What is a SWOT Analysis?
SWOT analysis is a tool for analyzing a business and its environment. It is the first stage of planning and helps marketers and new entrepreneurs to focus on key issues.
The acronym SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
- S – Strengths
- W – Weaknesses
- O – Opportunities
- T – Threats
Strengths and weaknesses are internal factors. Opportunities and threats are external factors. Lets look at a few examples within the context of analyzing your competitors. For example:
Business Survival By Applying SWOT Analysis:
A strength could be:
- Specialist marketing expertise
- New, innovative products or services
- Location of business
- Any other aspect of their businesses that adds value to their products or services
A weakness could be:
- Lack of marketing expertise
- Undifferentiated products or services (i.e. in relation to your business)
- Location of their businesses
- Poor quality goods or services
- Damaged reputations
In SWOT, opportunities and threats are external factors. For example:
An opportunity could be:
- A developing market such as the Internet
- Mergers, joint ventures or strategic alliances
- Moving into new market segments that offer improved profits
- A new international market
- A market vacated by an ineffective competitor
A threat could be:
- A new competitor in your home market
- Price wars among competitors
- A competitor has a new, innovative product or service
- Competitors have superior access to channels of distribution
- Taxation (such as VAT)is introduced on your product or service
You can apply the SWOT analysis methodology to your business or your competitors businesses as you try to assess the position of any of these organizations.
Now try to do a SWOT analysis of your business idea.
For further details about SWOT Analysis click here.