The origin of the term SWOT is the acronym of Strengths, Weaknesses, Opportunities and Threats - that is, Forces, Weaknesses, Opportunities and Threats. This approach allows you to put into practice an effective Marketing strategy to position yourself strategically and make the most of growth opportunities, maintaining a sustainable competitive advantage over time.
SWOT Analysis is based on 5 fundamental phases:
- Definition of objectives.
- Definition of internal strengths, which represent a competitive advantage for the company: skills, resources and advantages but also weaknesses.
- Definition of opportunities and threats from the external environmental context.
- Insertion of data into the SWOT matrix.
- Elaboration of actions to be taken based on the analysis carried out.
The SWOT matrix
A SWOT matrix is a 2×2 matrix in which an organization or an individual lists in a structured way the internal and external factors, positive or negative with respect to a choice they must make or with respect to a specific market condition.
The simplest model is a grid that sees the endogenous factors in the upper part while the endogenous components are located in the lower part.
Endogenous factors: strengths and weaknesses
Let's first analyze the endogenous factors, whose levers are in the hands of the company. Strengths are internal factors over which the company has direct control and which have a positive impact on the business. What could they be?
- The presence of a strong brand,
- Access to key resources
- Possession of advanced and protectable skills and technologies, difficult to access.
- Financial solidity
- A loyal user and customer base
As for weaknesses, the discussion is the same as the previous one, that is: the absence of resources, skills, technologies, the lack of economies of scale, financial resources, active marketing and communication channels, the weakness of the brand, the absence of innovation are all factors that determine a disadvantage compared to the market and are undoubtedly weaknesses.
Some questions that can help in identifying them could be:
- What are the critical issues that our resources and procedures present?
- Are there deficiencies regarding internal know-how and personnel?
- What practices slow down the business?
- What do our competitors do better than us?
Exogenous factors: opportunities and threats
Not all factors that have a potential impact on the business are controllable by the organization.
Opportunities represent external factors that, if adequately exploited, offer the company the possibility of making extra profits, of gaining a differential positioning, of acquiring a competitive advantage, or, more generally, of obtaining an advantage on the market along the supply chain, with customers, in management, in the organization, capable of making the company gain an advantageous position over competitors.
Some questions that are useful to answer are:
- What are the most interesting trends with respect to the reference market?
- Which of these can have a concrete impact?
- Are there changes underway at a political or technological level that must be taken into account?
- Are there changes that are relevant for us that affect society?
Threats represent the risks to which the company is exposed due to environmental, external factors, over which it is not possible to exercise direct control, but only to defend oneself from potential negative impacts. Knowing how to identify them is essential to evaluate potential risks.
questions to keep in mind:
- Are there any roadblocks in the company that are hindering business?
- Are there any standards that are changing and that need to be updated?
- What are others doing about it?
- What are the challenges that need to be addressed? How fast do we need to move?
- Are there any pitfalls to avoid, to use a metaphor from Greek mythology?
Benefits of Swot
In the marketing field, SWOT Analysis offers several benefits, including:
- Evaluate the company/brand's position in the market and the competitive position: It identifies the areas in which a company is strong or weak compared to its competitors, allowing you to adapt the marketing plan to focus on what works best.
- Guide the definition of strategies: It helps to create strategies that maximize strengths, reduce weaknesses, exploit opportunities and mitigate threats.
- Make informed decisions: It provides a solid basis for making key decisions, such as investments, expansions, new product development or entering new markets.
- Monitor change: Since the market and external conditions are constantly changing, SWOT Analysis allows you to adapt and respond to changes with greater flexibility. Optimize resources: By identifying weaknesses, the company can improve the efficiency of its processes and resources, better allocating budget and energy in marketing.
- Ease of use: SWOT Analysis is a versatile and easy-to-apply tool, which makes it accessible even for small businesses that may not have large budgets or resources for complex market analyses.
- Long-term planning: It helps build marketing strategies not only for the short term, but also for the future, identifying in advance the factors that could influence business growth.
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