Most companies operate in a highly complex and competitive business environment. This increases the need for effective market analysis, which strengthens your position in the market and helps you stay ahead of your competition.
One such market analysis tool is SWOT. A SWOT Analysis helps you understand the company’s internal and external operations, allowing you to better identify and fulfil clients’ wants and needs. So, what is a SWOT Analysis and how can this tool help your company reach its goals?
What is a SWOT Analysis?
A SWOT Analysis is the study of the micro and the macro environment surrounding your company to determine their Strengths, Weaknesses, Opportunities and Threats. It allows a business to determine the competitive advantage they hold in the market, while identifying shortcomings that could undermine its chances of success.
The Benefits of SWOT Analysis
Conducting a SWOT Analysis allows your company to assess its position in the market, regardless of the industry. More than that, it helps you set objectives based on realistic, internally consistent, and focused aims.
Identifying clear goals allows you to create step-by-step plans to achieve your objectives. These plans are in place to help your company grow efficiently, which in turn saves time and money.
Conducting a SWOT Analysis
The micro environment is composed of individuals, factors and forces which form part of the organisation’s internal environment and directly affect your performance, such as suppliers, competitors and clients. This allows you to determine the strengths and weaknesses of the company. On the other hand, determining opportunities and threats is achieved through an analysis of the macro environment. The macro environment is made up of those factors and forces that are external to your company and are therefore, uncontrollable. Examples of the macro environment include legal, technological, natural, socio-cultural and demographic factors.
Once you have identified the factors that make up your micro and your macro environment, you should draw up a table covering the four elements of SWOT. This is done through brainstorming sessions where you should ask questions about the current reality of the company, as well as what would happen in hypothetical situations. For example, what precautions are we taking to prevent our website being hacked? What would happen should a natural disaster strike and damage our offices? Does our pricing put us at an advantage over our competitors?
By asking these questions, you can capitalize on present opportunities in the market that play to your strengths. Just as importantly, you can improve and defend your weak spots, while preparing yourself for possible openings and threats in the future.
An Example of SWOT Analysis
Using a specialty travel touring start-up as an example, let’s see what a SWOT Analysis might look like:
This analysis allows the company to understand its internal works; what it can offer to its clients, such as niche travel expertise, and what they need to work on, such as increasing their advertising budget. More than that, the company is able to identify the external works; what opportunities they can act on, such as targeting new countries, and possible threats that might harm them, such as possible flight restrictions. By keeping all this in mind, the company can draw up more efficient plans that will strengthen its position in the market. Ultimately, that strategic insight will put you ahead of your competition.