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Almost everyone involved in the business world is aware of SWOT. SWOT is an analysis which helps firms to identify the internal and external factors that might affect future performance. Even though SWOT is commonly used by the management teams, it can prove great for branding and marketing as well.
SWOT is an acronym. The letters stand for strengths, weaknesses, opportunities and threats. Strengths and weaknesses are the internal factors. Opportunities and threats are the external factors. The 4 factors help to evaluate the fit between internal resources and capabilities of the company and external possibilities and threats.
Internal factors are the elements which the company has control over. This includes resources, operating system, people and culture. Firms have very little power over external factors. SWOT gauges the fit between internal and external factors.
Generally, you should conduct SWOT to find answers to the following questions:
- What is your business’ strongest asset?
- What can you improve?
- What trends do you foresee? What changes can present exciting opportunities?
- What obstacles do you face?
SWOT is undeniably an effective tool. Some believe that the use of this analysis has decreased in many departments. However, reports suggest that SWOT is still widely used in almost every major organization. It is normally just used as a starting point as it helps to figure out where the company stands. You must understand that SWOT results change with time.
A SWOT conducted right now would be obsolete after 2 months. It requires you to work actively. You have to take care of the weaknesses. Take full advantage of the opportunities as soon as identify them.
The aim with SWOT is to reduce weaknesses and exploit the opportunities. Remember to make contingency plans to minimize threats.
SWOT is a valuable tool. But, it is not enough to get a complete overview of a business situation. The analysis is a great start to making big changes. You can evaluate your business’s overall direction. Teams must immediately focus on weaknesses and opportunities.
You should set action plans and agendas. Also arrange meetings and outline action points. SWOT will not help if you do not make changes based on it. Leading companies practise action-based analysis. Framework analysis, action plans and action points are all part of it.
SWOT’s contribution to the management team is constantly celebrated. Recently, people are questioning whether it still helps branding and marketing. The answer is yes. SWOT is not only helpful but essential for the marketing department.
Use of SWOT analysis in branding and marketing
A critical part of planning is to look at the existing business position and predicting how external factors may affect the business. Businesses often conduct SWOT analysis to decide which marketing strategy tit should use.
The organization performs an audit of the internal and external nature. This gives an idea of the current and future situation of the business. The audit serves as a review of all the business activities.
Below, I have listed some possible strengths, weaknesses, opportunities and threats in marketing.
- Specialist marketing expertise
- An innovative product or service
- The location of your business is convenient for customers
- The reputation of your brand. For example, if it is trusted or recognised to offer the highest quality, your brand reputation is a strength.
- Not having a clear product differentiation compared with competitor’s offerings
- Weak distribution compared with your competitors
- Not having enough online presence
- Using advanced technology to develop new products
- Growing demand from international markets like China and India
- Using Facebook, Twitter and other social media sites to reach new customers
- Competitors might introduce better products and services at lower prices
- Changes in the economic environment might reduce customer loyalty to established brands
- Changes in customer tastes and fashions can also be a problem
With very little effort, SWOT can help uncover opportunities to exploit. This is mainly what makes SWOT so powerful. You can craft a better strategy by observing your firm and competitors. It can help differentiate from competitors. It is a great tool which helps compete successfully in your market.
Benefits of SWOT analysis
The main benefit of performing a SWOT analysis is that it incurs little or no cost. Anyone who has basic business knowledge can perform the analysis. You can even use it when you do not have excess time to address a complicated situation.
Therefore, you can improve your business without the expense of hiring a business adviser or external consultant. As repeatedly mentioned in this article, SWOT analysis concentrates on the most important factors affecting business.
You can do the following by using a SWOT:
- Understand your company better
- identify weaknesses
- avoid threats
- capitalize on the opportunities
- take full advantage of your strengths
- develop attainable business goals and strategies
Limitations of SWOT analysis
Always remember that SWOT is only a stage of the business planning process. It has certain limitations. You will have to carry out more in-depth analysis to take decisions for more complex topics.
You must understand that SWOT analysis only covers topics that can be considered as strength, weakness, opportunity or threat. So, it is not possible to address two-sided or uncertain factors. Two-sided factors are those which can be seen as both strength and weakness do not have a place in SWOT.
Some limitations of SWOT analysis are:
- SWOT does not prioritize the factors
- It does not offer solutions or alternative decisions
- It can sometimes create too many ideas. As it offers not help to choose which one is best, problem might arise.
- It can produce a lot of information which might not always be useful.
In spite of the limitations, SWOT analysis provides strategic insight into recommendations and opportunities. Especially small businesses benefit as SWOT helps map out a strategic plan. It is an actionable management tool.