In order
to swat the competition you need to understand SWOT. SWOT stands for
Strengths, Weaknesses, Opportunities and Threats. It's a way to
analyze a company's or a department's position in the market in
relation to its competitors. The goal is to identify all the major
factors affecting competitiveness before crafting a business
strategy.
| SWOT
Breakdown |
| SWOT identifies
the internal and external factors that affect an organization.
Here’s the breakdown of SWOT by internal and external
variables: |
| Internal
factors |
| (Strengths and
weaknesses) |
|
A corporate
structure, culture and resources |
|
Shareholders |
|
Customers |
|
Competitors |
| External
factors |
| (Opportunities
threats) |
|
Politics |
|
Technology |
|
Society |
|
Economics |
"It comes from an old term from the strategic planning field,"
says Fred Wiersema, co-author of The Discipline of Market Leaders.
Marketing gurus have taken familiar terms from old "situation
analysis" principles -- like core competencies (your company's main
business), liabilities (weak points that need improvement),
customers and competitors -- and simply given them a catchy new
acronym, according to Wiersema.
"The purpose of strategy is to be really clear before you take
the direction. The point of a SWOT analysis is to have the best shot
at a grounded plan," says Rashi Glazer, co-director of the Center
for Marketing and Technology at the University of California at
Berkeley.
For example, an information technology department needs to
determine the strengths and weaknesses of its people and its
technology. It also needs to make sure the IT strategy complements
the company's business goals. The department head needs to ask: What
is each staff member good at? What are they not good at?
Project leaders also must consider opportunities and threats --
or customers and competitors. How attractive is the market or
direction they're considering? What's their market share and cost
structure?
Delta Air Lines Inc., for example, chose to invest in a
multibillion-dollar customer service system that addresses the
flight delay problems experienced by 20% of its passengers. Although
some companies might think the move was excessive considering 80% of
customers have no problems, Delta believed customer service was an
important area for increasing market share and that competitors
could pose a threat if Delta didn't address the problem.
Another example is Dell Computer Corp., which is a great example
of how an IT company can use a SWOT analysis to carve out a strong
business strategy, according to Glazer.
Dell recognized that its strength was selling directly to
consumers and keeping its costs lower than those of other hardware
vendors.
As for weaknesses, the company acknowledged that it lacked solid
dealer relationships.
Identifying opportunities was an easier task. Dell looked at the
marketplace and saw that customers increasingly valued convenience
and one-stop shopping and that they knew what they wanted to
purchase. Dell also saw the Internet as a powerful marketing tool.
On the threats side, Dell realized that competitors like IBM and
Compaq Computer Corp. had stronger brand names, which put Dell in a
weaker position with dealers.
Dell put together a business strategy that included mass
customization and just-in-time manufacturing (letting customers
design their own computers and custom-building systems). Dell also
stuck with its direct sales plan and offered sales on the Internet.
"Clarity in strategy works. Fuzzy strategies fail. Most
strategies fail because they don't have a clear direction," Glazer
says.
Analyze
This
To help you do a
SWOT anaysis, use these sample questions as a
guideline
STRENGTHS:
Define
areas you excel in, such as the company’s core competency and
resource analysis |
|
What does your
company do well? |
|
How strong is
your company in the market? |
|
Does your
company have a clear strategic direction? |
|
Does your
company’s culture produce a positive work
environment? |
WEAKNESSES:
Evaluate
your liabilities |
|
What could be
improved at your company? |
|
What does your
company do poorly? |
|
What should be
avoided? |
|
Is your company
unable to finance needed technology? |
|
Do you have
poor debt or cash flow? |
OPPORTUNITIES:
Analyze
your customers and market attractiveness |
|
What favorable
circumstances are you facing? |
|
What are the
interesting trends? Is your company positioned to take on
those trends? |
|
Is your company
entering new markets? |
|
Is your company
advanced in technology? |
THREATS:
Check out
what your competitors are doing and assess other potential
challenges |
|
What obstacles
do you face? |
|
What is your
competition doing? |
|
Are the
required specifications for your products or services
changing? |
|
Is changing
technology threatening your position? |
|
What policies
are local and federal lawmakers backing? Do they affect your
industry? |
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