In the world of marketing, a SWOT analysis doesn’t mean Special Weapons and Tactics teams based in the United States (although that would be rather exciting). It’s an acronym for Strengths, Weaknesses, Opportunities and Threats, it is a tool commonly used by businesses when future planning. Figure 1 shows how a SWOT is laid out.
A SWOT analysis is used to highlight both internal and external factors affecting the business. The Strengths and Weaknesses are Internal, whilst Opportunities and Threats are External.
Figure 1: SWOT Analysis Diagram
With a SWOT analysis (opposed to a TOWS: Threats, Opportunities, Weaknesses, Strengths), we start by looking at the internal factors first.
Strengths can be identified by asking what advantages the organisation has and what its unique selling proposition (USP) is. It is important to consider what other people in your market see as your strengths i.e. a brand name, patient or a workforce with a particular skillset.
Weaknesses would include: what your organisation could do to improve, what you should avoid (be it due to brand name/reputation, resource etc.) and what factors ultimately lose your organisation sales.
When identifying strengths and weaknesses, it’s important to compare your organisation to its competitors. Some of your proposed strengths could be a necessity in your organisation’s market and therefore not actually a strength.
It’s also critical to be honest! Lack of honesty is a common pitfall in undertaking a SWOT analysis, so remember this is an internal document that is being used to critically assess your current position. Utilising realistic information will ensure that a high-quality output is achieved.
Once you’ve identified the internal factors, you need to move onto the macro factors – these are external opportunities and threats. You can use a PESTEL analysis to ensure you’ve covered all the factors. A PESTEL analysis identifies Political, Economic, Social, Technological, Environmental and Legal factors – these are all based on the macro environment.
For the opportunities section, you need to identify what good opportunities are open to your business – some of these will come via the organisation’s strengths. You may find that through the PESTEL analysis you identify some interesting trends. For example, the UK’s Referendum on the EU would be a political consideration – how does the referendum outcome create opportunities or challenges? Or, a change to China’s one child policy (legal and social), how could this open up opportunities for a pram distributor?
And finally, your SWOT analysis should assess your threats. What are the threats facing your business right now, and what are your competitors doing? For example, how is technology affecting your business?
When teaching marketing qualifications, we often ask students to consider a SWOT analysis for organisations that have since gone out of business. What were the potential threats or opportunities might they have seen? And how would they have been able to change their business model to adapt to market changes. This highlights both why a SWOT is so important and also how it can be effectively used.
As a final note, it is worth ordering strengths, weaknesses, opportunities and threats by priority. This helps clarify what your organisation needs to deal with most importantly.
If you are interested in learning more about how to undertake a SWOT analysis and how it can be used within a strategic marketing plan, why not consider the CIM Diploma in Professional Marketing. This marketing qualification is ideal for professionals who want to develop their knowledge and practical knowledge in marketing and marketing strategy. For more information about the marketing diploma qualification from The Oxford College of Marketing, call one of our course advisors on +44 (0)1865 515255 or email firstname.lastname@example.org.
This post was written by Oxford College of Marketing tutor, Georgina Park