One of the advantages of SWOT analysis is that it can be applied to any management situation, type of company (regardless of size and activity) or line of business. The first step we have to take is to describe the current situation of the company or department in question, identify the strategies, the changes in the market, as well as our opportunities and limitations. This serves as the basis for make a historical, incidental and projective analysis .
It consists in uncovering the strengths and weaknesses of the company that lead to competitive advantages or disadvantages. To carry it out, the following factors are examined:
Production. Production capacity, manufacturing costs, quality and technological innovation.
Marketing. Assortment and assortment, image, positioning and market share, prices, advertising, distribution, sales team, promotions and customer service.
Organization. Structure, direction and control of the process and culture of the company.
Employees. Selection, Training, Motivation, Compensation and Rotation.
finance. Funds available, leverage, profitability and liquidity. Investigation and Development. New products, patents and lack of innovation.
The external analysis in the Dafo method
It is about identifying and analyzing the threats and opportunities of our market. It covers different areas:
Market. Define our goal and its characteristics. Also general aspects (size and market segment, demand development, consumer wishes) and other behavioral aspects (purchase types, buying behavior).
Sector. Recognize market trends to identify possible chances of success by examining companies, manufacturers, suppliers, distributors and customers.
Contest. Identify and assess current and potential competition. Analyze your products, prices, distribution, advertising, etc.
About. They are the factors that we cannot control, such as economic, political, legal, sociological, technological, etc.
The SWOT helps us review the actions we should implement to capitalize on the identified opportunities and eliminate or prepare the business for threats, being aware of our weaknesses and strengths.
Once the goals are set – which must be prioritized, quantified, real and consistent – we choose the strategy to achieve them through marketing efforts. Let’s review the possible strategies with examples:
Defensive. The company is prepared for threats. When your product is no longer viewed as a leader, highlight what sets you apart from the competition. When market share drops, look for customers who are more profitable for you and protect them.
Offensive. The company must pursue growth strategies. If your strengths are recognized by customers, you can attack the competition to highlight your advantages (Example: 83% prefer x). When the market matures, you can try to steal customers by launching new models.
Survive. They face external threats without the necessary internal forces to fight the competition. Leave things as they are until the changes that occur are resolved (e.g. observe the internetization of the environment before introducing it to the network).
reorientation. Opportunities open up for you that you can take advantage of, but you lack the right preparation. Change policies or products because the current ones aren’t delivering the desired results.
What factors need to be considered in a SWOT analysis?
- Core competencies in key activities
- Superior technological skills and resources
- Ownership of the core technology
- Better production capacity
- cost advantages
- Access to economies of scale
- Product innovation skills
- Good image with the consumer
- Products (brands) well differentiated and valued in the market
- Best Ad Campaigns
- Specific or functional strategies that are well thought out and designed
- leadership capacity
- Organizational flexibility
- Other .
- There is no clear strategic orientation
- Inability to fund necessary policy changes
- Lack of some key qualifications or skills
- R&D backlog
- Higher unit costs compared to direct competitors
- Below average profitability
- Too many internal operational problems
- outdated installations
- Lack of experience and leadership talent
- Other .
- Entry into new markets or segments
- Serve additional customer groups
- Expansion of the product portfolio to meet new customer needs
- rapid market growth
- Diversification of related products
- Vertical integration
- Removal of trade barriers in attractive foreign markets
- Complacency between competing companies
- entry of new competitors
- Increase in sales of substitute products
- slow market growth
- Changing consumer needs and tastes
- Increasing bargaining power of customers and/or suppliers
- Unfavorable changes in exchange rates and trade policies of other countries
- Adverse demographic changes