Okay, maybe that question isn’t the correct tact in this case. In other words, maybe the proper perspective is “SWOT is your answer!” That is to say, the answer is SWOT analysis. SWOT analysis is an incredible tool to assist you in determining your firm’s:
For those that enjoy and require a visual aid…
The table below displays the general relationships among the 4 dynamics of SWOT analysis.
These 4 areas of analysis can then be divided into 2 general categories. The first category analyzes strengths and weakness. Your firm’s strengths and weaknesses are internal in nature and as such, are under your company’s control. When you determine your strengths and weaknesses you not only delineate your company’s advantages in the market, but also become aware of areas where your competition may take advantage of your position.
Examples of Strengths:
- The location of your business
- Customer-friendly return policy
- Industry-leading customer service
- Cost advantages from proprietary know-how
Examples of Weaknesses
- Repairing a damaged reputation
- Quality of your product(s) and/or service(s) has declined
- Gone through an extreme reduction in company workforce
- Lack of access to key distribution channels
The second category permits your firm to look at the external forces, the opportunities and threats that affect your business and your success and resilience in the marketplace. Opportunities and threats are the opposites of the same coin, external in nature, and therefore your firm has no control over these factors. But if your company is able to determine upcoming opportunities and possible threats, your firm will be able to position itself to maximize the opportunities that present themselves and alleviate the damage from imminent threats.
Examples of Opportunities
- Mergers, partnerships and/or strategic alliances
- Improved profits from moving into emerging markets
- Competitor has gone out of business
- Emerging technologies
Examples of Threats
- Regulatory changes
- Environmental disasters
- Introduction of high-quality product and/or service from international market
- Shift in consumer preference from your firm’s product(s) and/or service(s)
Here are some sample questions to help you identify your business’s strengths and weaknesses:
- How is my business doing in the marketplace?
- What is my business good at supplying and providing to customers?
- In what areas is my business considered the leader?
- In what areas does my business need improvement?
- Is our company’s brand damaged or tainted in the view of our customers?
- Is our current level of staffing able to provide the labor needed to provide our product(s) and/or service(s)?
Here are some sample questions to help you narrow down your firm’s available opportunities and possible threats:
- What software applications are available to improve our existing electronic data interface (EDI)?
- At present, would our company benefit financially from a partnership or joint venture?
- Is there a void in market share of which we could take strategic advantage?
- Are there any new proposed tax laws that could negatively affect our overall profitability or on one of our lines of products and/or services?
- Is our infrastructure robust enough and prepared for a natural disaster?
- Does our competition’s access to specific distribution channels provide them with a competitive advantage?
Granted, these questions are simple examples. Yet asking questions such as these will lead to much more specific questions, and the answers provided will give you tools to develop an effective strategy of further growth. After you conduct an intensive SWOT analysis you will realize that, “Knowledge is king!” As they age-old saying goes, “To be forewarned, is to be forearmed.” When you are able to identify the nature of the 4 dynamics within your company, you will greatly increase your chances to use your available resources (financial, labor, distribution channels, chamber of commerce etc.) more efficiently and effectively.
So, when was the last time you performed a little SWOT analysis on your business…and you? Think about it!