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Strategy

SWOT Analysis

From Form-Filling to a Powerful Strategic Weapon

The SWOT is one of the most powerful tools in marketing yet it is generally misunderstood and done badly.  In this article, I am going to show you how to do it properly as a cornerstone to getting your growth strategy right. Doing a SWOT properly can change your business and, indeed, your life!

The SWOT below can be used at a high level to assess your company or organization, or at a lower level to assess an existing brand, product/service, a new product/service or even to assess yourself!

Getting Ready for a STAR SWOT

The STAR SWOT

There are many different types of SWOT in use. In this case, we will use the common 2 x 2 Matrix model but will turbo-charge it to make it extremely powerful.  We call this The STAR SWOT as it follows these 4 simple steps: Step 1: SWOT: Long and rough Step 2: Tidy it up Step 3: Ask “So what?” Step 4: Rank for strategic impact The S-T-A-R letters will help you to remember the steps which are outlined below. But before we create our SWOT, it is worth getting the foundations right first.

SWOT – A Brief Summary

So, “SWOT” – what is it and what does it mean? The SWOT is a very common tool of marketing. The letters stand for Strengths, Weaknesses, Opportunities and Threats. There are many different types of SWOTs in use. For example, there is the basic and famous 4-box model. There is also a more sophisticated 9-box version. There is also a 2-Step SWOT-to-TOWS version. Finally, there is the very sophisticated version taught by my colleague, Professor Malcolm McDonald.  You can search for these online and see many articles about them. In this lecture, I am going to show you how to do a turbo-charged basic version. It is simple to do and very powerful. Once you have mastered this, you can then proceed to more sophisticated versions later. However, this will do the job nicely without enormous effort.

Useful Preparation Tips before we get started

Before we get started, we need to do some preparation. We need to decide the basics of the project and identify the key information we are seeking.

The Seven Golden Rules of a Good SWOT

There are also some basic rules that we need to follow when doing our SWOT. 1) Be clear about what the SWOT is focused on. How is the market defined? For example, are we interested in a global or a local market? What products and customers are in scope i.e. what are all the current and potential products or services that we can sell; and which types of customers can we sell them to?  Who are the competitors, both current and potential? For example, Terry Leahy, the CEO of Tesco in the UK was more worried about Amazon than other bricks-and-mortar supermarkets. 2) Be clear about how far into the future we are looking. 3) Be clear about who should be involved. Who has good insights? What about involving external people? These could be consultants or academics who are independent experts.  If you are doing this in a workshop setting, maybe its worth getting an external facilitator in to run the session. Think about Who has the money and power? At some point, you will be asking for approval of your marketing plan.  It may therefore be useful to involve an influential person in the SWOT analysis so they feel like they have had an input to the process and will help you get the strategy approved. 4) Remember that Strengths and Weaknesses are perceived by the customer, based on their key needs and relative to the competition. Make sure the strengths and weaknesses analysis is done from the viewpoint of the customer, looking at the alternative options. If the customer thinks your product or service is inferior to the competition, then it is. It does not matter if the reality is different as it is their perceptions that count. In other words, perception is reality. Also, if you said your key strength is a nice office to work in, that may not be a strength that the customer cares about.  So strengths and weaknesses must always be based on key needs.  By the way, you should always be worried when someone talks about our “USP” or Unique Selling Point because that unique strength may be totally irrelevant to the buying decision. Furthermore, strengths and weaknesses are always relative to the competition.  If you have poor customer service but your competitors have very poor customer service, then your customer service is actually a relative strength in the eyes of the customer. The fact that no company is providing the desired customer service means it is an unmet need and that goes in the Opportunity box. Any unmet needs are potential goldmines! 5) Opportunities and Threats are usually external to the company and should not be confused with internal strategies or actions. This is important because we need to understand the external conditions facing the firm and avoid confusing this with the strategies and actions that the firm should take to exploit or avoid them. This is a common error in SWOTs and should be diligently policed.   External conditions can be driven by the key forces affecting us, our industry, and our market. At a macro-level, these could include Political, Economic, Socio-demographic, Technological, Legal, and Environmental forces.  In your industry, these could include pressure from Suppliers, Customers, Product Substitutes, Existing Competitors and New Competitors 6) Let people speak openly especially at the first step of doing the SWOT when we want people to be in a creative mood and we do not want to miss anything important. We will edit it down later. 7) Be honest and self-critical. Weaknesses are often harder to find and stated more cautiously than strengths.  Yet, imagine if there was a bunch of customers in the room, especially those buying the competitors’ products and services.   What would they say?  It is far better to be over-critical of your firm than to be over-generous.  A soft SWOT leads to business as normal. A hard, critical SWOT leads to significant business improvement. Once we know these answers, we are in a good position to get started with the SWOT. It is possible to do the SWOT in a workshop setting (either face-to-face or online) without knowing the answers and make fast progress in a day or two.  However, the results of that workshop should always be seen as hypotheses that need testing with further research. If you have recently undertaken a marketing audit, then this is a good place to find useful information to help answer the questions above.  This is a 360-degree analysis of the current situation and includes both an external market assessment and an internal assessment of our capabilities. The SWOT really does help us to rise above all the data and draw some key conclusions. It is therefore very useful in helping us achieve good strategic insight.  Done well, it will significantly help us to develop the right growth strategy.  Indeed, too often, people do a poor SWOT, leading to a poor strategy which is then well-executed leading to slow growth or even profit death!  The SWOT helps to avoid this problem.

Step 1: SWOT – Long & Rough

So let’s now use an example to help us do a good SWOT. I will use the example of a fictional online injury claims law firm, based in the UK. So this is the sort of law firm that people call when they have had an accident and are looking for compensation.  This particular one is purely online. The first step is to generate a long rough list of all the strengths, weaknesses, opportunities and threats. I have listed 3-4 in each box here but in reality, you may have many more.  At this stage, it does not matter how many you have.  If you are doing it in a workshop setting you can set a time limit, for example, 1 hour, to get most of the key ones listed.   Use the 7 Golden Rules above to help do this well.
 

Step 2: Tidy it Up

In Step 2 we tidy up the SWOT. First, we refine the longlist into a more relevant shortlist of statements.  Here, in the Strengths box, I have crossed out “Been going for 30 years” because ‘age of the law firm’ is not a key need of customers so it is irrelevant. In the Opportunities box, I have crossed out “Develop new services” as this is an internal strategy, not an external opportunity.  In the Threats box, I have crossed out “Office canteen closing” as this will have only a marginal impact on the firm.  In your SWOT, you can both cross out the irrelevant, insignificant statements and highlight the more important statements.  You should now have a more focused SWOT where all the statements are useful.   Try also to get the SWOT on one page or one slide.
  Then, still in our tidy-up step, we make the SWOT clearer. Here, we are aiming to be more precise about the nature of the statements.  One way to do this is to try to find facts that provide evidence for the statements. So, in our Strengths box, we can say from looking at our Injury Claims performance that we have a “20% better win rate versus the competition.” This demonstrates a sizeable gap versus the competition and a real benefit to customers. Also, rather than just saying “Low-cost service,” we can look at industry surveys that show our “average fees are 18% lower than the competition” another significant gap.
  In the Weaknesses box, we can use our own customer survey data to say that our customers rate our client relationships with them at only two out of five, so a significant issue. In the Opportunities box, we can specify the size of the market opportunity and be clearer about the fact that the new automated services technology can be used for both improved selling and improved delivery of services. Finally, in the Threats box, we can be more specific about the nature of the rising competition and even name examples of companies that we are concerned about. Now, I have only made a few edits to a few statements here to show you what to do. In your SWOT, you will have more statements and more space to play with.  You can even go further by setting up trigger points that will suddenly make an issue important.  A typical example is exchange rates, which often pop up as both an Opportunity and a Threat.  You could say that if they move to $1 = 9 Euros then that is the trigger point for that exchange rate to be a Threat. Similarly, if they move to $1 = 0.8 Euros then that is the trigger point for them to be an Opportunity.   Whatever works for your business and situation.  The point is that we are turning a general SWOT into a very useful strategic tool for managing the business.

Step 3: Ask “So What?”

In Step 3, we really turn up the value of the tool. We turn the information into insights! To do this we cross-reference the statements and look to find the Key Challenges for the firm. First of all, we ask, “What strengths do we have that can exploit the opportunities?” Here, we should be able to use our strength in “Dealing with injury claims” to help us exploit the new millennials segments of “Young people reaching adulthood.”  This raises our first key question of ‘How can we use our experience with injury claims to reach new car drivers?”
  Second of all, we ask, “How can we use our strengths to mitigate the threats we face?” Here, we can use our “high convenience, low cost” strengths to help customers through the economic uncertainty ahead.  They can save money with us and do it easily so they can spend their time on more important matters. So the key challenge is then “How can we better explain that our convenient, low-cost service is right for uncertain times?” Third of all we ask, “Are there any Opportunities where we need to develop new Strengths to exploit them?” Here, we do need to get to grips with the emerging use of automation and artificial intelligence in the law industry. Fourth of all we ask, “Are there any Threats or Weaknesses where we need to develop new Strengths to mitigate the risks?” Here, we need to find some way of improving our client relationships despite being a pure online firm; and we need to become competent at doing competitor analysis so we can predict the dangers before it is too late. So we now have a good list of key strategic challenges that the firm is facing. All that from the humble SWOT. However, we can still go further. Now is also a good time to refine the list of Key Challenges so that they are clear. This can be very illuminating and well worth the effort.  For example, in the first challenge on the list, if we change just one word it makes a big difference.  If we change “car” drivers to “vehicle” drivers we are suddenly talking about not just capturing the new millennials segments but also using our claims expertise to potentially support van drivers, lorry drivers as well.  This may be done via other law firms or fleet operators that the customer already uses but who are not that interested in injury claims. The point being that in re-stating the problem, we have opened up a potential new opportunity.  Similarly, the other challenges on this slide have been re-stated so that they are also clearer. These are the examination questions that we want the market strategy to answer. Defining the problem correctly is the key conclusion to the marketing audit and it provides the GPS fix on your current position. As Albert Einstein said, “If I had an hour to solve a problem I’d spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.”

Step 4: Rank for Impact

Finally, in Step 4, we rank the Key Challenges by their strategic impact on the firm. We are therefore saying, these are the questions, in ranked order that we want our market strategy to solve. Now, as I have written the book on marketing plan implementation, I know that few plans actually hit all of their targets on time.  So this is a good way of ensuring that we are not trying to do too much with our market strategy and are, instead, focusing it on the most important marketing issues for the firm.   To rank them, we are really asking this question:  “If we were to solve this challenge, what would be the strategic impact?”
  You can, of course, do this in a simple way of thinking, discussion and debate. However, you also use a more sophisticated scoring system.  One method is to use the “Triple Bottom Line” accounting framework that considers profit impact, people impact and planet impact.  A strategy that helps all three will score higher than one that just impacts profits and you can have 3 columns in your scoring matrix.  The question then becomes, “If we were to solve this challenge, what would be the strategic impact on our profits, people and the planet?”  Further refinements include considering risk and reputation.  At the end of the day, you simply need to develop a ranking mechanism that works best for your business or organization.

The Digital Marketing Input

Digital marketing can help you do a good SWOT in a number of ways. First, you can use it to help you understand customer needs. There are specific online survey platforms like SurveyMonkey that do this well.  You can also do survey polls on Facebook and post research questions on LinkedIn.  By understanding needs, you will understand which strengths and weaknesses actually matter. Second, you can get a better understanding of strengths and weaknesses from looking at customer comments about your products and your competitors’ products. In the travel industry, TripAdvisor is a massive source of data for both companies and customers.  In other industries, user-generated content like comments on Facebook or Amazon can make a big difference to a company’s or product’s perceived strengths and weaknesses. Third, technology now allows a lot of market testing to be done rapidly. For example, many companies split-test different words and phrases in Google Adwords to see which works better. Moreover, in Google Adwords, Facebook, and LinkedIn advertisements can be targeted precisely to test response rates in different segments.  This not only confirms where a firm’s strengths and weaknesses lie but also can be used to check for dynamic changes in strengths and weaknesses over time. Fourth, it can be used to get a better understanding of opportunities and threats. For example, reading blog posts by competitors can reveal where they are, what they are doing, and what value they are promoting.  Reviewing online content from associations, industry bodies, subject bodies (like the Chartered Institute of Marketing, here in the UK ) can reveal hot topics and who is doing what. Google Trends is also another good free resource to spot rising trends. In summary, digital marketing can improve enormously the quality of the SWOT.

The Sustainability SWOT

The rising issue of sustainability has big implications for the SWOT analysis.  Customer needs are changing, growth rates of market segments are changing, new products and competitors are emerging.  On top of this, macro forces across the world are changing how investors view sustainable companies.  To get your SWOT to be sustainable, follow the 4 steps mentioned above but make sure that at every step, you do them considering sustainability and “ESG.”

To Conclude

So, in conclusion, a great SWOT can help you achieve success in many areas. At a company level, it can help you develop a better strategic plan for your business, helping your business to succeed. At a product level, it can help you launch or improve a key product or service successfully. You can even do it at a personal level to develop a better career plan for yourself. In this case, you would do a SWOT on yourself from the viewpoint of your boss or potential recruiter.   I did this when I was in my 30s and it completely re-set my career direction. It can even help you be happier outside work.  What would a SWOT of your family look like based on the needs of a great family?  What would a SWOT of your local club look like to help them get more members?  What would a SWOT look like of a key purchase decision or any key decision you are about to make? There is an endless list of how this simple tool can enrich your life.

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DISCOVER THE EXCELLENCE
GGA
Ambassador

We work for a purpose-driven, collaborative leadership that delivers, good, sustainable prosperity while, enhancing the planet, treating people inclusively, ethically,  adopting good governance principles which produce good, sustainable profits, and contribute... Learn more

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