Conducting a SWOT Analysis
Once you have finalized and selected who your competitors are, it is extremely important that you find out their strengths and weaknesses. The best way to do this is by conducting a SWOT Analysis. What is a SWOT analysis, you might ask?
SWOT analysis is a tool for analyzing businesses and the environment within which they operate. It is extremely effective in identifying the underlying opportunities and in helping an entrepreneur decide a course of action, which must be taken. It consists of two elements,
- The first is the internal analysis, which consists of the S and W of the SWOT acronym. These stand for the strengths and weaknesses of a company.
- The second is the external analysis, which consists of the T and W from the word SWOT, which stands for threats posed by external sources, and the opportunities to be gained by operating in the chosen industry.
Once you have determined the strengths and weaknesses of your own organization you must compare them against the threats posed by the competition and the opportunities which can be mace use of. There is a high chance that a threat can be converted into an opportunity. However, you can only come to that conclusion once you have identified your key strengths and weaknesses. Compare your strengths and weaknesses against the threats and opportunities in the external environment and then decide what needs to be done to overcome the threats and make use of the opportunities to gain a sustainable competitive advantage.
Along with conducting a SWOT analysis for your own self, you must also create a SWOT analysis for your competitor. This will give you a clear picture regarding where you stand now and where you need to be, to give your competitors a tough competition.
To make understanding this easier for you, here is a simple example of what a company’s strengths, weaknesses, threats, and opportunities could be.
- Innovative products or services.
- Technology oriented, introducing new procedures through technological advancements.
- Marketing expertise, or strong positioning of the brand.
- Supply Chain Management of the business.
- Superior quality of products hence premium pricing.
- Products or services, which are not differentiated by the competitors.
- Location of the business.
- Lack of marketing expertise
- Distortion in the operating procedures of the organization
- Unsupervised and improper supply chain management.
- damaged reputation
- Poor quality of goods and services.
- A developing market with a lot of potential.
- Mergers, joint ventures, or strategic alliances, which can give you a competitive lead.
- Expansion opportunities in other markets based on geographical regions.
- A large competitor, which recently closed down its operations.
- Attracting and tapping new market segments.
- A new competitor, quickly gaining recognition in the market.
- Price wars, which might adversely affect your business.
- Changes in government regulations.
- Competitors have come up with a new and improved distribution strategy.
There can be many more situations, which can be viewe3d as a threat by one company while as an opportunity by another. A great way of converting the threats into massive opportunities is by employing practices, improving the manner in which your business is run, continuously coming up with newer strategies for creating cost effective and efficient production processes, and improving the supply chain management, so that the product is always available to the consumers and the supply meets the demand.