One of the advantages of this analysis model is that it can be applied in any management situation, type of company (regardless of its size and activity) or business area. The first step we must take is to describe the current situation of the company or department in question, identify the strategies, the changes that occur in the market and our capabilities and limitations. This will serve as the basis for a historical, casual and projective analysis.
The internal analysis
It consists of detecting the strengths and weaknesses of the company that give rise to competitive advantages or disadvantages. To carry it out, the following factors are studied:
- Production. Production capacity, manufacturing costs, quality and technological innovation.
- Marketing. Line and range of products, image, positioning and quota in the market, prices, advertising, distribution, sales team, promotions and customer service.
- Organization. Structure, process of direction and control and culture of the company.
- Personal. Selection, training, motivation, remuneration and rotation.
- Finance. Available financial resources, level of indebtedness, profitability and liquidity. Investigation and development . New products, patents and lack of innovation.
The external analysis
It is about identifying and analyzing the threats and opportunities of our market. It covers several areas:
- Market. Define our target and its characteristics. Also the general aspects (size and market segment, evolution of demand, consumer wishes), and other behavior (types of purchase, behavior when buying).
- Sector. Detect market trends to identify possible opportunities for success, studying companies, manufacturers, suppliers, distributors and customers.
- Competition. Identify and evaluate current and potential competition. Analyze your products, prices, distribution, advertising, etc.
- Environment. They are the factors that we can not control, such as economic, political, legal, sociological, technological, etc.
DEFINE THE STRATEGY
The SWOT helps to consider the actions we should take to take advantage of the opportunities detected and eliminate or prepare the company against threats, being aware of our weaknesses and strengths.
Once the objectives are set -which must be hierarchical, quantified, real and consistent-, we will choose the strategy to reach them through marketing actions. Let’s review the possible strategies with examples:
Defensive. The company is prepared to face threats. If your product is no longer considered a leader, highlight what sets you apart from the competition. When the market share falls, look for customers that are more profitable and protect them.
Offensive. The company must adopt growth strategies. When your strengths are recognized by the clients, you can attack the competition to exalt your advantages (for example: 83% prefer x). When the market is mature, you can try to steal customers by launching new models.
Survival. You face external threats without the internal forces necessary to fight against competition. Leave things as they are until the changes that occur (for example: observe the internetization of the environment before launching into the network).
Reorientation Opportunities are open to you that you can take advantage of, but you lack the adequate preparation. Change policy or products because the current ones are not giving the desired results.
What factors should be considered in a SWOT analysis?
- Key skills in key activities
- Skills and superior technological resources
- Ownership of the main technology
- Better manufacturing capacity
- Cost advantages
- Access to economies of scale
- Skills for product innovation
- Good image among consumers
- Products (brands) well differentiated and valued in the market
- Better advertising campaigns
- Well-designed and designed specific or functional strategies
- Management capacity
- Organizational flexibility
- There is no clear strategic direction
- Inability to finance the necessary changes in the strategy
- Lack of some key skills or abilities
- Delay in Research and Development
- Higher unit costs compared to direct competitors
- Profitability below average
- Excess of internal operational problems
- Obsolete facilities
- Lack of experience and managerial talent
- Enter new markets or segments
- Serve additional groups of clients
- Expansion of the product portfolio to meet new customer needs
- Rapid growth