A Little Marketing


SWOT Analysis
July 11, 2008, 2:11 pm
Filed under: Uncategorized | Tags: , , , , , ,

Many people seem to believe that the SWOT analysis is something that is easy and simple to understand. However, it is misused quite often and as the SWOT and confrontation matrix are closely related, you should understand how both work.

SWOT, as you presumably know, stands for Strengths, Weaknesses, Opportunities and Threats. It is a concept that is actually relatively easy to understand. However, the application of the SWOT analysis is where most people make their mistake. When filling in the blanks, you should always remember that the strengths and weaknesses of the organisation relate to the internal analysis; opportunities and threats relate to the external analysis. Also, the statements you make in your SWOT matrix, should be backed-up by your internal and external analysis. For instance, if you claim that the wide product range of the organisation is one of its strengths, but don’t mention anything about their product range in your internal analysis, your statement will become invalid. So make sure you can always make a reference to your analysis, or you’ll be destroyed with questions your cannot answer.

Now comes an important part of this article; in relation to the confrontation matrix, you should follow these two guidelines when making any statements in your SWOT:

  1. It must relate to your product market combination
  2. It must relate to the problem definition

It makes sense when you think about it. If you sell kitchen appliances and your goal is to sell 1500 products in November and December, you can’t name global warming as one of your threats. At least not without making it sound far-fetched. In reality, if you have done proper research and your analysis is on point, you will rarely come across any problems. The reason for this is that if your research is done properly, you should have only gathered (or at least used) the information that is relative to the organisation. Similarly, if you have analyzed everything correctly, the statements you make in you SWOT will almost automatically follow the two guidelines.

One common mistake is that people tend to jump to conclusions in their SWOT analysis. For instance, if I list unnecessary high production costs as a weakness, I will naturally think of ways to lower the production costs and I might even include these solutions in my SWOT. While this seems like an obvious and harmless thing to do, we are not supposed to include possible solutions and stratety in an analysis. That is why it is called an analysis. However, if you are like me, you may find it helpful to write down your conclusions anyway but excluding them from the analysis. You could even enter an additional chapter called SWOT Conclusion and get everything of your chest. However, you will soon find out that your SWOT Conclusion is very similar to Strategic Advice or Strategic Options (depending on what you have to say). In other words, the conclusions you draw from your analysis will eventually show up in some other part of you plan, so you’ll just be repeating yourself.

So a solid SWOT analysisis based on good market research and a sound internal and external analysis. That much is obvious. Actually, a SWOT analysis should not bring any trouble to even a novice marketer. However, you should always evaluate your findings before you continue; you don’t want to start all over again near the end of your plan because your SWOT isn’t good enough. Also, I cannot stress enough about he importance of following the two guidelines when compiling your SWOT. The SWOT plays an important role in the confrontation matrix and thus, your marketing strategy and the implementation of it.

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