SWOT Analysis

Define SWOT Analysis by Looking at the Diner on the Corner

Another title for this article could have been: Why you Shouldn’t eat at the Greasy Diner on the Corner!

To define SWOT analysis, you have to understand that SWOT is actually an abbreviation. It’s: S. W. 0. T. and it is abbreviated to help you understand strengths, threats, weaknesses, and opportunities. SWOT analysis is used when a company is looking at another company, and they want to do an analysis of that particular company based on things like:

  • whether or not they’re strong
  • if they are weak in certain areas
  • if they have a lot of things going for them
  • if they have a lot of competitors

But what does this have to do with the diner on the corner? Good question!

Do you ever read a review on the top places to eat when you see your local restaurant or diner? You might go online first because you want to know what other people are saying about it. Maybe you’ll go to Yelp, or you will use another site so you can read about the reviews. Maybe there’s a restaurant or a diner that’s at your local corner and you want to check them out before you actually go and visit them.

Studying a SWOT breakdown is similar to that. What you’re going to do is you are going to research a company ahead of time. Before you deal with that particular company, learn about them. This can come into play if you’re thinking about getting into a similar business or industry. Now let’s get back to the diner.

When you go online to look for a diner, there are few things that you want to check out. You want to find out if they’re getting a lot of great reviews. You also want to know:

  • if they have a lot of customers
  • if they have good prices
  • and if there are a lot of people going in and out of the diner so that way you’ll know if the food is good

Strengths

SWOT analysis is similar to that because when you look at SWOT methods, you’re going to look at the strength of the company. Is it a good business? Are there a lot of people visiting this business? Are they getting a lot of repeat customers and a lot of foot traffic in?

Weaknesses

As you look at the weaknesses, you may think about that diner again. A weakness for a diner might be not having a lot of 4 or 5-star ratings. Maybe their food isn’t good, or maybe they had the health department visit them recently and there were bugs or something along those lines.

When you look at a company, and you look at their weaknesses you’re going to also keep in mind that weaknesses can relate to sales and you might want to ask:

  • are their sales slow?
  • did they have a bad holiday season?

You might not remember this, but a few years ago Walmart had a big problem in the news. They ran big sales for Christmas, and they had these big door buster prices. When people got to Walmart, they rushed through the doors. This caused mobs of people to trample on some people. Walmart had to change their ads, pay money in damages and apologize. They received a lot of bad press because they didn’t even have a lot of items in stock. It looked like they set up the ads so people would rush the doors for things like $10 HDTVs. Walmart received negative press because of bad planning and ads.

Opportunities

When you look at opportunities and threats for the business, think about that diner again. You’re going to factor in opportunities being what is on the menu. You’re also going to think about seating and how they plan on expanding the menu.

Threats

Threats can be the other diners that are a few blocks away or any restaurant. A threat can be local to their neighborhood and anything that might take their business. Don’t think of a type of threat like you’re afraid to eat there. A threat would be something like you’re seeing other diners and other restaurants selling similar food. If they offer a similar service that means they can take money away from the diner.

Benefits of a SWOT analysis breakdown

The benefits of doing a SWOT breakdown are that it helps give you a detailed overview on the company. You can also get a very easy way to review the various strengths, weaknesses, opportunities and threats. Always keep this in mind as you look at any company because your SWOT analysis can be very helpful to you to make sure that you know what a company has to offer.

When should I do SWOT analysis?

SWOT analysis should be done before you look at a particular company or firm that you want to do business with or that you want to research. It can come in handy if you’re going to do a paper on a particular company, and you want to see what they have to offer. You can also see the different problems that you’re having. It can also be a time when you are thinking about getting into a certain type of business and you want to make sure that it’s going to make money.

You can also do SWOT analysis to see why a company might be losing money if you were looking at their stock. Sometimes companies will look at another company that they want to invest in because they don’t understand why they’re not valued higher or worth more money. This happened a few years ago with Facebook (also, check out the SWOT Analysis on Social Media).

Facebook came out as a new public company. There was so much talk about it being a really great company and their stock took off. It went really high and then dropped really low. The problem was people kept saying it was a really good company and that you should invest and add more money. They would say, just give the stock time and buy more stock. What ended up happening was that came true and people who bought stock at $17 or $18 a share, have seen it go up to about $87 a share. That’s really a big deal. Some companies only go up $10 in a year, if that.

Always do a SWOT analysis ahead of time so you can understand what the company has to offer, its benefits, and the areas where it might be lagging behind and know the reasons why. And if you see long lines at your local diner, you might want to check it out!

Image: Petar Djordjevic/Shutterstock.com

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