How to do a swot analysis of an enterprise. Swot analysis: examples of swot analysis

SWOT is an acronym for the words Strengths, Weaknesses, Opportunities and Threats. The internal situation of the company is reflected mainly in S and W, and the external situation - in O and T. SWOT analysis is a development stage

The SWOT analysis methodology involves, firstly, identifying the internal strengths and weaknesses of the company, as well as external opportunities and threats, and, secondly, establishing connections between them.

SWOT analysis helps answer the following questions:

Does the company use internal strengths or differentiating advantages in its strategy? If a company does not have a differentiating advantage, what are its potential strengths that could become one?
- Are the company's weaknesses its competitive vulnerabilities and/or do they prevent it from taking advantage of certain favorable circumstances? What weaknesses require adjustment based on strategic considerations?
- what opportunities give the company a real chance of success using its skills and access to resources? (opportunities without ways to realize them are an illusion; the strengths and weaknesses of a firm make it better or worse suited to exploiting favorable opportunities than other firms).
- what threats should a manager be most concerned about and what strategic actions should he take to ensure good protection?

The table provides examples of the main factors that should be taken into account in a SWOT analysis.

Potential Internal Strengths(S):	Potential internal weaknesses(W):
Clearly demonstrated competence	Loss of some aspects of competence
Adequate financial sources	Unavailability of finance needed to change strategy
High art of competition	Market art below average
Good understanding of consumers	Lack of consumer information analysis
Recognized market leader	Weak market participant
A clearly defined strategy	Lack of a clearly defined strategy, inconsistency in its implementation
Leveraging economies of scale, cost advantage	High cost of production compared to key competitors
Own unique technology, best production facilities	Outdated technology and equipment
Proven reliable control	Loss of depth and flexibility of management
Reliable distribution network	Weak distribution network
High Art of R&D	Weak positions in R&D
The most effective advertising in the industry	Weak promotion policy
Potential external opportunities(ABOUT):	Potential external threats(T):
Possibility of serving additional consumer groups	Weakening market growth, unfavorable demographic changes and the introduction of new market segments
Expanding the range of possible products	Increased sales of substitute products, changing customer tastes and needs
The complacency of competitors	Fierce competition
Reducing trade barriers to entering foreign markets	The emergence of foreign competitors with low-cost goods
Favorable shift in exchange rates	Unfavorable movement in exchange rates
Greater availability of resources	Strengthening supplier requirements
Relaxation of restrictive legislation	Legislative price regulation
Easing business instability	Sensitivity to instability in external business conditions

Classic SWOT analysis involves identifying the strengths and weaknesses of a company’s activities, potential external threats and opportunities, and assessing them in terms of scores relative to industry averages or in relation to data from strategically important competitors. The classic presentation of information from such an analysis was the compilation of tables of strengths in the company’s activities (S), its weaknesses (W), potential favorable opportunities (O) and external threats (T).

The final SWOT matrix looks something like this:

At the intersection of SW and OT, an expert assessment of their mutual influence is given in points. The total sum of points in rows and columns shows the priority of taking into account a particular factor when forming a strategy.

Based on the results of the SWOT analysis, a matrix of strategic activities is compiled:

SO- activities that need to be carried out to use strengths to increase the company's capabilities;
WO- activities that need to be carried out to overcome weaknesses and take advantage of the opportunities presented;
ST- activities that use the organization's strengths to avoid threats;
W.T.- activities that minimize weaknesses to avoid threats.

Rules for conducting SWOT analysis

In order to avoid possible mistakes in practice and get the maximum benefit from a SWOT analysis, you must follow several rules.

If possible, specify the scope of the SWOT analysis as much as possible. When conducting an analysis that covers the entire business, the results are likely to be too general and useless for practical use. Focusing a SWOT analysis on a company's position within a specific market/segment will provide much more practical results.
Be correct when classifying a factor as a strength/weakness or opportunity/threat. Strengths and weaknesses are internal features of a company. Opportunities and threats describe the market situation and are not subject to the direct influence of management.
A SWOT analysis should show the real position and prospects of the company in the market, and not their internal perception, therefore strengths and weaknesses can be considered as such only if they (or their result) are perceived in this way by external customers and partners. They must correspond to objectively existing differences between the company’s products and competitors. Strengths and weaknesses must be ranked in accordance with their importance (weight) for buyers and only the most important ones must be included in the SWOT analysis.
The quality of a SWOT analysis directly depends on objectivity and the use of diverse information. You cannot entrust it to one person, because the information will be distorted by his subjective perception. When conducting a SWOT analysis, the points of view of all functional divisions of the company must be taken into account. In addition, all identified factors must be confirmed by objective facts and research results.
Vaginal and ambiguous language should be avoided. The more specific the formulation, the clearer the impact of this factor on the company’s business now and in the future, the greater the practical value of the results of the SWOT analysis.

Limitations of SWOT Analysis

SWOT analysis is only a tool for structuring available information; it does not provide clear and clearly formulated recommendations or specific answers. It only helps to visualize the main factors, as well as to estimate, as a first approximation, the mathematical expectation of certain events. Formulating recommendations based on this information is the job of the analyst.

The simplicity of a SWOT analysis is deceptive; its results are highly dependent on the completeness and quality of the source information. Conducting a SWOT analysis requires either experts with a very deep understanding of the current state and trends of the market, or a very large amount of work in collecting and analyzing primary information to achieve this understanding. Errors made during the formation of the table (inclusion of unnecessary factors or loss of important ones, incorrect assessment of weighting coefficients and mutual influence) cannot be identified in the process of further analysis (except for very obvious ones) - they will lead to incorrect conclusions and erroneous strategic decisions. In addition, the interpretation of the resulting model, and therefore the quality of conclusions and recommendations, highly depend on the qualifications of the experts conducting the SWOT analysis.

History of SWOT Analysis

Kenneth Andrews is considered the pioneer of the direction of strategic analysis aimed at finding a balance between the resources and capabilities of a company with factors and conditions of the external environment (. He developed a model that became the prototype of SWOT analysis. This model is based on four questions:

What can we do (strengths and weaknesses)?
What would we like to do (organizational and personal values)?
What could we do (opportunities and threats from external environmental conditions)?
What do others expect from us (intermediary expectations)?

The answers to these four questions served as the starting point for strategy formation.

SWOT analysis in its modern form appeared thanks to the work of a group of scientists at the Stanford Research Institute (SRI): R. Stewart (research director), Marion Dosher, Otis Benepe and Albert Humphrey (Robert Stewart, Marion Dosher, Dr Otis Benepe, Birger Lie, Albert Humphrey). Studying the organization of strategic planning in companies from the Fortune's 500 list (the study was carried out from 1960 to 1969), they eventually came to a system they called SOFT: Satisfactory, Opportunity, Fault, Threat. The model was later modified and renamed the SWOT presented above.

Product (what are we selling?)
Processes (how do we sell?)
Buyers (who are we selling to?)
Distribution (how does it reach customers?)
Finance (what are prices, costs and investments?)
Administration (how do we manage it all?)

Based on the factors identified during the analysis, strategic decisions were then made.

You are the head of a company, but do you know everything about it? Are you ready to voice a clear plan for the further development of your own business? Find it difficult to answer? Then you should definitely put into practice already proven marketing research. They have already helped millions of entrepreneurs like them find the right solution. One of the main technologies is considered SWOT analysis.

What it is?

The abbreviation SWOT is an acronym for the following English words:

Strengths – strengths or advantages of the organization;
Weaknesses - weak points or shortcomings;
Opportunities - opportunities or external factors that, if properly applied, will create additional advantages for the company;
Threats – threats or possible circumstances that could harm the company.

A standard SWOT analysis is precisely a comprehensive assessment of the company’s activities, and not only its strengths, but also its weaknesses. But in the terminology adopted in this analysis, they are called sides, respectively, strong and weak. An assessment is made not only of probable external threats, but also of favorable opportunities. In this case, the results obtained must be compared with the indicators of the most strategically important competing firms.

Conducting a SWOT analysis helps answer questions such as:

Does the company fully use its personal strengths, as well as its distinctive features, in implementing its own strategy?
Which of the company's weaknesses need to be adjusted accordingly?
Which potential opportunities offer a real chance of success if all possible resources are deployed and the firm's skills are taken into account?
What potential threats should a manager pay attention to, and what actions should they take?

Marketers recommend choosing the period for carrying out a SWOT analysis when the direction in which the future development of the business is planned is formulated, and the period for determining the list of goals and setting tasks.

Swot analysis matrix

During the analysis process, specially developed templates are used, which are tables called SWOT matrices. Which one will be used is a purely individual choice. It is worth noting that the results, regardless of the selected template, are completely identical.

Any swot analysis matrix filled out according to a specific pattern. The cells describing the strengths of the enterprise are filled in first. Next we move on to its weaknesses. These two columns help describe the company's microenvironment.

To display the macro environment, you will need to fill in the remaining two columns. In one of them, opportunities should be written down, that is, those probable benefits that the company will be able to obtain in the current market conditions if no significant changes occur. And the last column of the matrix records threats - those factors that can interfere with the development of the company’s strengths and the use of the opportunities provided.

Microenvironment

Strengths include those areas where a company has significantly succeeded and what sets it apart from its competitors. Here you should also describe your competitive advantages, but be objective. These cannot be simply unfounded allegations. They must be confirmed by certain indicators.

These advantages may well include:

unique company resources;
personnel with a high qualification level;
quality products;
brand popularity.

A company's weaknesses include factors that place it at a disadvantage compared to potential competitors. As an example of the weakness of an enterprise, one can point out a limited range of goods produced or services provided, a not very good reputation, low funding or a relatively low level of customer service.

Macro environment

As you remember, the macro environment in SWOT analysis is presented in the form of probable opportunities or potential threats.

Opportunities include the most favorable circumstances, through which the company receives additional benefits. It is opportunities that contribute to the development of the strengths of an enterprise.

Threats are probable events, in the event of which the enterprise may find itself in not entirely favorable conditions for further development. Examples of such events may be the emergence of new competing companies on the market, increases in tax rates, and changes in demand from buyers.

Additional materials

The swot analysis matrix will require additional information to be filled out more completely and truthfully. Let's consider this point in more detail. All available data will be required in the following categories:

Management

All information related to the organization of the work of the entire company is collected here. These are the qualifications of the enterprise’s employees, connections that determine the level of interaction between all departments, etc.

Production

In this category, an assessment is made of production capacity, the quality of existing equipment, and the degree of its wear and tear. The quality of manufactured goods, the availability of patent or licensing documentation, if required, and the cost of manufactured goods are also considered. Additionally, the reliability of partners acting as suppliers, level of service, etc. are assessed.

Finance.

This is the most important category that requires detailed consideration. It is here that the clearest gradation of the strengths and weaknesses of the business in question is observed. These are the costs of the production process, the availability and speed of turnover of cash capital, the financial stability of the enterprise and its profitability.

Innovation.

How often are customers provided with an updated list of products? What is the level of quality and how quickly does the return on capital investments occur? This subparagraph must contain answers to all questions asked.

Marketing

consumer reactions to manufactured goods;
awareness of your brand;
the range of products presented by the enterprise;
pricing policy;
the effectiveness of advertising campaigns;
additional services offered by the company.

Rules for performing SWOT analysis

In order to avoid possible mistakes in practice and get the maximum benefit from the marketing research, strict adherence to several rules is required.

As much as possible, try to narrow the scope of the activity in which the analysis will be carried out. If you perform this procedure simultaneously for all activities of the enterprise, the data obtained will be too general and absolutely useless from a practical point of view. Focusing the analytical process on a company's position in a specific market segment will help obtain more specific data.

As you complete the matrix columns in the macro and micro environments, be careful when drawing conclusions regarding the strengths/weaknesses and opportunities/threats of certain factors. Weak or strong qualities are represented by the internal characteristics of the company. Whereas the second pair characterize the situation in a given time period, and cannot be regulated by management.

High-quality analysis is possible only when all the data is completely objective. This strategic analysis should be carried out on the basis of the diverse information presented. The research cannot be entrusted to one specialist, since the information received may well be distorted by his personal subjective perception. In this marketing research, it is necessary to take into account the point of view of each functional unit of the enterprise. All data entered into the SWOT matrix must be confirmed by existing facts or the results of previously conducted research activities.

The use of lengthy formulations or the possibility of its double interpretation is completely unacceptable. The more specifically a factor is formulated, the more clear its impact on the company’s activities as a whole will be in the future. And accordingly, the results obtained after completion of the analysis will have the greatest value.

Weaknesses of SWOT Analysis

SWOT analysis is just a simple tool used to structure information. This marketing procedure does not provide any specific answers or clear recommendations. It only helps to more adequately assess the main factors and predict the occurrence of certain events with a certain degree of probability. Formulating any recommendations based on the data obtained - this procedure is already within the competence of the analyst.

Moreover, the apparent simplicity of this strategic analysis is very deceptive. The veracity of the result, and accordingly the development of further transformations, is highly dependent on the completeness and quality of the information provided. To truly obtain the most realistic data, you will either need the participation of an expert who can assess the current state and likely path for further development of the market, or you will need to carry out very painstaking work in collecting and then analyzing the information received in order to achieve this understanding.

Errors that may be made when filling out a matrix table are not detected during the analysis process. Therefore, the addition of an extra factor or, on the contrary, the loss of an important one or other inaccuracies lead to an erroneous conclusion, and therefore incorrect development of a further strategy.

SWOT Analysis Example

The given analysis example is for demonstration purposes only. Here is the entire sequence of actions that will help you perform a SWOT analysis.

Determination of strengths/weaknesses (sides)

First of all, analyze all possible options. Each of the areas must contain at least 3 parameters that helped in assessing the competitive capabilities of the business.

For example, let’s take the direction “appearance of the product.” To analyze it you will need to answer questions such as:

to what extent is the appearance of the packaging better/worse than that of a competing company;
the convenience of packaging is better/worse compared to a competing company;
how much better/worse is the packaging design compared to a competing company, etc.

We check the importance of identified strengths/weaknesses

Not the entire list from the first paragraph will be needed to fill out the matrix. Now you should eliminate the non-essential items. To choose the right parameters, you should evaluate the impact of each in terms of the satisfaction of potential customers, as well as the profit generated.

The results of such a check will help eliminate parameters that play a minor role. The final microenvironment rating will be fully prepared.

Identifying likely growth paths

At this stage, you will need to write potential options that can . Two questions will help with this:

how a company can increase its sales level;
What are the possibilities for reducing production costs?

Make a comprehensive list of opportunities that will help your business grow. As an example, the following options can be given:

new sales territory;
expansion of the range;
influx of new consumers, etc.

Next, an assessment is made and opportunities that do not have a decisive impact on profits and customer satisfaction are eliminated. Having fully analyzed the entire list received, we cross out opportunities that do not have a strong impact on the profit received and customer satisfaction.

Identifying Potential Threats

This section should list potential threat options. For example, why customers may refuse to purchase a company’s product:

changing your usual lifestyle;
decrease in the level of income of the population;
changed requirements for product quality, etc.

Then we exclude threats that do not threaten the development of the enterprise over the next 5 years.

Filling out the matrix

Now that all the data has been received, we fill out the standard template. In this case, the rating of all indicators is necessarily preserved. Next, based on the SWOT information, recommendations are made for the further development of the enterprise.

You can find detailed swot analysis, strategy and implementation methods using the example of a specific enterprise in this article:

You can also watch the compilation of swot analysis on video.

I love learning everything new, interesting and unusual. And also - wrap yourself in a warm blanket, take hot cocoa and tell you about the latest developments in the financial market, hot stories from the offices of bank consultants and other interesting things.

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Starting a business is hard work. There are so many little things you need to pay attention to that you can simply get lost in them.

The only way to ensure that your business will last is to periodically step back from it and look at things from a broader perspective.

This is what SWOT analysis is all about. A SWOT analysis will allow you to look at the potential of your online business. You will not only study how your company works today, but you will also be able to plan its development for the next week, month and even year.

What is SWOT analysis?

SWOT analysis sounds like the name of some scary accounting process. But that's not true. SWOT analysis is not complex, but it is very useful.

The abbreviation SWOT stands for:

S – Strengths
W – Weaknesses
O – Opportunities
T – Threats

This is a list of what needs to be assessed during the analysis. A SWOT analysis forces you to think about the future. Do you know how your business works today, but have no idea what will happen to it tomorrow? A SWOT analysis will allow you to understand this and plan your development process.

A SWOT analysis shows the strengths and weaknesses of your online business, from both an internal and external perspective.

Strengths and weaknesses are internal factors, while opportunities and threats are external. Internal factors relate directly to your business, while external factors concern the environment that surrounds it.

Strengths and weaknesses provide insight into the present state of affairs, while opportunities and threats focus on the future. What is happening and what could happen.

The strengths and weaknesses in a SWOT analysis are under your control. They can be changed over time.

For example:

company culture
reputation
list of clients
geography
employees
partnerships
intellectual property
assets

Conversely, the opportunities and threats of a SWOT analysis are usually beyond your control. You can try and plan for them or influence positive changes, but at the end of the day it is not up to you.

For example:

regulation
suppliers
competitors
economy
market size
trends
financing

Why do you need a SWOT analysis?

In any online business, both new and old, it is necessary to conduct a SWOT analysis.

Whether you're just starting a business or are still in the planning stages, a SWOT analysis will give you a competitive advantage. Completing it will allow you to conduct a break-even analysis and see a more realistic picture of the entire process. Both are necessary in order to obtain financing.

Existing businesses should conduct a SWOT analysis annually. This will allow you to keep your business running smoothly, anticipate problems, work on necessary changes or improvements, and make smarter decisions throughout the year. Basically, an annual SWOT analysis will prevent you from losing touch with your business, customers and production.

How to do a SWOT analysis?

There is no objective way to measure how well you perform a SWOT analysis. It depends on your ability to notice and remember the internal and external factors that may affect your business. SWOT analysis is needed not to make accurate predictions, but to correctly plan business development.

Step 1: Gather the right people

Although important business decisions should generally be made by the founders and managers of the company, a SWOT analysis requires the participation of as many employees as possible. Having more data, even from people who don't fully understand your business, will make your planning even more accurate.

You'll also find that many employees have good ideas and useful skills. Even your customers can provide valuable information.

Step 2. Brainstorm

Once you have your team together, organize a brainstorming session with everyone involved. You can either list strengths, weaknesses, opportunities, and threats together (for smaller teams) or ask participants to create corresponding lists separately (for larger teams).

Consider everything that falls into each category. At this point, don't worry about how important each observation is. The idea is to not miss anything. Just write it all down.

Step 3: Fill in the blanks

Once you've exhausted all the ideas and written four big lists, it's time to start filling in the blanks where more explanation is needed. This is an opportunity for you and your team to ask questions that will determine how important each item on the list is.

Ask everyone in the group to choose the three most important items on each of their lists. Chances are, a pattern will emerge that will show you what to focus on.

Even if you are working on the analysis alone, don't worry. In this case, you are involved in all parts of the business and should have a good understanding of what needs to be considered.

31 Example Questions for Conducting a Strategic SWOT Analysis

Whether you're working alone or in a group, starting a brainstorming session can be challenging. The following questions will help you move forward. We recommend asking yourself these questions so you don't miss important factors to consider.

Questions to identify strengths in SWOT analysis

These are positive internal factors that influence the performance of your business. Although they may be difficult to change, they should be under your control:

What are we good at?
What do we do better than anyone else?
What is our competitive advantage?
What do we do that no one else does?
What resources are at our disposal?
What are the advantages of our online business?
What benefits do our employees have?
What valuable assets does our company have?
What do our clients like about us?

How to determine weak sides when analyzing

These are negative internal factors that affect the performance of your business. Although they may be difficult to change, they should be under your control:

What are we doing wrong?
What are our competitors better than us at?
What complaints do our customers have?
What are our team's weaknesses?
What's holding us back?
What resources do we lack?
What can we improve?

Examples of analysis questions opportunities

These are external factors that can affect your business in a positive way. They may be largely out of your control, but you can use them:

What potential regulatory changes could help our business?
Are market trends favorable to us?
Can the current economy affect us in a positive way?
What possibilities haven't we considered yet?
What new features are becoming available?
Are the prices of our goods decreasing?
Can we acquire additional resources that we lack?

Questions to consider threats in SWOT analysis

These are external factors that can negatively impact your business. These may be largely out of your control, but you can take them into account to minimize the damage:

Who is our competitor?
What new market participants could threaten our business?
Is our market size shrinking?
Could industry trends negatively impact our business?
Is the cost of our goods increasing?
Are our partners' offers enough for us?
Are the rules changing that could harm our business?
Is our manufacturer reliable?

How to effectively use the results of a SWOT analysis

As a business owner, you constantly need to decide where to focus your attention. Tough resource allocation decisions are inevitable. No matter how successful you are, you always need to choose where to direct your attention. A SWOT analysis will help you determine which areas you need to focus your energy and resources on.

Step 4: Narrow down your lists

Take the lists you created during your brainstorming session. Now work on shrinking these lists so they can fit in a table on one page (like the example below). Narrow down lists based on two assumptions: how important the factor is and how likely it is.

For example, if you receive the bulk of your income from one large client, this is a big weakness that leaves you in a vulnerable position, even if you are confident that this client will not leave you.

Even when you have created a table like the example below, save your lists. You're not going to focus on factors that aren't included in the table right now, but you can be sure that you won't miss any important issues if the situation changes. What is less important now may become critical in the future, and you should be aware of this possibility. You can always change the list and come back to it later.

Step 5: Create Strategies

For each of the factors on your shortlist, create a strategy to take advantage of the strengths and opportunities and to address the weaknesses and threats. These initial strategies don't need to be particularly complex or foolproof, although you can refine them later. For now, just create an action plan.

Also, keep in mind that different factors can work together to balance each other out. How can you use your strengths to eliminate your weaknesses? How can you take advantage of opportunities to neutralize threats? Can you use your strengths to better seize opportunities? Do you have any weaknesses that could prevent you from preventing the threat?

Example of a SWOT analysis table

Below is an example of a SWOT analysis table for an online T-shirt store. Although many other factors emerged during the brainstorming session, these were the most important.

Strengths: Local production allows for fast order processing Many regular customers who promote the business Good ranking by search engines, allowing you to get free traffic	Weak sides: Prices for locally made T-shirts are uncompetitive Higher costs mean fewer material options due to warehousing costs Clients do not like to take measurements themselves
Possibilities: Using technology to simplify the measurement process can increase sales New paid advertising channels like Instagram and Pinterest can be effective Buying clothes online is a trend nowadays.	Threats: Several competitors are currently undercutting prices Website is difficult to use on a mobile device, although mobile traffic is increasing Strong dollar could dampen international sales

Consider what strategies a business owner can implement based on this information. Remember that there is no right or wrong answer here.

6 Examples of SWOT Analysis Strategies

The most important part of a SWOT analysis is how you use the information obtained. Here are six example problems (with potential solutions) to help you start thinking strategically.

Example 1: Your lease is nearing the end of its term and you need to renegotiate the terms. Since the price of the neighboring premises has risen, you fear that the same will happen to yours.

Strategy as a result of analysis: start selling online to reduce your space footprint.

Example 2: You rely on raw materials that are in high demand, and prices rise quickly as they become more scarce.

Strategy: Participate in a five-year contract to ensure delivery at a lower price.

Example 3: You have excess cash.

Strategy: Set aside a fixed amount for emergencies and invest the rest for growth.

Example 4: Your employees are ineffective.

Strategy: Hire a work culture consultant to help you understand the situation.

Example 5: Most of your website traffic comes from search engines. If the algorithm changes and your site stops ranking, you could lose a lot of new customers. You need to diversify your traffic.

Strategy: Start using other traffic sources such as social media or paid advertising.

Example 6: Your entire business fits on your laptop, and if it's stolen, you'll lose everything.

Strategy: Purchase a program to automatically back up your files on a daily basis.

Working through a SWOT analysis on a regular basis will prevent you from losing touch with your business, your team and your clients. More importantly, it will help you stay successful in an ever-changing market.

Once you have time to think about the most important things on your list, make an action plan and get to work!

SWOT analysis: what it is and examples of how to do it correctly

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Excerpt from the book by Peter the Great "A Practical Guide to Market Segmentation"

A3.1. Introduction

Any segmentation begins with a comprehensive study of the market situation in which the company operates and an assessment of the types of opportunities and threats it may face. The starting point for this review is a SWOT analysis, one of the most common types of analysis in marketing. Simply put, a SWOT analysis allows you to identify and structure a company's strengths and weaknesses, as well as potential opportunities and threats. This is achieved due to the fact that managers must compare the internal strengths and weaknesses of their company with the opportunities that the market gives them. Based on the quality of compliance, a conclusion is made about the direction in which the organization should develop its business and ultimately the distribution of resources among segments is determined.

This chapter will examine the strengths, weaknesses, opportunities and threats in relation to the segments or markets being studied. Determining the relative importance of each of the listed SWOT components requires a wide range of inputs. After studying this chapter, you will build a SWOT analysis for each of your segments.

Objects within each element (for example, strengths) will be ranked by importance: the most important strength will come first, then the second, and so on.

A3.2. Rules for conducting SWOT analysis

The simplest form of presenting the results of a SWOT analysis is shown in Fig. A3.1: Strengths, weaknesses, opportunities and threats are listed. Because of its conceptual simplicity, SWOT has become easily applicable to managers and equally susceptible to misuse. It requires neither extensive databases nor formal training. Anyone with even a little knowledge of the company and an understanding of the market can create a simple SWOT. On the other hand, the inherent simplicity of the analysis can lead to hasty and meaningless conclusions, full of such vague and ambiguous concepts as “product performance”, “modern equipment”, “prices”. In addition, users sometimes forget about objectivity and rely on outdated or unreliable information.

Rice. A3.1. SWOT analysis

To avoid these mistakes and get the most out of your SWOT analysis, follow these simple rules.

Rule 1. Carefully define the scope of each SWOT analysis. Companies often conduct broad analyzes covering their entire business. It will likely be too general and unhelpful to managers interested in opportunities in specific markets or segments. Focusing a SWOT analysis, for example on a specific segment, ensures that its most important strengths, weaknesses, opportunities and threats are identified.

Rule 2. Understand the differences between the SWOT elements: strengths, weaknesses, opportunities and threats. Strengths and weaknesses are internal features of a company and therefore controllable by it. Opportunities and threats are related to the characteristics of the market environment and are beyond the influence of the organization.

Rule 3. Strengths and weaknesses can only be considered as such if that is how customers perceive them. Only the most relevant strengths and weaknesses should be included in the analysis. Remember that they must be determined in light of competitors' proposals. A strength will only be strong if the market sees it as such. For example, the quality of a product will only be a strength if it performs better than competitors' products. And finally, there can be a lot of such strengths and weaknesses, so that you won’t understand which of them are the main ones. To avoid this, strengths and weaknesses must be ranked according to their importance in the eyes of buyers.

Rule 4. Be objective and use varied input. Of course, it is not always possible to conduct an analysis based on the results of extensive market research, but on the other hand, it cannot be entrusted to one person, since it will not be as accurate and in-depth as an analysis carried out in the form of group discussion and the exchange of ideas. It is important to understand that a SWOT analysis is not simply a list of managers' suspicions. It should be based as much as possible on objective facts and research data.

Rule 5. Avoid lengthy or ambiguous statements. Too often, a SWOT analysis is weakened by the inclusion of statements that likely mean nothing to most buyers. The more precise the wording, the more useful the analysis will be. This is confirmed by Fig. A3.2. By the way, buyers will perceive it as a poorly defined, meaningless statement. This element needs to be broken down into several more significant components from the buyer’s point of view: modern equipment...

Other statements from Fig. 1 can be analyzed in a similar way. A3.2. Some of the resulting components will be relevant to buyers, some will not. The point is that you should only include those that are perceived by the market and customers as important.

Rice. A3.2. Example of a bad SWOT analysis

A3.3. Elements of the internal environment: strengths and weaknesses

Strengths and weaknesses can hide a wide variety of aspects of a company's activities. Below are the categories most commonly included in the analysis. Each SWOT is unique and may include one or two of them, or even all of them at once. Each element, depending on customer perception, can be both a strength and a weakness.

Marketing.
Product
Pricing
Promotion
Marketing information/intelligence
Service/staff
Distribution/Distributors
Brands and positioning
Engineering and development of new products. The closer the relationship between marketing and technical departments becomes, the more important these elements will be. For example, a strong relationship between the new product development team and the marketing department allows customer feedback to be directly used in the design of new products.
Operational activities.
Manufacturing/Engineering
Sales and Marketing
Processing orders/transactions
Staff.
Research and development
Distributors
Marketing
Sales
After sales/service
Customer Service/Service

This includes skills, wages and bonuses, training and development, motivation, working conditions of people, staff turnover. All of these elements are central to the successful implementation of a customer-centric marketing philosophy and marketing strategy.

Management. Sensitive and often controversial, but sometimes requiring changes, management structures directly determine the success of implementing a marketing strategy. Such aspects should be reflected in the analysis.
Company resources. Resources determine the availability of people and finances, and thus affect a company's ability to capitalize on specific opportunities.

A3.4. Elements of the external environment: opportunities and threats

Opportunities and threats are outside the organization's control. Thus, they can be considered as external, relating to elements of the market environment. The environmental analysis that should have already been completed by now (see Analysis 2) can serve as an excellent starting point for this part of the SWOT analysis. Key elements to consider include:

legislative/regulatory/political forces. Actions by authorities in the form of enforcement of policies, as well as legislative and regulatory requirements to which companies must comply;
social forces (culture). Directly affects the company when dissatisfied customers put pressure on organizations whose activities are perceived as unacceptable;
technological forces. The technological capabilities that help a company achieve its goals influence the products that are offered to customers and how they respond;
economic situation. The influence of the general state of the economy, under the influence of which consumer demand and spending habits are formed;
competition. Nature and scale of competitive threat. The following points deserve special attention:

Intensity of competition
Threat of new competitors
Customer needs in the market
Market power of buyers, distributors, suppliers
Competitiveness
Pressure from substitute products

A3.5. Registration of data for SWOT analysis

For each of the markets or segments being considered, you need to list the most important (most relevant/impacting business) elements across all four categories: strengths, weaknesses, opportunities and threats (see Table A3.1). In each of them, the wording should be ordered by importance: threat number one comes first, and so on. The SWOT should be as focused as possible: for example, if necessary, build a separate table for each new market or group of buyers. There is no point in listing everything possible and impossible: limit yourself to only those elements that have the greatest impact on your company. Be objective. Can you back up your claims with evidence (quotes, letters, industry statistics, press reports, government publications, dealer reports, customer comments)? Remember that the analysis should be focused on the customer, not internal to the organization. When considering your next application, it is useful to ask yourself the following questions.

Are we sure that this is actually the case?
How confident are we?
How do we know?
Is it possible that this will change soon?
Does this statement have relevance/meaning/meaning to our customers?
Have we considered this position in relation to competitors?

In practice, a SWOT analysis is often compiled for each leading competitor and for individual markets. This reveals the company's relative strengths and weaknesses, its ability to deal with threats and seize opportunities. This exercise is useful in determining the attractiveness of existing opportunities and assessing the firm's ability to pursue them.

Table A3.1 SWOT analysis

What should be done:

Rank the statements in order of possibility.
Include only the main statements/aspects.
Have evidence to support them.
Strengths and weaknesses must be considered in relation to competitors.
Strengths and weaknesses are internal aspects.
Opportunities and threats are external aspects of the market environment.

What are the main conclusions that can be drawn from this?

A3.6. Summary

In this chapter, we covered conducting a SWOT analysis for each market or segment under consideration. This approach is simple, but it also allows the company to examine existing opportunities in the market and weigh its ability to pursue them. At the same time, threats that could undermine the company’s position are also studied. Strengths and weaknesses are viewed from the buyer's perspective, which provides a realistic basis for resource allocation decisions and helps the company make the most of the opportunities available to it.

Checklist: Strengths, Weaknesses, Opportunities and Threats
We recommend reading and completing the following checklist.

1. What you should know
Before moving on to the next chapter, you should create a SWOT analysis for each market. To do this, it is necessary to study the internal strengths and weaknesses of the company and identify the opportunities and threats that exist in its external market environment. The elements of each of the four categories must be ranked. The result of the analysis should be conclusions for the company. If you serve more than one market, you must complete the appropriate forms for each.

If you have not yet gathered the information necessary to do this, we strongly recommend that you return to this chapter at the earliest opportunity, and certainly before selecting target segments and creating positioning strategies.

2. The table must be completed
Check your progress: have you completed the table?

A 3.1: SWOT analysis

Be prepared to return to the table if/when additional information becomes available.

3. Information collected
The following types of information are required for this chapter. Please indicate what stage of collection of relevant information you are in.

SWOT analysis is an intermediate link between formulating the mission of an enterprise and determining its goals and objectives. Everything happens

in this sequence (see Figure 1):

1. You have determined the main direction of development of the enterprise (its mission)

2. Then you weigh the strengths of the enterprise and evaluate the market situation to understand whether it can move in the indicated direction and how best to do this (SWOT analysis);

3. After this, you set goals for your enterprise, taking into account its real capabilities.

SWOT analysis helps answer the following questions: - Are the company’s weaknesses its competitive vulnerabilities and/or do they prevent it from taking advantage of certain favorable circumstances? What weaknesses require adjustment based on strategic considerations?

What opportunities give a company a real chance of success by leveraging its skills and access to resources?

What threats should a manager be most concerned about and what strategic actions should he take to ensure a good defense?

So, after conducting a SWOT analysis, you will have a clearer idea of the advantages and disadvantages of your enterprise, as well as the market situation. This will allow you to choose the optimal path of development, avoid dangers and make the most efficient use of the resources at your disposal, while simultaneously taking advantage of the opportunities provided by the market.

Even if you are sure that you are already well aware of everything, it is still better to conduct a SWOT analysis, since in this case it will help structure the available information about the enterprise and the market and take a fresh look at the current situation and emerging prospects.

In addition, the results of the analysis and decisions made on its basis must be recorded and accumulated, because accumulated structured experience (“knowledge base”) is the basis of the management value of any company.

Correctly and timely strategic decisions today play a key role in the success of an organization. Ultimately, they have a decisive influence on the competitiveness of products and the enterprise as a whole.

Methodology for conducting SWOT analysis

In general, conducting a SWOT analysis comes down to filling out the matrix shown

in Figure 2, the so-called “SWOT analysis matrix”. The strengths and weaknesses of the enterprise, as well as market opportunities and threats, must be entered into the appropriate cells of the matrix.

Strengths enterprise - something in which it succeeds or some feature that provides additional opportunities. Strength may lie in existing experience, access to unique resources, the availability of advanced technology and modern equipment, highly qualified personnel, high quality of products, brand recognition, etc.

Weak sides enterprise is the absence of something important for the functioning of the enterprise or something that the enterprise is not yet successful in comparison with other companies and puts it in an unfavorable position. Examples of weaknesses include a too narrow range of products, a poor reputation of the company in the market, lack of financing, low level of service, etc.

Market Opportunity-- these are favorable circumstances that an enterprise can use to gain an advantage. Examples of market opportunities include the deterioration of competitors' positions, a sharp increase in demand, the emergence of new production technologies, an increase in the level of income of the population, etc. It should be noted that opportunities from the point of view of SWOT analysis are not all opportunities that exist in the market, but only those that the enterprise can exploit.

Market threats-- events the occurrence of which may have an adverse impact on the enterprise. Examples of market threats: new competitors entering the market, rising taxes, changing consumer tastes, declining birth rates, etc.

It should be noted that the same factor can be both a threat and an opportunity for different enterprises. For example, for a store selling expensive products, an increase in household income may be an opportunity, as it will lead to an increase in the number of customers. At the same time, for a discount store, the same factor can become a threat, since its customers, with rising salaries, may move to competitors offering a higher level of service.

A SWOT analysis should be conducted with the participation of all critical members of the organization. This concerns the general identification of weaknesses and strengths that should be clearly visible within the organization. However, this analysis should be as broad as possible. The most difficult thing is to identify the weaknesses of an organization, which may later appear in attacks by competing organizations. The members of the organization themselves speak about them very reluctantly.

SWOT analysis can be performed using the brainstorming technique. However, if the task involves assessing the leadership of an organization, this technique will be of little use because members of the organization may be afraid to express their real views in the presence of others. It follows that it is also necessary to use other techniques that provide anonymity to specific authors of the analysis. For this purpose, it is possible, first of all, to collect the analysis performed by each member of the organization, and then submit the results of general verification and discussion. Each of the points in all four directions of analysis can be assessed by ordinary members of the organization according to the following scheme: “yes”, “no”, and must be adjusted (how?).

The quality of the analysis can be improved by involving individuals outside the organization in conducting the analysis. True, they can only perform auxiliary functions, since they do not know the organization enough to independently distinguish between its strengths and weaknesses. However, due to the fact that they are not involved in the internal “alignments” of the organization, such individuals can act as impartial arbiters who are able to evaluate proposals, and also, by raising special questions, provoke the organization to a more thorough rethinking of its provisions and actions. Of course, these individuals must enjoy the undeniable trust of members of the organization, because during the analysis, facts may be discovered, the disclosure of which can be very dangerous.

When conducting a SWOT analysis, and in particular an analysis of chances and threats, previously conducted public opinion research should be used. Connecting an organization with a certain problem, issue, attributing competence to it in any area can be a good chance for it. However, from the organization's point of view, the assessment of certain actions as very unpopular can become a significant threat. Public opinion research can also confirm the analysis's findings regarding strengths and weaknesses. Even if an organization has a strong leader, but this person is very unpopular in society, it is difficult to attribute his presence to the strengths of the organization. It may turn out that such a leader leads the organization very well (and in this sense this is a strength), but it is his low popularity that is a threat to the organization.

Step 1. Determining the strengths and weaknesses of the enterprise

The first step of a SWOT analysis is to assess your own strengths. The first stage allows you to determine what the strengths and weaknesses of the enterprise are.

In order to determine the strengths and weaknesses of the enterprise, you need to:

1. Compile a list of parameters by which the enterprise will be assessed;

2. For each parameter, determine what is the strength of the enterprise and what is the weakness;

3. From the entire list, select the most important strengths and weaknesses of the enterprise and enter them into the SWOT analysis matrix (Figure 2).

Let's illustrate this technique with an example.

To evaluate an enterprise, you can use the following list of parameters:

1. Organization (here the level of qualifications of employees, their interest in the development of the enterprise, the presence of interaction between departments of the enterprise, etc. can be assessed)

2. Production (production capacity, quality and degree of wear and tear of equipment, quality of manufactured goods, availability of patents and licenses (if necessary), cost of production, reliability of supply channels for raw materials and supplies, etc. can be assessed)

3. Finance (production costs, availability of capital, rate of capital turnover, financial stability of your enterprise, profitability of your business, etc. can be assessed)

4. Innovation (here the frequency of introduction of new products and services at the enterprise, the degree of their novelty (minor or dramatic changes), payback periods for funds invested in the development of new products, etc. can be assessed)

5. Marketing (here you can evaluate the quality of goods/services (how consumers evaluate this quality), brand awareness, completeness of the assortment, price level, advertising effectiveness, enterprise reputation, the effectiveness of the sales model used, the range of additional services offered, the qualifications of service personnel).

Next, you should fill out Table 1. This is done as follows: the assessment parameter is written in the first column, and the strengths and weaknesses of the enterprise that exist in this area are written in the second and third. Table 1 provides several examples of strengths and weaknesses for the Organization and Production dimensions.

Table 1. Determining the strengths and weaknesses of your enterprise

After this, from the entire list of strengths and weaknesses of the enterprise, it is necessary to select the most important ones (the strongest and weakest points) and write them down in the appropriate cells of the SWOT analysis matrix (Figure 2). It is optimal if you can limit yourself to 5-10 strengths and the same number of weaknesses, so as not to experience difficulties in further analysis.

Strengths are especially important for a company's strategic perspective, since they are the cornerstones of strategy and the achievement of competitive advantages should be built on them. At the same time, a good strategy requires intervention in weak areas. An organizational strategy must be well tailored to what needs to be done. Of particular importance is the identification of the company's distinctive advantages. This is important for strategy formation because:

Unique opportunities give a firm a chance to take advantage of favorable market conditions,

Create competitive advantages in the market,

Potentially could be cornerstones of strategy.

Step 2: Identify Market Opportunities and Threats

The second step of SWOT analysis is a kind of “terrain reconnaissance” - market assessment. This stage allows you to assess the situation outside your enterprise and understand what opportunities you have, as well as what threats you should be wary of (and, accordingly, prepare for them in advance).

The method for determining market opportunities and threats is almost identical to the method for determining the strengths and weaknesses of an enterprise:

1. A list of parameters is compiled by which the market situation will be assessed;

2. For each parameter, it is determined what is an opportunity and what is a threat to the enterprise;

3. From the entire list, the most important opportunities and threats are selected and entered into the SWOT analysis matrix.

Let's look at an example.

The following list of parameters can be taken as a basis for assessing market opportunities and threats:

1. Demand factors (here it is advisable to take into account the market capacity, the rate of its growth or contraction, the structure of demand for the enterprise’s products, etc.)

2. Competition factors(one should take into account the number of main competitors, the presence of substitute products on the market, the height of barriers to entry and exit from the market, the distribution of market shares between the main market participants, etc.)

3. Sales factors (it is necessary to pay attention to the number of intermediaries, the presence of distribution networks, conditions of supply of materials and components, etc.)

4. Economic factors (the exchange rate of the ruble (dollar, euro), the level of inflation, changes in the level of income of the population, state tax policy, etc. are taken into account)

5. Political and legal factors(the level of political stability in the country, the level of legal literacy of the population, the level of law-abidingness, the level of government corruption, etc. are assessed)

6. Scientific and technical factors(usually the level of development of science, the degree of introduction of innovations (new goods, technologies) into industrial production, the level of government support for the development of science, etc. are taken into account)

7. Socio-demographic factors(one should take into account the size and age-sex structure of the population of the region in which the enterprise operates, the birth and death rates, the level of employment, etc.)

8. Socio-cultural factors(usually the traditions and value system of society, the existing culture of consumption of goods and services, existing stereotypes of people’s behavior, etc. are taken into account)

9. Natural and environmental factors(the climate zone in which the enterprise operates, the state of the environment, public attitude towards environmental protection, etc. are taken into account)

10. And finally, international factors (among them, the level of stability in the world, the presence of local conflicts, etc. are taken into account)

Next, as in the first case, the table is filled in (Table 2): the assessment parameter is written in the first column, and the existing opportunities and threats associated with this parameter are written in the second and third columns. The table provides examples to help you understand the list of opportunities and threats for your enterprise.

Table 2. Identification of market opportunities and threats

After filling out Table 2, as in the first case, you need to select the most important ones from the entire list of opportunities and threats. To do this, each opportunity (or threat) must be assessed on two parameters by asking two questions: “How likely is it that this will happen?” and “How much impact will this have on the business?” Those events are selected that are likely to occur and will have a significant impact on the business. These 5-10 opportunities and approximately the same number of threats are entered into the corresponding cells of the SWOT analysis matrix (Figure 2).

Step 3. Compare the strengths and weaknesses of the enterprise with the opportunities and threats of the market

Comparing strengths and weaknesses with market opportunities and threats allows you to answer the following questions regarding the further development of your business:

1. How can you take advantage of emerging opportunities using the company's strengths?

2. What weaknesses of the enterprise can prevent this?

3. What strengths can be used to neutralize existing threats?

4. What threats, compounded by enterprise weaknesses, should we be most concerned about?

To compare the capabilities of an enterprise with market conditions, the SWOT matrix is used, which has the following form (Fig. 3). On the left, two sections are highlighted (strengths and weaknesses), into which all the strengths and weaknesses of the organization identified at the first stage of the analysis are respectively entered. At the top of the matrix there are also two sections (opportunities and threats), into which all identified opportunities and threats are entered.

At the intersection of sections, four fields are formed: “SIV” (strength and capabilities); "SIU" (force and threats); “SLV” (weakness and opportunity); “SLU” (weakness and threats). In each of these fields, the researcher must consider all possible pairwise combinations and highlight those that should be taken into account when developing the organization's behavior strategy. For those pairs that were selected from the SIV field, a strategy should be developed to use the organization's strengths in order to benefit from the opportunities that have appeared in the external environment. For those couples who find themselves on the “SLV” field, the strategy should be structured in such a way that, due to the opportunities that have arisen, they try to overcome the weaknesses in the organization. If the couple is on the “SIU” field, then the strategy should involve using the strength of the organization to eliminate threats. Finally, for couples on the SLU field, the organization must develop a strategy that would allow it to both get rid of weaknesses and try to prevent the threat looming over it.

To successfully apply the SWOT methodology, it is important to be able not only to identify threats and opportunities, but also to try to evaluate them from the point of view of how important it is for the organization to take into account each of the identified threats and opportunities in its behavior strategy.

To assess opportunities, a method is used to position each specific opportunity on the opportunity matrix (Fig. 4).

This matrix is constructed as follows: at the top is the degree of influence of the opportunity on the organization’s activities (strong, moderate, small); on the side is the probability that the organization will be able to take advantage of the opportunity (high, medium and low). The ten opportunity fields obtained inside the matrix have different meanings for the organization. Opportunities that fall into the “VS”, “VU” and “SS” fields are of great importance for the organization, and they must be used. Opportunities that fall into the “SM”, “NU” and “NM” fields practically do not deserve attention. Regarding the opportunities that fall into the remaining fields, management must make a positive decision to pursue them if the organization has sufficient resources.

Rice. 3. SWOT Matrix

Example:

Microsoft SWOT analysis.

I. Creation of new software

II. Price drop

III. Entering other markets

I. Antimonopoly policy

II. Competition

III. Declining demand

1. Reputation in the market

2. Large market share

3. Good staff

4. Secret technologies

I.- 3,4

II.- 2,4

III.- 1,4,5

I.- 2

II.-3,4

III.-4,5

1. Unfinished products

2. Low salary

3. Monopoly

I.- 1

II.- 1,3

III.- 2

I.- 3

II.- 1,2

III.- 1

A similar matrix is compiled for threat assessments (Fig. 5) . Those threats that fall into the “VR”, “VC” and “CP” fields pose a very great danger to the organization and require immediate and mandatory elimination. Threats that fall into the “VT”, “SC” and “NR” fields should also be in the field of view of senior management and be eliminated as a matter of priority. As for the threats located in the fields of “NK”, “ST” and “VL”, a careful and responsible approach to eliminating them is required.

Rice. 4. Opportunity Matrix

Rice. 5. Threat Matrix

Threats that fall into the remaining fields should also not fall out of sight of the organization’s management, and their development should also be carefully monitored, although the primary task of eliminating them is not set.

As for the specific content of the considered matrices, it is recommended to identify opportunities and threats in three directions: market, product and activities for selling products in target markets (pricing, distribution and promotion of products). The source of opportunities and threats can be consumers, competitors, changes in macro-external environmental factors, for example, the legislative framework, customs policy. It is advisable to carry out this analysis by answering the following questions in relation to opportunities and threats in three areas:

1. The nature of the opportunity (threat) and the reason for its occurrence.

2. How long will it last?

3. What power does she have?

4. How valuable (dangerous) is it?

5. What is the extent of its influence?

To analyze the environment, the method of compiling its profile can also be used. This method is convenient to use to profile separately the macroenvironment, the immediate environment and the internal environment. Using the method of compiling an environmental profile, it is possible to assess the relative importance of individual environmental factors for the organization.