Running a business is never a simple or easy task, especially when it comes to making a decision or planning a campaign. Going with your gut is not a thing here, so what to do when you need to make an important business decision? SWOT analysis can help, better than you expected - indeed.
SWOT, known as one of the most effective analysis tools for business, stands for Strengths, Weaknesses, Opportunities and Threats. This analysis is so common that your company should try at least once.
SWOT is conducted by a business analyst, a team or individuals who try to set a plan of action and develop that plan into reality. SWOT has high applicability to all sorts of business and industry; also, individuals can find this analysis useful and applicable in study or private planning. However, SWOT is usually mentioned in companies and products.
As mentioned earlier, SWOT analysis is a tool used to focus on four major traits: STRENGTHS, WEAKNESSES, OPPORTUNITIES and THREATS. Obviously, both internal and external factors are considered independently and objectively in this kind of analysis. SWOT analysis, as mentioned above, is a tool used to highlight and assess key elements which influence your business in future plan. In general, these four traits are classified into two groups of internal and external factors.
Below are some examples of them:
One of two internal factors in SWOT is Strengths. This trait is perceived positive and healthy for your business. Your business’s strengths are traits which represent your company’s advantages. In other words, which makes you outstanding and different from other competitors, which encourages you to have a strong position in the market or which simply lets your company survive are your strengths.
For example, owning cutting-edge technology or employing cheap labour can become a S in SWOT analysis. Identifying your company’s S is the very first step in SWOT analysis. Without clearly understanding about this, you are not able to take any advantage of the valuable assets you have, and it will be obviously difficult to make a good plan for your campaign.
The second step is to find out what your company’s weaknesses are. In general, every organization has disadvantages; however, this is not absolutely unhealthy for your business. The most important thing is that you can acknowledge them and find the best solution to work on the weaknesses.
If your shipping costs more than other competitors, it is perceived as your weakness. Also, if you have not used multi-channel selling, your checkout process takes longer than other online stores, or your customer service is slow and ineffective, you have disadvantages. Remember that you should list all of these weaknesses in details. Along with identifying pros, the acknowledgement of your current issues is essential and necessary.
While Strengths and Weaknesses are internal factors, Opportunities and Threats are external ones which you are mostly unable to control, but unfortunately affect your business significantly.
Opportunities should be listed out to consider which traits can help eliminate your weaknesses and which ones can help develop new strengths. Opportunities are supposed to happen randomly and suddenly, you can either miss it or win it. However, I believe that you can even create it yourself.
Opportunities are positive traits which represent reasons why your business is likely to thrive in future. You can figure out those factors by doing some research or simply answering these questions:
Like opportunities, threats are external factors which you have no control over them. They can come from changes in market, economics, political or environmental regulations. However, unlike opportunities, threats are unhealthy for your business.
In other words, they are negative factors which cause bad impacts on your company’s future. Although you seem to be passive facing these factors, you may still benefit from them by acknowledging, preparing for the solutions and having a careful plan if bad things occur.
To figure out threats, you should answer these questions:
At this very first step, you need to consider your products and services carefully to figure out what your company is really good at, do your goods and services have any unique features in comparison to the same products from competitors.
Your advantages which are over other competitors can be your well-trained human resources, abundant capital resources, reputation, your experience, your testimonials, your awards or prize in a contest, and so on. However, remember that a factor is considered as a strength when it is within your company or under control of your company.
In contrast to strengths, weaknesses are any factors that negatively affect the development or success of your marketing plan. These drawbacks also origin from inside the company including for example, lack of human or capital resources, poor infrastructure, and so on. By examining the weaknesses within your business, you can find out some solutions or adjustments to better the situation.
After already examining all internal factors, it is high time for you to look for opportunities from the marketplace. An opportunity can exert positive impacts on the success of your marketing plan. For example, when the number of social networking users increases dramatically, your online marketing launched on these sites gain more opportunities to reach potential customers.
The final step in making a SWOT analysis is examining as many threats as possible. Once you can navigate the outside disadvantages, you can have time figure out how to handle in these situations or how to minimize the risks. To find out what will become a threat for your business, requires thorough examination from business owners.
They also need to be sensitive to the new trend in the marketplace to quickly identify the upcoming risks. For example, the outburst of advanced technology may make your products become outdated. Therefore, figure out as many possible issues as possible to modify your marketing strategies appropriately.
SWOT analysis is effective as it helps you prevent making unnecessary or even wrong decisions. In contrast, you can build up a plan of action in details which is based on both subjective and objective factors (including positive and negative traits). To know more what SWOT analysis looks like, let’s go through some examples below.
Most companies rely on SWOT analysis when it comes to making decisions, no matter how big business is. Web startups is not an exception. They often use SWOT to figure out and assess how user-friendly their websites are. In this digital era, that organizations keep seeking for new ways to enhance their site’s performance will never stop as the race of technology is passing all the boundaries. The most noticeable use of this analysis amid web startups is to analyze the site User Experience, also called UX, in comparison to other sites.
Being perceived as a product, the website is the major objective in the analysis. It will be examined in strengths, weaknesses, opportunities and threats. Based on these factors, web owners will have a better understanding of what they need to work on their site such as to achieve a higher conversion rate, to boost sales and to earn more profits.
When it comes to assessing the performance of your website, it is critical to test the usability. Just make sure that you get all the objective feedback, and it will work much better if you can get comments from the existing users.
The valuable data that you should gather can be insights to why the visitors are confused or why they abandon your site quickly. Besides Google Analytics or other similar analytical tools , one of the best ways is to collect feedback directly from your users like emailing them, making a poll or making a phone call.
Your products, in this case - your websites/online stores, should be user-centric. It is designed and perfected for end users. Hence, all the enhancement on your products should become from your customers’ needs and demands. After the test, you can work on your strengths and try to prevent weaknesses.
It is obvious to acknowledge that web startups have specialized internal and external factors which will give both negative and positive impacts on all of the site’s performance. Especially in this information age, SWOT analysis is so different from that for bricks and mortals. Some examples are listed below:
SWOT analysis is not only identifying your own strengths and weaknesses, but also to figure out what your competitor’s advantages and disadvantages are. In general, your competitor’s strengths can become your threats and their weaknesses are your opportunities. Just try to exploit all your advantages and eliminate risks you have to face.
It is kind of undeniable to say Amazon has achieved so big and they are really successful in their e-commerce business. So let’s look at a SWOT example for Amazon:
In conclusion, a SWOT analysis plays an important role in making the the success of a marketing strategy. Doing a SWOT analysis can help a business develop their strengths, address their weaknesses, make use of opportunities, and minimize possible threats.