Every MBA student will have studied SWOT at some point. SWOT, or “Strengths, Weaknesses, Opportunities and Threats” is a classical yet still effective tool for analyzing competition. By doing a SWOT analysis, you can analyze your marketplace in a very systematic way.
Here are the basics of how to do a SWOT analysis.
In what arena is your company particularly strong? How does that play out in the marketplace?
Look for strengths that can’t be emulated by your competitors and try to build a “moat.” In other words, try to create a competitive advantage that competitors can’t possibly steal.
On the other hand, it’s equally important to know what your weaknesses are. If you don’t have an eye on your weaknesses, it’s easy to get blindsided.
For example, say your weakness is customer support. You just don’t have the cashflow to hire 15 more support staff at $1,500 a month.
If you’re aware of this weakness, you can implement systems like a knowledge base, live chat or other such tools to help reduce the amount of support requests you get.
If you’re not aware of the weakness, you’ll just provide bad support and alienate customers.
Successful businesses focus on opportunities, not urgent problems. In business, there’s always going to be urgent problems that need immediate attention. It’s the companies that can manage to stay focused on their opportunities that win out in the end.
Look for opportunities and identify ways you can take advantage of them. Lay out opportunities in each and every aspect of your business.
Keep an eye on your threats. These could include upcoming market changes, like new technology that could make your product obsolete. It could include new or existing competitors. It could even be internal; for example a growing rift between the marketing department and the product development department.
==> What Areas SWOT Encompasses
When you’re looking for strength, weaknesses, opportunities and threats, these are the areas you should assess:
* Marketing and outreach
* Management, personnel and talent
* Finance, cashflow and cash on hand
* Product positioning and price
* Brand and brand perception
* Intellectual property and patents
* Supply chain and supply costs
If possible, do a SWOT analysis for each category. This will give you a very in-depth analysis of all the most important aspects of your business.
==> Implementing Your SWOT Analysis
A SWOT analysis should be performed at least every six months. Upon completing a SWOT analysis, ask yourself: What’s the #1 highest leverage arena I could compete in today?
Craft an action plan around that answer. It could be based on leveraging a strength, fixing a weakness, exploiting an opportunity or mitigating a threat. Find the highest leverage activity and approach it head on.