SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a business venture or business startup. It involves specifying the objective of the business venture or startup and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.
A SWOT analysis starts with a definition of a desired end state or objective. In an initial marketing plan of a business startup that desired end state or objective will probably involve the attainment of the marketing objectives after a year of business.
Identification of SWOTs is essential because the steps in the process of planning for achievement of the selected objective may be derived from the SWOT analysis.
The four different factors in the SWOT analysis are defined as:
- Strengths: attributes of the organization that are helpful to achieving the objective
- Weaknesses: attributes of the organization that are harmful to achieving the objective
- Opportunities: external conditions that are helpful to achieving the objective
- Threats: external conditions that could do damage to the business’s performance
Examples of strength attributes which can be used to gain the business a competitive advantage could be factors such as:
- Patents
- Strong brand names
- Good reputation among customers
- Cost advantages from proprietary know-how
- Advantageous manufacturing capabilities
- Superior personnel
- Favorable access to distribution networks
- Superior product
- A superior location where the product can be purchased
- Advantages in promotion, such as advertising, public relations, word of mouth and point of sale
Your business will capitalize on its strengths
A weakness can be defined as the absence of competitive strength such as:
- Lack of patent protection
- A weak brand name
- Poor reputation among customers
- High cost structure
- Lack of access to good raw materials or natural resources
- Lack of access to key distribution channels
Your business will shore up its weaknesses
Analysis of the external environment may reveal opportunities for profit and growth for the startup business. Some of these include:
- An unfilled customer need
- Loosening of regulations
- A growing market segment
- Technological change
- Socio-cultural changes
Your business will use its strengths to invest in its opportunities
External environmental threats can be the flip side of opportunities. These can include:
- Negative socio-cultural changes
- Technological changes that threaten to make a product obsolete
- Threats of changes in laws and regulations
- Shifts in consumer tastes away from the business’s products
- Increased trade barriers
External threats can’t be controlled but they need to be identified and may be able to be impacted.
