SWOT is an acronym for strengths, weaknesses, opportunities and threats. It is the culmination of much internal analysis and external research. Thinking about the outcome, one can define SWOT analysis as the extent to which a firm’s current strategy, strengths and weaknesses are relevant to the business environment that the company is operating in.
Strengths and weaknesses are internal aspects and Kotler (1988) suggests that these should cover the four areas of marketing, financial, manufacturing and organisational. Opportunities and threats look at the main environmental issues such as the economic situation, social changes such as the population getting older and technological developments including the internet.
A SWOT analysis example for a cosmetics manufacturer might include:
Strengths
Strong, experienced marketing team
High brand recognition
Well established consumer testing panel
Weaknesses
Prices perceived to be too high
Costs spiralling out of control due to increases from raw material suppliers
Inconsistent brand identity
Opportunities
Growth of the internet leading to an increase in the number of consumers willing to buy online
New emerging teen market
Threats
New ‘affordable luxury’ entrants to the market threatening to take share from premium brands
Major competitor planning to integrate vertically and sell direct to the consumer
Rise in popularity of nail spas leading to decline in demand for nail products
A SWOT can be performed for companies, departments and divisions as well as individual people. Whatever the focus is the results will be very individual, even to companies competing in the same sector. One company may see new technology increasing the number of consumers who wish to buy on ...