Does your business put a priority on its business intelligence process? Does it monitor your competitive analysis, marketplace trends, and its understanding of market change? And most importantly, does it put a priority on making changes as a result of insights from this analysis? This post discusses the business intelligence SWOT analysis and its usefulness in both a strategic as well as tactical sense.
How Is Your Business Intelligence Process Part 1 Overview
The Business Intelligence Process Part 2 Market Analysis
The Business Intelligence Process Part 3 Competitive Intelligence
Every now and then we get requests from authors to put their work on our blog. Such is the case of:
An Essential Guide to SWOT Analysis By Justin Gomer and Jackson
This is a well-written guide on the subject of SWOT analysis and what follows are some abstracts from the guide. Once we have discussed the process and its value to business intelligence, we will tell you why we like the guide and a few pointers to the authors on how they could turn very well written to extraordinary.
What is a SWOT analysis?
SWOT Analysis is a useful technique for understanding your Strengths and Weaknesses, and for identifying both the Opportunities open to you and the Threats you face.
It represents a methodological tool designed to help workers and companies optimize performance, maximize potential, manage competition, and minimize risk. It is about making better decisions, both large and small.
It can help you determine the efficacy of something as small as introducing a new product or service or something as large as a merger or acquisition.
Why conduct SWOT?
SWOT is a method that, once mastered, can only enhance performance. What makes SWOT particularly powerful is that, with a little thought, it can help you uncover opportunities that you are well-placed to exploit.
And by understanding the weaknesses of your business, you can manage and eliminate threats that would otherwise catch you unawares.
More than this, by looking at yourself and your competitors using the SWOT framework, you can start to craft a strategy that helps you distinguish yourself from your competitors so that you can compete successfully in your market.
When to conduct SWOT?
You can use a SWOT analysis in two predominant ways – as a simple icebreaker helping people get together to “kick-off” strategy formulation, or in a more sophisticated way as a serious tactical tool in the competitive sense.
What makes SWOT particularly powerful is that, with a little thought, it can help you uncover opportunities that you are well-placed to exploit. And by understanding the weaknesses of your business, you can manage and eliminate threats that would otherwise catch you unawares.
More than this, by looking at yourself and your competitors using the SWOT framework, you can start to craft a strategy that helps you distinguish yourself from your competitors so that you can compete successfully in your market.
Note that we believe the SWOT analysis should definitely be used in conjunction with the market and competitive analyses and is best when it is conducted following these efforts.
Check out these components of SWOT.
Components of SWOT
Once you’ve identified the subject of your SWOT analysis, it is time to begin. SWOT consists of four components–Strengths, Weaknesses, Opportunities, and Threats.
These four components are organized into two categories–internal and external. That is, look internally for Strengths and Weaknesses, and look externally for Opportunities and Threats.
Strengths
Once you’ve identified the subject of your analysis (e.g. should we add x product to our lineup?), it is time to identify your strengths. Quality and reliability, for example, should always be strengths for any organization.
More specifically, Charlie Ioannou defines strengths as “the resources and capabilities that can be used to develop a competitive advantage” (Ioannou, SWOT Analysis – An Easy to Understand Guide, 47-49).
This brings us to perhaps the most important aspect of the Strengths assessment: it is imperative that you analyze your strengths (and weaknesses) in relation to your competitors.
In other words, what are the unique features of your company–a well-established company with established brand trust, lower production costs, superior customer service, stronger web presence, etc.–that will provide a competitive advantage?
Identify those and you’ve identified your strengths.
Weaknesses
Now identify your weaknesses. The more honest you are here the better. One way to think of weakness is the absence of strength.
Therefore, the items of your business model you did not identify as strengths above are the first place to look for weaknesses.
Cash flow, brand recognition, marketing budgets, distribution networks, the age of your company, etc. are all places to consider when assessing weaknesses.
The idea here is that you’ll turn these weaknesses into strengths. Doing so, however, requires an honest assessment of where your company needs to improve.
Now that you’ve looked internally for Strengths and Weaknesses, it’s time to look externally for Opportunities and Threats. Opportunities and Threats interact similarly to Strengths and Weaknesses.
That is, they draw on similar dynamics (external ones, in this case) to assess whether those create opportunities or threats to your business.
Opportunities
Here is where you identify the opportunities for growth, greater margins, and a larger market share. Again, assessing the opportunity in relation to the competition is imperative.
What opportunities are there for you to distinguish your company from your competitors? What opportunities can you identify to offer a similar service or product at a higher quality or at a lower price than your competition? What are the needs of your customers that your field does not currently address?
Technology is an external factor that always presents new opportunities and, as we shall see, new threats. What technological innovations open up new opportunities for your business to lower costs, speed up production, market more effectively, or improve customer service?
The key to opportunities is that they must be acted on. Remember, if you don’t act your competitors will.
Threats
Lastly, in which areas are your company at risk? Is your competitor developing a product to compete with one of yours? Is there a new or bigger company poaching your best employees? These are all threats to your business.
The Harvard Business Reviews defines “Threats” as “possible events or forces outside of your control that your company or unit needs to plan for or decide how to mitigate.”
What about new legislation? Does a new law or proposed law threaten your production costs? What about new tax laws? A yes to any of these equals a threat.
Lastly, just as technological innovation may provide an opportunity; it can also issue a threat.
Threats to the business now include lawsuits over insurance liability, legislation proposing banning the service, and higher profit-margins at competing companies.
Choosing an action plan after a SWOT analysis is a complicated process that is specific to each decision in each company.
However, there is a general philosophy regarding how to approach action with the results of a SWOT.
Here it is:
Another important thing to remember is that the purpose of a SWOT analysis is to assess your organization’s current position. Therefore, as the University of Kansas encourages, use your SWOT to look for a “stretch,” not just a “fit.”
SWOT’s are often improperly used to justify complacency and verify current practices. If you are conducting a SWOT to identify areas of need and/or growth, it is imperative you use the analysis to diagnose where you can “stretch.”
Consider an example of Internet Privacy
Running a business today almost certainly means having a digital presence, and being connected to the Internet. While the benefits of this transformation are many, Internet privacy and security issues are still a daily challenge, with many solutions in the marketplace to address them.
Yes, internet service providers (ISPs) such as Comcast, Verizon, and AT&T are free to track all your browsing behavior and sell it to advertisers without consent.
ISPs have access to literally all of your browsing behavior – they act as a gateway for all of your web visits, clicks, searches, app downloads, and video streams.
This represents a huge treasure trove of personal data, including health concerns, shopping habits, and porn preferences. ISPs want to use this data to deliver personalized advertising.
Looking for a valid VPN solution?
Small business SWOT examples
Lastly, here are two examples of SWOTs for small businesses. The first example discusses the restaurant business and the second the construction industry. While these examples do not refer to specific companies, they nonetheless offer insightful information on the specifics of SWOTs in their respective industries.
For a restaurant, high-quality food, price, taste, and customer service are all areas to look for strengths. These areas can also reveal weaknesses. Could your customer service improve? Are your prices competitive? Is your food delicious?
Adding online ordering or delivery service may provide an opportunity to generate new business, while new competing restaurants and changes to the cost of food (e.g. a rise in the price of fish) pose areas of threat.
In construction, a trusted and reliable brand name, as well as a consistent ability to complete work on schedule, are major strengths. Conversely, delays, or the inability to perform certain work are weaknesses.
In terms of new opportunities, consider examining your city’s plans to expand public transportation and how such an expansion provides a new opportunity for business and residential construction.
As the housing bubble demonstrated, fluctuations in the housing market pose the biggest threat (or opportunity in times of economic boom).
Here are the reasons I recommend this guide so highly:
What I liked
The presentation format is uniquely effective, particularly the guide sideboard for key points. I also found the discussion of the purpose of the guide to be very useful, especially for new SWOT users.
The wide use of examples, particularly UBER for new disruptive markets, was the most effective part of the guide. We are big believers that the audience gets the most learning from real-life applications.
To make this section up a notch, the authors could offer some additional ways to enhance SWOT in each example, including the strengths and weaknesses of each example, going beyond what the example authors accomplished.
What I learned
Why and when to do SWOT? What the key outputs of SWOT should be.
Taking it up a notch, we suggest the authors spend a little more time on the tactical uses of SWOT such as its use for business bid and proposal work. This is where SWOT’s relationship to market and competitor analyses is most important we believe.
Continually rework all of your techniques, particularly your discrimination and value proposition. We recommend short revisits on these topics every 3-4 months.
The key to success here is realizing that this is a marathon and not a sprint. If you examine the competition in the top areas mentioned above and create a plan to overcome, you will win the long term.
Monitoring your competition is a small, but important component of a successful digital marketing plan. No business exists in a vacuum, so you must be aware of your environment.
Will you be the one to stand out?
All you get is what you bring to the fight. And that fight gets better every day you learn and apply new ideas.
When things are not what you want them to be, what’s most important is your next step.
Test. Learn. Improve. Repeat.
Are you devoting enough energy to continually improving your continuous learning?
Do you have a lesson about making your learning better you can share with this community? Have any questions or comments to add in the section below?
Digital Spark Marketing will stretch your thinking and your ability to adapt to change. We also provide some fun and inspiration along the way.
More reading on the business process from Digital Spark Marketing’s Library:
Mike Schoultz is a digital marketing and customer service expert. With 48 years of business experience, he consults on and writes about topics to help improve the performance of small business. Find him on Facebook, Twitter, Digital Spark Marketing, and LinkedIn.
