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The SWOT analysis which stands for Strengths, Weaknesses, Opportunities and Threats is a critical feature of the overall marketing plan and emerges from an audit of the marketing function. It should cover the whole company and scrunch down into the detail of each business segment and product. It effectively looks at the current environment and business practices but if properly conducted, will provide the management and owners of the company, with a clear understanding of where the organization is headed.
Too often the SWOT analysis process will end up as a jumbled list of issues and the more effective ones will help identify needs, what people buy and specifically help you to understand your competitors. Once it is completed you will have a list of issues, it is then necessary to consider the impact of those issues and craft a solution.
You will often see examples of a SWOT analysis drawn up as a matrix in quadrants and if you've read the previous article you will know that these emanate from two key variables; internal (company) and external factors.
Let's take just one of these quadrants – Threads – this one element can then be further divided into another matrix which can be drawn up to show the likelihood of it occurring along one axis and the level of its impact on the other. In this way you end up being able to track certain events and place them in one of the quadrants as follows;
- High likelihood, major impact
- High likelihood, low impact
- Low likelihood, high impact
- Low likelihood, low impact.
Where would you place your efforts, resources and money to combat the threat? If it is both highly likely to happen and the effect on your business would be great, then it's a sort of no brainer. Similarly, although you need to be aware of the potential, you would not need to spend too much time worrying about or planning to avoid, an event in the fourth quadrant.
Examples of the above can be anything you like; for example it could be that you are a retailer and one of the major supermarket chains applications for planning permission to open a store just down the road. The local authority you know could be keen to attract this sort of business to regenerate the area, so it's probable that this will go ahead. The effect on your business could be catastrophic depending on what your business is. So you really need to work out what to do about it; open an on-line shop, stock more diverse items that may be outside the normal range for the superstore, you may even consider moving your business.
An example of low likelihood but high impact would be a fire so a thorough risk assessment and preventive measures such as; insurance, staff training, provision of suitable fire extinguishers, visit from the local fire officer to advise you etc, would be necessary.
The same process should be completed for each of the SWOT elements until the final analysis is completed. The end result will be a three or four page summary of the critical findings, which will slot into the marketing plan and provide a much clearer understanding of what is needed to ensure the business survives into the future.
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