eliminate it by regular training for the sales employees, providing access to multiple tools so that they can work off their skills, implementation of an efficient Customer Relationship Management software and other such corrective measures can be taken.
- A competitor losing its customers and going bankrupt can be a huge business opportunity for an organization intending to expand operations. Proactive research on how to operate, demographic segmentation and taking advantages of the identified strengths to ensure the competitor’s market is explored.
- Taking into consideration, organizational strengths and weaknesses, factors which may cause harm to the organization’s reputation can be identified. For examples, if the market forecast suggests a downfall in the economy, an organization can be prepared for it by reducing unwanted expenditures, appointing existing star-performers for sales conversions, etc.
Organizations conduct SWOT analysis extensively to make internal (strengths and weaknesses evaluation) and external (opportunities and threat evaluation) improvements as it can access an excessive pool of information. Already-existent companies should execute this strategic competitive analysis method at least once or twice a year to make sure they proactively analyze their market to keep making enhancements in various aspects of their organization.
Learn more: Market Research Survey
SWOT Analysis Template in Market Research
The SWOT Analysis template is a walk-through of how to conduct SWOT analysis using the 4 models: Strength, Weaknesses, Opportunities and Threat analysis. Here are the 4 SWOT Analysis templates in details:
Strengths: What is the organization good at doing? What are the key differentiators do they offer? What are the primary resources they have?
Strengths depict the positive factors of an organization which they can control. They can be analyzed by dividing the organization into sales, finance, marketing, research and development, and other structural elements. Strengths involve the positive contribution of key stakeholders in terms of experience, knowledge, educational background and such skills that contribute towards the performance of an organization. This analysis factor also includes tangible aspects such as distribution channel, existing customers, generated finance, accessories etc.
Factors that add value to an organization’s operation by internal analysis and in turn build a competitive advantage called Strengths.
Learn more: Quantitative Market Research
Weaknesses: Where do you think there is a scope for improvement?
Weaknesses are those elements of the business which still need a lot of enhancement and are bringing the organization down in more than one ways. There are certain areas of business which might not be shaping up according to expectation and this is leading to friction in achieving the desired goals.
Segments such as subject matter expertise, lack of financial support, unavailability of appropriate technological tools for training, an inappropriate location of the organization, etc. can fall under the category of “weakness”. These segments are under an organization’s control but are contributing to significant losses.
Weaknesses are negative attributes which are contributing to an organization’s competitive disadvantage. An accurate understanding of negative characteristics will help an organization to improve and compete with the best in the business.
Opportunities: What are the opportunities in the market, the ones from which an organization can prosper?
Opportunities gauge attractive elements of a market which can contribute towards more profits for an organization. These are external to an organization’s environment. There are always new avenues the crop up after executing marketing strategies. So, opportunities are generally the outcome of revenue/market growth, changes in market perception, a solution to difficulties faced by the market currently, the ability of an organization to add value to the market need that in turn increase brand value. Associate a timeline for the identified opportunity after understanding whether it fits the current marketing strategy and also, whether the opportunity can be seized in the pre-decided timeline.
Threats: Which aspects of the market are a threat to a business?
Threats indicate those factors which may cause harm to the organization’s existing marketing strategies and also eventually lead to business losses. An organization can profit from inculcating the possibility of these risks into their marketing plans. Threats are those uncontrollable factors which will create business losses. Competitors, change in government policies, bad press coverage for products/services/events, a shift in customer behavior, change in market dynamics which might make certain product outdated and other similar angles are considered to be threats.
Learn more: Qualitative Market Research
How to do a SWOT Analysis for a Business Plan?
There are two types of factors in business: Internal and External. The factors which would exist irrespective of the existence of a specific organization are considered to be external and those that exist within an organization are of course, internal.
Implement the below mentioned 8 steps for SWOT analysis to develop a business plan:
1. Have a clear SWOT analysis objective: The marketing team can discuss which topic needs immediate attention and this objective can be put to paper. This way, SWOT analysis can be conducted in an organized and effective manner. For example, if an organization intends to know whether or not to launch a new product – this becomes the primary objective of SWOT.
2. Conduct research to understand the target market and industry: For successful implementation of SWOT, there should be a thorough understanding of what the market has to offer. Insights obtained from research about technology, customer service, competitors, etc, can be used to conduct an exhaustive SWOT analysis.
3. Identify business’s strengths: An organization should understand what their strengths are, what are those features of their functioning which are better than the others in the market. Answers to these questions must be noted down. Workforce, location of the organization, product quality, etc. are some examples of an organization’s strengths.
4. Identify the business’s weaknesses: There are certain elements of the organization which needs improvement. Marketers should create a list of these elements which they believe are harming their reputation in the market. Acknowledging these weaknesses and working to eliminate them should be the intention of the analysis. This list can include aspects such as the reduction in product clients, constant downsizing of market share, lack of proper staff members et al.
5. Identify potential opportunities: Evaluate external factors which can be lucrative for business growth. These are not internal and there are chances of the same factor being a threat to the business as well. While listing opportunities, one should keep in mind that opportunities should not be a threat to the business. For example, launching a new feature after opportunity analysis might cause damage to business in case there are competitors who offer the same feature at lower costs.
6. Identify threats to the organization: Note down factors that are not a part of an organization’s ecosystem but are threats to business growth. Unstable markets, the increasing competition in the market etc. are some threats to a business.
7. Allot importance to various factors from SWOT analysis: After completing step 3 to step 6, four different lists will be formed. The ideal way of amalgamating these lists is creating a side-by-side matrix. A matrix helps in generating a comprehensive picture for SWOT analysis.
Once the lists are put into a matrix, the degree of importance corresponding to each of the points so that marketing strategies for immediate implementation can be put into action.
Ask the following questions to understand the priority:
- Can the organization implement their strengths to benefit from existing opportunities?
- Can the organization implement their strengths to get a grip on identified threats?
- What are the steps to be taken in order to make sure the organization’s weaknesses do not hinder taking advantages of the opportunities?
- What can be done to reduce weaknesses to get a grip on threats?
8. Create a strategy to solve identified problems: After creating the SWOT matrix and answering all these questions, the marketing team can work to create marketing strategies to attain organizational aims.
SWOT Analysis Example with Questions
Purpose: Launching a new mobile variant
- What are your strongest assets?
- How are your products/services better than competitors?
- What is your unique selling point?
- How efficient is your workforce?
- What do your existing customers have to say about their experience with your organization?
- Which sections of your organization need improvement?
- Which aspects of your business can the competitors benefit from?
- Do you lack subject matter expertise?
- Do you think your business has made enough money?
- How progressive are your competitors in terms of coping with market trends?
- Which trends do you think can bring you new opportunities?
- Will these trends benefit the market?
- Where does the current market lack?
- Are your competitors not successful in meeting customer demands?
- If yes, can you target those customers?
- Are there competitors in the market who can cut down your business?
- What are the roadblocks you are currently facing?
- Do your products/services comply with every existing law?
- Do you foresee a change in government laws in the near future?
- Do you believe your target audience might evolve in their product preferences?