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Explain SWOT Analysis

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According to Marketing Guru, Prof. Philip Kotler, SWOT analysis is for the overall evaluation of company’s Strengths, Weaknesses, Opportunities and Threats.

I. Strength – A strength enables an organisation to take advantage of the market opportunity to give it advantage over competition.

It is internal to the firm and is based on the skills of the staff, specialised resources, etc. It is not common in the industry, and therefore empowers the firm to perform better than its market competitors. It is related to an opportunity in the market. If a firm has specialist staff but the skills are not relevant to the opportunity in the market, those specialists cannot be utilised to the firms’ advantage.

Strengths:
• Company culture
• Skilled staff
• Strong legal team
• Expertise on distribution network
• Financial resources
• Brand image
• Access to supplies (exclusive contracts with suppliers), etc.

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II. Weakness – A weakness is opposite of the strength.
It is also internal to the firm and based upon the absence of a specialist staff, resources, or knowledge. This absence is not common in the industry hence the company with weaknesses cannot compete in the market.

Weaknesses:
• Unskilled staff
• Weak brand image
• High cost structure
• Unorganised management structure
• Lack of efficient suppliers
• Inefficient distribution network

III. Opportunities – It is a change or development in the marketing environment which if tapped strategically helps the organisation achieve its objectives.

It is external to the firm and not dependent to the firm. It forms an opportunity to the entire industry. It will be an opportunity only if the organisation has a strength to take advantage of this development.

Opportunities:
• Unfulfilled need in the market
• New Corporate friendly regulations
• New efficient and effective technology, etc.

IV. Threats – It threatens the organisation from meeting its objectives.
Threats exist for the entire industry. The threats are more detrimental or a cause of concern if the organisation has weakness to counter the emerged threat.

Threats:
• Preference to substitute products in the market
• New regulatory changes
• High corporate tax rates
• Emergence of high cost technology which competitors can afford
• Changes in supplier demands, prices or entry of new suppliers, etc.

The SWOT can also be viewed in different perspective. Some marketers see weakness as something which restricts them from taking advantage of an opportunity as well as competition. This opportunity for the entire industry becomes a threat to the organisation as it cannot take advantage of it, and the competitors will definitely dent the organisations market share. Similarly, a threat if countered better than the competition becomes an opportunity. It will give an advantage to the organisation and will help it move ahead of the competition.

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The SWOT analysis helps to –
• Prioritise and identify key concerning issues
• The priority level can be highlighted as High priority, medium priority and lower priority
• Presents the analysis in a simple format easy to understand

SWOT Analysis

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