A SWOTT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, Threats and Trends as they apply to a business objective. A SWOTT analysis examines internal and external factors that are significant to the objective. Results of SWOTT analysis will be used in the strategic planning for the organization.
- Tangible Strengths, these tend to be strengths that can be precisely identified, measured or realized
- Intangible Strengths, these tend to be strengths that can not be physically touched or physically measured
- Consider your assets including plant and equipment
- Do you have long-term rental contracts for your business locations?
- Are your products unique or market leading?
- Have you got sufficient financial resources to fund any changes you would like to make?
- Do you have any cost advantages over your competitors?
- Do you use superior technology in your business?
- Is your business high volume?
- Can your scale up your volume if you need to?
- Do you have or stock strong recognizable brands
- Your reputation – are you considered a market leader? or an expert in your filed?
- Do you have good relationship with your customers? (Goodwill)
- Do you have strong relationships with your suppliers
- Do you have a positive relationship with your employees
- Do you have any unique alliances with other businesses?
- Do you own any patents or proprietary technology?
- Do you have a proven advertising process that works well?
- Do you have more experience in your field?
- Are you managers highly experienced?
- Do you have superior industry knowledge?
- Are you involved with industry associations?
- Is your business Innovative?
Weaknesses – A weakness is a core capability of your business, that your customers value, where your competitor(s) have an advantage over youu, i.e. you failed the “better than your competitors” test.
- Tangible Weaknesses, these tend to be weaknesses that can be precisely identified, measured or realized
- Intangible Weaknesses, these tend to be weaknesses that can not be physically touched or physically measured
- Old or outdated plant and equipment
- Narrow product line
- Insufficient financial resources to fund changes
- High costs (Not high price, high costs specifically refers to your operating costs)
- Inferior technology
- Low volume and restricted in your ability to scale up
- Weak or unrecognizable brand
- Weak or unrecognizable image
- Poor relationships with your customers
- Poor relationships with your suppliers
- Poor relationships with your employees
- Marketing failing to meet objectives
- Manager inexperience
- Low R&D
- Low industry knowledge
- Low innovative skills
- Industry Opportunities – Industry opportunities are opportunities in your industry environment and generally reduce the level of price competition in your industry. To discover more about your industry environment see porters five forces.
- Macro Opportunities – Macro opportunities are in the broader environment that generally affect all businesses in your region.
Some possible Industry Opportunities are:
- Expand your product range
- Diversify your business interests
- Expand into your customer’s field (Forward Integration)
- Expand into your supplier’s field (Backward integration)
- Expand your customer base (Geographically or through new products)
- Placid competition
- Export opportunities
- Products or service in growth
Some possible Macro Opportunities are:
- Favorable changes to legislation
- Favorable changes to any import/export constraints
- Favorable economic outlook favorable
- Favorable cultural shifts
- Technology that your business can utilize such as Ecommerce or Internet sales
Threats – A threat is a forecast environmental condition that is out of your control and has the potential to harm your businesses profitability.
- Industry threats – Industry threats are related to an increase in the competition in your industry or a reduction in market size. Generally industry threats threaten to reduce your businesses profitability.
- Macro Threats – Macro threats are the kinds of things that affect all industries in your region. These also generally result in a risk of reduced profitability.
- Low cost imports, the threat of low cost imports affects almost any manufacturer in the developed world, with the possible exception of food manufacturing.
- Consumer ability to shift to a substitute product and changing demand for substitute products, consider the manufacture of nails used in the assembly of house frames, if housing developers shifted from timber frames to steel framed houses, demand for nails would drop significantly.
- Slow market growth or decline in market size, western countries the demand for alcoholic drinks remains pretty flat
- Shifts in customer or supplier buying power reducing your margins, consolidation in the retail industry has shifted buying power to the retailer who can place suppliers for generic products under high price pressure.
- The changing needs of buyers, (customers), take the McDonalds fast food chain as an example, Faced the threat of Australian customer needs changing towards a healthier life style. In response to this threat McDonalds has introduced several healthy eating options.
Some possible Macro Threats include:
- Shifts in foreign exchange rates impacting your imports or exports. International tourism is often hit hardest by shifts in exchange rates. As your currency increases in value you will get less tourists visiting you, and more people in your country will seek affordable overseas holidays. A strong currency has a double impact, less international travelers and less domestic tourists.
- Demographic changes, the aging workforce making it difficult to get skilled workers in many developed countries.
- Industry Regulation, a good example is aged care facilities who are impacted by increasing regulation and increased costs to administer these new regulations.
Consider this scenario.