2008 Q4 SWOT Analysis
During the strategic planning process it is common for management to conduct a SWOT analysis. A SWOT analysis is an environmental scan of an organization’s Strengths and Weaknesses as well as external factors such as Opportunities and Threats.
An organization’s strengths can be leveraged for competitive advantage. Strengths can include brand image and awareness, cost advantages, proprietary processes, extensive distribution channels, etc. Inversely, examples of weaknesses include poor reputation, high cost structure, a high level of customer’s dissatisfaction, etc.
Externally, the environmental scan may identify opportunities for the organization to exploit. Examples include industry deregulation, the development of new technologies, etc. On the other hand, threats to the growth or profitability of the organization may include the introduction of substitute products, increased government regulations, etc.
Going through this analysis will help management stay focused on the environment in which they compete and how to best assess opportunities using their competitive strengths. A competitive advantage can come by identifying a fit between the company’s strengths and opportunities. In many competitor analyses, strategists can build detailed profiles of each competitor in the market, focusing especially on their relative competitive strengths and weaknesses.
As part of the competitive analysis, it is important to examine each competitor’s cost structure, sources of profits, resources and competencies, competitive positioning and product differentiation, degree of vertical integration, historical responses to industry developments and other factors.