SWOT Analysis of a Company: Examples and Matrix

Contents:

• What is SWOT analysis
• Who needs SWOT analysis and why
• What types of SWOT analysis are there?
• How to conduct a SWOT analysis
• Why SWOT is criticized: the main shortcomings of analysis

What is SWOT analysis

SWOT analysis is a method of strategic planning. It is an analysis of four groups of factors that influence a company: strengths, weaknesses, opportunities, and threats.
SWOT analysis is used to make decisions about a company's future development. For example, in cases where it is necessary to break out of stagnation, introduce a new product to the market, or master a different type of activity.
SWOT analysis consists of two stages. At the first stage, fill in the table shown in the figure.

Strengths and weaknesses are internal factors that can be influenced: order delivery speed, production costs, marketing. Opportunities and threats are external factors that are beyond the company's control: the emergence of strong competitors, exchange rate volatility, technological development.
At the second stage, when the external and internal factors for the SWOT analysis have been identified, a decision matrix is ​​created. It describes what needs to be done to avoid potential threats or to occupy a larger share of the market.
The analysis can be performed by one person who has information about what is happening in the company and in the market, for example, the company owner, CEO, or co-founder. But the analysis will be more objective if a team participates in the brainstorming—for example, the CEO with department heads, marketers, and so on. When many different opinions and ideas are collected, more factors can be found for analysis and decision-making later.

Who needs a SWOT analysis and why?

SWOT is most often used in business. It is used to analyze the work of a company or its individual areas, projects, branches, points of sale, and even products.
Here's why companies use SWOT analysis:

• Understand your strengths and create a unique selling proposition;
• Find weaknesses and understand how to get rid of them - for example, how to improve processes and avoid potential problems;
• Assess possible threats to the business and develop a plan to prevent or minimize them;
• Plan the company's goals for the short and long term;
• discover areas in which the company has potential for development and find ways to master them;
• find out what resources will be needed for the company to develop and strengthen its competitiveness.

What else can be analyzed using SWOT? In addition to business, this tool is also used in other areas. For example, there is a SWOT analysis of personality. It is used to identify a person's true values ​​and create a development plan for them, identify weaknesses that hinder development, and eliminate them.
There is also a SWOT analysis of a profession—it is conducted when choosing a specialty or considering career advancement. This method can help you understand which profession is right for you. For example, whether you have the potential to become a manager in the future.
The SWOT analysis method can be applied to a huge number of objects: the economy, a country, a non-profit organization, an event, and so on. English: The principles of analysis will be similar everywhere: for each object they look for strengths, weaknesses, opportunities and threats.

What types of SWOT analysis are there?

There are two types of SWOT analysis: express and comprehensive. The choice between them depends on the goals of the analysis, as well as the time you are willing to allocate for it.
Comprehensive analysis is an in-depth study of all aspects of the business. Each identified analysis factor and solution is assigned points depending on their importance to the company. To find the factors themselves, they use marketing research, open statistics, consumer surveys, and so on.
Express analysis is a quick overview of the main characteristics of the company. Points are not assigned for this method of analysis. It is suitable when you need to quickly assess the situation and decide how to proceed.
Experts advise that any organization conduct a comprehensive SWOT analysis at least once a year, and an express analysis quarterly. The effectiveness of this tool can be assessed using the example of Kodak and Netflix.
Kodak was a leader in the field of photographic materials and equipment for working with them. SWOT analysis showed that the main threat to the company was digital and SLR cameras. To protect itself from the threat, the company could have acquired promising startups introducing new technologies in this area. However, the management did not adapt to the changing world, and in 2012 Kodak declared bankruptcy.
A contrasting example is Netflix. At first, this company was engaged in the rental of discs with movies and TV series. Netflix's strength was its ability to identify and prevent threats, anticipate trends, and stay one step ahead. The company saw how online was developing, changed its development vector, and became an online cinema.

How to conduct a SWOT analysis

SWOT analysis consists of two stages. In the first stage, strengths and weaknesses are identified, opportunities and threats are determined. In the second stage, a solution matrix is ​​created. We will analyze how to do this step by step.

Strengths

Strengths are the properties of a product, team, or project that provide an advantage over other market participants. This could be a low price, cooperation with influencers, a high percentage of repeat sales, a unique production technology, and so on.
To find strengths for a SWOT analysis, you can answer the questions:

• How are you different from your competitors for the better?
• Why do customers choose your product, what do they say in positive reviews?
• Which customer acquisition channels bring good results and where are you present more than competitors?
• What special technologies do you use in production and what benefits does this provide? For example: it reduces costs and speeds up the process.
• How does the company develop and make more profit?

Weaknesses

Weaknesses are anything that hinders a company's growth or makes it weaker than its competitors. For example, poorly organized delivery and courier delays, data leaks due to employee dishonesty, and lost orders.
To identify weaknesses for a SWOT analysis, you can answer the following questions:

• What do customers write about in negative reviews?
• What are you significantly worse at than your competitors?
• What errors constantly occur in business processes?
• What prevents you from achieving your goals and increasing profits?

For example, for a mattress manufacturer, a weak point may be Low production capacity, which prevents the company from making large deliveries. Or delivery delays due to poor performance of shipping companies.
The most objective source is audience feedback. You can start with the brand's own channels: see how the audience reacts to messages and whether they trust them. Often, in the comments, people rally around the brand, becoming voluntary ambassadors.
Then it's worth checking reviews on independent platforms. Of course, people are more likely to broadcast negativity than positive information, which they perceive as normal. However, complaints can say a lot about quality, service, or even factors beyond the brand's control.

Opportunities

Opportunities are external factors that a company can use to grow, strengthen its position, or generate profit. These are external opportunities that must be recognized and seized in time.
How to find opportunities? Detector questions:

• What new needs have customers developed?
• What has changed in laws/technologies?
• Where have competitors missed the mark?
• Which resources have become more accessible?
  

Opportunities are the wind in your sails. Don't wait—act: test hypotheses quickly (for example, through targeting in TG), take advantage of "windows of opportunity" (while competitors are sleeping), and tie opportunities to your strengths.

Threats

Threats are changes in the external environment that can negatively impact a company's situation: lead to customer outflow, deterioration of reputation, and decreased profits. Such changes include, for example, an economic crisis: it cannot be prevented, but sales will decrease because people will be afraid to spend money.
The search for threats in a SWOT analysis is structured in the same way as the search for opportunities: think about what from the outside can negatively impact the business. For example, the entry of a foreign manufacturer into the market will lead to an outflow of customers, and an increase in the cost of consumables will increase the cost of the product.

Combinations

The decision matrix in a SWOT analysis contains the actions that need to be taken to develop the business. To fill out the matrix, you need to compare different groups of factors. You will get four combination options.
S + O — what strengths will help to realize the opportunities. For example, a mattress manufacturer uses environmentally friendly materials, and one of the opportunities is for large retail chains to eliminate intermediaries. The company can offer supplies to these chains now, as the product has a competitive advantage.
W + O—how weaknesses can prevent opportunities from being realized. At this intersection, solutions must be found that will correct the shortcomings and realize the opportunities. In the case of the mattress manufacturer, eliminating intermediaries from the chains means higher supply volumes, but the company has low production capacity. To seize the opportunity, it must open additional mattress production lines.

S + T — how strengths can help protect against threats. When a foreign manufacturer enters the Russian market, the company may lose some customers. However, the company has an advantage: it is willing to offer a free product test drive. This marketing decision will help maintain sales.
W + T — what weaknesses increase the likelihood that threats will harm the business. The company has high production costs for its industry. The threat of a large foreign competitor entering the market with a cheap product pushes it to modernize as quickly as possible.
After comparing all the strengths, weaknesses, opportunities, and threats, a list of specific solutions is formed: what can be done to develop the company or prevent future failure. The solutions found as a result of the analysis are assigned priorities and consistently implemented.

What SWOT is criticized for: the main shortcomings of the analysis

Some marketers and managers point out that SWOT analysis produces results that are too subjective and vague.
For example, Lawrence Minsky, an associate professor at Columbia College Chicago, and David Aron, a professor at Dominican University, believe that SWOT analysis is ineffective in the form in which it is usually used.
They draw attention to the fact that the results obtained using the tool are difficult to interpret, and the factors in SWOT analysis have no hierarchy. “All four squares of the grid are equally significant. "The table is just a snapshot of the current situation or, worse, the personal experiences of the participants at the time of the brainstorming session," write Minsky and Aaron.
In 1999, 212 managers from Fortune 1000 companies were asked about SWOT analysis. The majority said that the tool had a rather negative impact on results.
In this article, marketer Alexander Repyev criticizes the SWOT analysis method. In his opinion, SWOT "is liked by irresponsible professors because it is ideal for teaching and discussion in 'scientific' texts." Consultants like to include SWOT in their proposals because, due to its ambiguity and vagueness, it allows them to shirk responsibility for clients' failures. At the same time, the cumbersome nature of SWOT allows them to give the appearance of scientific validity to their statements, the marketer believes.