While working on your business plan, a school project, or if you’re generally looking into marketing buzzwords, you’d find that a SWOT analysis is widely acclaimed. Let us explain why. By definition, a swot analysis is a comprehensive external and internal evaluation of a company’s strengths, weaknesses, opportunities, and threats. Keep in mind that this is quite the traditional approach. This tool is meant to analyze company strengths and weaknesses as well as current and possible marketing actions to determine which opportunities it can best pursue.
The Traditional SWOT Analysis - A Marketing Staple
Most marketers and businesses have used this as a tool to analyze their current and prospective markets to find attractive opportunities. But with opportunities, come threats. The only drawback of this framework is that it doesn’t factor in the dynamic nature of the business world. But we’ll get to that in a hot minute. The traditional framework though, to its merit, does allow for a thorough study of your business and is a fantastic place to start.
Above, the traditional framework considers a company’s strengths, weaknesses, opportunities, and threats. Pretty linear stuff.
Problems With The Traditional SWOT Analysis
- It Does Not Consider Cognitive Biases
This strategic analysis leaves room for social bias, memory bias, probability bias, decision bias, to name a few. The forward-viewing parts of the framework; such as the opportunities and threats can be met with unverified claims and subjective social hierarchies.
- You Need More Data To Back It Up
Most SWOT analyses are not conducted with a reliable collection of data from intelligence gathering about the world on hand. With SWOT, business owners are essentially trying to anticipate the future (risks and opportunities) and what they can do to ensure financial benefit. This is in turn based on the competitive landscape (vis-à-vis strengths and weaknesses) which is based on their impression of the company. This can be a bit...unidirectional. The business landscape is dynamic and future trends, disruptive tech, and competitor profiles are what can help you navigate through today’s cut-throat landscape.
- It Does Not Take Internal Politics Into Consideration
SWOT analysis is usually done within an organization and involves a fair bit of self-criticism. You’re forced to point out openly what you like and dislike about your own business. People put in this position are more likely to self-censor and riddle their analysis with inaccurate information
Reimagining SWOT for a Dynamic EcoSystem
Diagram of new SWOT courtesy of Harvard Business Review:
The business world is dynamic and smaller players end up giving larger firms a run for their money. Case & Point: GymShark. Started by a lad in the UK who ran inventory in his bedroom, this underdog fitness apparel brand is now worth a billion dollars and holds a significant market share. GymShark poses stiff competition to household brands like Nike, Adidas, Puma, and similar big-league brands. This proves that other’s weaknesses and strengths can affect your SWOTs. Meaning, in some cases, large corporations’ strengths can be opportunities for smaller businesses. Nike’s large brand name and major market share drove independent brands to center stage, owing to multiple internet trends, sustainability issues, and sweatshop manufacturing rumors.
When Determining Strengths
Strengths encompass internal aptitudes, resources, and positive work environments. These determinants ideally help the company serve its consumers and achieve its quarterly/annual goals.
If you own a boutique, consider what would happen if local brick and mortar businesses shut down due to unavoidable circumstances (Like good ol’ COVID-19) and where your store would stand in the e-commerce space? Or if you’re looking into your personal brand, state how your unique sense of humor would make your content stand out on the infinite, content-jammed feeds of Instagram. No matter what field you’re in, question your strengths enough to anticipate your weaknesses.
When Determining Weaknesses
Weaknesses include internal limitations and negative situational factors that may interfere with the company’s performance. Factors such as a hiring deficit, poor employee retention, questionable manufacturing practices, etc. The idea here is to figure out what you’re dealing with. Knowing your company’s weaknesses allows your public relations and marketing departments to anticipate any positive or negative developments that come to light.
So, how do you accurately define what your brand’s weaknesses are? There are two important considerations:
- Get in the shoes of a weary buyer. If you were a customer, what would deter you from buying this product? Would you avoid engaging with this business because of their values? What would make you abandon your website’s checkout page?
- What is it like to work for you? Step out of your authority and look at the inside, out. What do you think could hinder your employees’ ability to get the job done? Is there anything at the office that needs fixing? What can you do to boost morale and improve your output?
- What areas are you least profitable? Ask yourself where your business lacks certain resources, or what costs you the most time and money. Whether it’s equipment, manufacturing costs, logistical issues, etc., make sure you note down every single detail. Be sure to take inputs from colleagues and employees in different departments. They will likely see weaknesses you hadn’t considered. That’s the magic of perspective.
When Determining Opportunities
Opportunities are favorable factors or trends in the external environment that the company may be able to exploit to its advantage. Usually, you’d be able to find weaknesses that could be an exciting opportunity. When determining opportunities, asking yourself the following questions; What technologies would make business hassle-free? How do I reach a new target audience? How can my business stand out with tech? Is there something our customers complain about while making a purchase?
Weakness and opportunity go hand in hand. Once you’ve made a list of weaknesses, it should be easy to create a list of potential opportunities that could arise if you find creative ways to work around your weaknesses. Case & Point: SpaceX. SpaceX went up against space tech giants such as Boeing and Lockheed Martin. Their weaknesses were their lack of experience and financial resources. However, those apparent weaknesses have led the organization to develop a series of low-cost, efficient innovations. They successfully reduced costs by using cheaper consumer electronics in their rocket components.
When Determining Threats
Threats are unfavorable external factors or trends that may present challenges to performance. The recent turn to sustainability has pushed several businesses to identify environmental threats. Plus, the current political climate has brands struggling to ensure fair, inclusive messaging without pissing off the next internet activist. So the traditional framework does not account for this. But your analysis doesn’t have to be incomplete. With a little elbow grease, you could make this an insightful tool. Analyze and understand the social, technological, economic, ecological, and political trends that might impact the future that the SWOT is trying to anticipate.
In the aviation industry, for example, it might be grim at the moment due to the effects of COVID-19 worldwide, causing a decline that’s never been seen before in the history of this sector’s existence. But some airlines like Air Canada are hopeful to be distributors of the COVID-19 vaccine like they are with PPE across Canada. This opened up an entirely new segment that was initially a threat to them and their competition.
Now Determine Your Competition’s Strengths and Weaknesses
Now, the idea that your competitor’s weaknesses present an opportunity to you can be found everywhere. In Krav Maga, a self-defense system created by the IDF, for example, teaches you how to neutralize an opponent twice your size by just using their weight against them. The same goes for the Japanese martial art, Judo.
A great example is Pepsi taking on the bevy giant, Coke. Pepsi introduces a much lower price, a price that was hard for Coke to compete with because of their already established pricing. Pepsi also appealed to the younger crowd as opposed to Coke’s more heartland approach.
Remember, the traditional SWOT framework is focused on your business but you need better insights to truly anticipate the good, the bad, and the ugly when you start out. Business is changing if it’s not booming. You just have to keep up.
If you have any questions, contact us!