Understanding the advantages of SWOT analysis is similar to picking the biggest kid in a tug of war. To come out as a winner, you need the right tools.
Why you want the big kid on your team in a tug of war? When someone looks at the advantages of SWOT analysis, they have to think about SWOT analysis as strengths, weaknesses, opportunities and threats. Advantage means you're going to have the upper hand at something. As it relates to SWOT analysis, it will give you an upper hand to understand what your competitor is doing or not doing.
Picking the biggest kid
That's why we gave you the example of a tug of war. Have you ever got ready to play tug of war with your friends? One of the first things you probably did was try to make your team. Maybe you were one of the captains and you had the chance to pick out people for your team. You probably wanted to pick out the strongest and biggest kids because you knew they could pull the most weight.
That’s a similar concept or similar way of doing things with SWOT analysis advantages. What you're doing is you're looking at some of the strong things the company has to offer and this can help you to have an advantage. Let's look at a pizza example.
The Pizza Shop
Let's just say you wanted to have a new pizza shop in the area, but there's already a Dominos and there is a Pizza Hut. The Pizza Hut established there doesn't deliver, but you can sit in their restaurant. The Dominos offers a delivery service, but they might have a lot of really fattening things like the cheesy breadsticks, the brownies for dessert, and they offer no healthy option.
Finding the advantages with SWOT analysis
This might be an advantage for you if you're going to open up a pizza shop because now you might think about being able to deliver and also adding healthier items to your menu that people might want. Maybe they want pizza and hot wings delivered together, and maybe they want salad also.
That's why you would do a SWOT analysis ahead of time. You would want to do a SWOT analysis for Pizza Hut, and one for Dominos. That way you can prepare your own menu and delivery service. Now here's where you take the advantages of what you learned and use it for your business.
Maybe you strategize (think really hard with a lot of smoke coming out of your ears), and you talk to your team and you come up with a plan. Your plan is going to be to not only sell pizza, wings, and salad but bags of chips and dessert like ice cream, too!
This is going to give you an added incentive because now you're targeting a market that no one else has in your area.
That's how SWOT analysis can help you. Just like with that tug of war example. You wanted to pick out the biggest kids and have them on your team, it's similar to that.
The big kid on your team in this sense is going to be that you're going to sell salad that everyone wants, and the dessert options like ice cream and chips. Because you know no one else has this, you're going to be able to make a lot of money because you're going to start selling them right away. You might even start selling these products going into the fall football season and by the time the Super Bowl comes around you'll have made a lot of money!
That's why SWOT analysis is very important in terms of understanding what advantages they can teach you about another company.
Maintaining a competitive lead (or all big kids for tug of war)
Let’s just say you've been in business now for a couple of months and Dominos realize that they're losing money. They might try to do a SWOT analysis on your pizza shop next! This will probably happen and they will probably start to research your company too! All companies have to do this in business because they will want to know why they're losing money and who their competitor is just like you did when you first moved in the neighborhood.
When they realize that you're selling all of those great dessert items, they might try to change their menu, as well. But this might be something they can’t do for a while because maybe you have a storage container where you can ship ice cream and you figured out how to ship ice cream and pizza together without the ice cream melting. Maybe Dominos can't do this with all of their stores because it's very expensive and time-consuming and you already put the work in.
Now you understand why SWOT analysis can give you an advantage and you want to make sure you always pick the big guys to be on your team! You’re learning to plan ahead of time!
You also want to make sure that you routinely do a SWOT analysis so that way you're better able to understand your competition. Because your competitor is going to look at you, that means that just like that type of war, you might want to make some changes too. Remember we mentioned the tug of war and the big kid that you're going to pull on to your team? What would you do if you had a team of big kids who were all in the sixth grade, but the other team pulled in two adults? You might have to swap out one of your other players to get the adults. You want to make changes that will still give you an advantage and that way you can win the tug of war game.
Copycats
SWOT analysis sometimes uses a lot of research to make sure a company can get an advantage in the same manner. For example, once Dominos find out that we're selling ice cream, they're going to sell ice cream, too. That's something that you can come to expect and competitors will do that. They will naturally try to do something similar. They don’t want to be left behind and you getting all the customers. Competitors will try to mirror your behavior and sales tactics, too. That's why you want to make sure that you have all the big kids and the adults on your team for as much as you can!
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