One of the most important facets of strategic business planning is a SWOT analysis. A useful first step is to map all the factors that you can gather against your competitors and thus attain a sense of competitive advantage and competency. The term SWOT consists of abbreviations: strengths, weaknesses, opportunities, and threats.
With SWOT analysis, you need to divide the individual market factors into four groups, each of which will be treated differently. A SWOT analysis is best suited for classifying ideas. It’s simple, effective, concise and when constructed rightfully, you have done half the work for your marketing strategy.
Strength: Strengths help you solidify your market position. They identify areas where your business is better than your competitors. These include skills, knowledge, resources, potential, and features – such as unique know-how, unique natural resources, experienced staff, strong brand, quality certification, or high-quality product or service. The real strength is, however, only what is somewhat out of the average. Knowledge of English, for example, is a necessary standard for English teachers.
Weaknesses: Weaknesses are the opposite of the strength. They include areas where your business is running worse than your competitors. Among the weaknesses are, for example, high costs, poor product taste, transport inaccessibility, a high turnover rate of employees or lack of marketing experience. It is true that the strengths of the company itself are usually the weaknesses of competition and vice versa.
What about the weaknesses in the strategy? A traditional approach usually beckons us to work on them as long as we achieve at least average results. However, there are other alternative methods of improving strategies, which include making the porous facets of the business operations more strong.
Opportunities: Opportunities represent externalities that can bring success to the company if they are identified and then put to use effectively. These include, for example, technological developments, unfulfilled customer needs, fashion trends, tax breaks, or industry standards. Surprisingly, opportunities are the most significant problems in making SWOT analysis for small businesses. Either they can’t be identified, or they are confused with the strengths, or instead of opportunities, they are viewed as a strategy that a firm could opt to use (such as entering new markets, distributing a distribution company, or targeting a specific group of new customers).
Threats: Threats include things that can reduce demand, cause customer dissatisfaction, or even jeopardize the stability of the company. Threats typically comprise of, for example, competitors’ activities, changes in customer preferences, natural disasters, or the introduction of regulatory measures and trade barriers.
Strategy Preparation: A well-compiled SWOT analysis helps when the strengths are of a large quantity. However, avoiding weaknesses usually means that the SWOT analysis has been ineffective. Hence, your next step is to prepare a strategy that is likely to challenge your analysis: how best to “sell” your current strengths, eliminate the weaknesses, take advantage of opportunities and be ready for the possible consequences of threats. With that being said, enterprises must work towards pooling together all the possible resources, should extract pertinent information and should carry out relevant studies to figure out the elements that are surrounding them on a regular basis.