The SWOT analysis is indispensable in the context of business development projects. Therefore, it is recommended as an instrument in almost every strategic context. The SWOT Matrix is probably the best-known tool in the field of strategic marketing management. The SWOT analysis is an internal analysis of strengths and weaknesses and an external analysis of opportunities and risks. SWOT is an English acronym and the first letters stand for:
- Strengths (S)
- Weaknesses = Weaknesses (W)
- Opportunities = Opportunities (O)
- Risks = Threats (T)
- 1 SWOT analysis: what is it?
- 2 SWOT Analysis: Implementation
- 3 Process of a SWOT analysis
- 4 Internal strengths and weaknesses (Software Analysis)
- 5 External Opportunity and Risk Analysis (OT)
- 6 Creation of a SWOT Portfolio
- 7 Derive Norm Strategies from the SWOT Portfolio
- 8 SWOT Analysis: Information Sources
- 9 SWOT Analysis: Use in Marketing
- 10 SWOT Analysis: Criticism
- 11 Temporal divergence in the SWOT analysis
- 12 Create a SWOT analysis with a checklist
- 13 SWOT Analysis and Its Importance for SEO
SWOT analysis: what is it?
A SWOT analysis is a strengths-weaknesses-opportunities-risks analysis. Internal strengths and weaknesses (Strengths – Weaknesses), as well as external opportunities and risks (Opportunities – Threats), can be determined on the basis of these in order to align strategies and measures of a company in a more targeted and efficient manner. The analyzed external risks pose a threat to the corporate strategy. In business development, SWOT analysis is one of the best known and most common tools. However, the analysis only offers effective added value if it is carried out conscientiously and in detail. The SWOT analysis helps answer the most important questions:
- What does the company’s initial situation look like? What are the company’s strengths and weaknesses?
- What challenges does the market or the corporate environment pose?
- What strategic options are available based on the current and future situation?
- How should the strengths be used correctly?
- What do we want to do to compensate for our weaknesses?
Marketing Guidelines that are related to the SWOT Analysis and Business Management:
- ROI and Importance for Marketing
- NeuroMarketing and Examples
- Flywheel Marketing Examples
- Eyetracking and Heatmaps
- Community Management for Marketing
- Page Impressions and Marketing
- Conversion Funnels
- Guerilla Marketing
SWOT Analysis: Implementation
In order to carry out a SWOT analysis appropriately, one should become familiar with the structure and application of this analysis instrument. You can find out how to get an optimal SWOT matrix below:
- Structure of the SWOT analysis
- Partial steps to build a SWOT matrix
- Questions with which one builds a strengths/weaknesses analysis
- Dealing with opportunities & risks (or the dangers)
- From SWOT analysis to a SWOT portfolio
Process of a SWOT analysis
The creation of a SWOT analysis should be structured and systematic. The following procedure has been established:
The information obtained from the internal analysis, from studies of customer relationships, core competencies, services, partnerships etc. are just as important for the SWOT analysis as the data from the external analysis, which describe the environment of the company and the relevant market. Examples of external influencing factors are: Social trends, economic developments, politics, technology, etc. All the data collected is summed up at the end and thus forms a clear SWOT portfolio. The SWOT portfolio is an important source of inspiration for business development projects.
The picture shows the process of the ideal typical procedure for the SWOT analysis
Internal strengths and weaknesses (Software Analysis)
Features that enable companies to differentiate themselves positively from the competition are called strengths. Companies have to filter out which features promote business success the most and at the same time correspond to the corporate objectives so that a focus can be placed on them. Features that distinguish companies from the competition, or areas that have deficits, are accordingly regarded as weaknesses. Factors that are responsible for failures or miscalculations should be determined in this step and eliminated in the future.
Helpful questions for the strengths and weaknesses analysis:
- What are our strengths?
- What are our weaknesses?
- Where are we in the relevant success factors compared to our competitions?
- What noteworthy successes can we record?
- What areas and target groups do we lose in the competition?
- In which areas are we worst in the competition?
In the context of the strengths and weaknesses analysis, the comparison value to which the factors are analyzed is elementary. Three different comparison dimensions are common from benchmarking.
- Comparison of one’s own skills with other parts of society, for example with different locations or subsidiaries
- Comparison with other companies in the industry
- Comparison with worldwide benchmarks regardless of the industry.
- This perspective certainly leads to different evaluation dimensions and thus to different statements about the performance of the company.
External Opportunity and Risk Analysis (OT)
External influencing factors should be given a lot of attention in the SWOT analysis because they are responsible for the success of a company. Developments on the market and in the environment of a company that has a certain positive potential are called opportunities. These include trends, socio-demographic changes, changing customer behavior, etc. Developments in the environment of a company that goes in a negative direction and poses a threat to the company’s success are considered risks. Examples of risks are; legal changes, new competitors, economic crises, etc.
Helpful questions for the identification of opportunities and risks:
- Which external factors influence us?
- Which long-term trends should be considered?
- How are our relevant markets and industries developing?
- How can we use the current developments for our corporate success?
Creation of a SWOT Portfolio
Interestingly, after the internal (SW) and the external (OT) analysis, the SWOT analysis ended in the German specialist literature in the 80s and 90s. In American literature, however, the question was: how do we deal with the results? Always an important step in the analysis. This view has now established itself across the board. A SWOT portfolio is created for this.
In a next step, the collected data will be classified in the fields of the SWOT portfolio. By combining different factors of the SWOT analysis, directions for future strategies and measures become apparent.
S-O strategy: Use strengths that match the company’s opportunities
- Which strengths match potential opportunities?
- Can new products or business areas be opened up?
- Can the opportunity be used only in the short term or also in the long term?
- W-O strategy: eliminate weaknesses to take advantage of opportunities
Can opportunities arise from certain “weaknesses”?
- From which weaknesses can strength be developed?
- Do certain products or business areas need to be improved?
- S-T strategy: Use strengths to minimize risks
What strengths are at risk?
- Which strengths can be used to ward off risks?
- Which products or business areas should be better protected against risks?
- W-T strategy: reduce weaknesses so that they do not develop into risks
In which areas do internal weaknesses meet external risks?
- What are the dangers of the company?
- How can I keep the damage as low as possible?
- Which products or business areas may need to be eliminated.
Derive Norm Strategies from the SWOT Portfolio
In the next step, standard strategies can be derived from the created SWOT portfolio, which serves to address the internal weaknesses and external risks of a company. For an optimal approach in business development, these standard strategies still have to be adapted to the respective company. An assessment and assessment of the relevance of the individual fields of the SWOT portfolio should be carried out so that resources and financial resources can be used efficiently.
SWOT Analysis: Information Sources
The question often arises as to where the information for the SWOT analysis comes from. A lot of information is already available in the company. It is, therefore, worthwhile to the first check which of these studies and analyzes have already been carried out in the company. Some analyzes are rather standard evaluations from the ERP system, ABC analysis, life cycle analysis, experience curve analysis, cost structure analysis, satisfaction analysis, corporate culture analysis, core competence analysis, 7-S model, value chain analysis, market growth/market share portfolio analysis and industry attractiveness / competitive strength portfolio analysis. You can find information and facts for opportunities and risks analysis, i.e. the external analysis, using the following analysis tools: environmental analysis, target group analysis, competition analysis, substitution analysis, stakeholder analysis, benchmarking, and industry structure analysis.
SWOT Analysis: Use in Marketing
The SWOT matrix can be used as a flexible management tool in various constellations in marketing. The applications are interesting in the following areas:
- SWOT analysis for a business unit
- Analysis of the skills of a marketing department as part of a marketing audit
- SWOT analysis of a business plan/business case
- SWOT analysis of a communication strategy
- SWOT analysis as part of the competitive analysis for a product
These exemplary use cases show how flexibly the SWOT analysis can be used. The question of the aim of the SWOT analysis is of fundamental importance. There is no value-neutral and situation-independent SWOT analysis. The SWOT matrix is therefore always the result of a specific marketing question and a specific point in time.
SWOT Analysis: Criticism
The SWOT analysis has been discussed and criticized in both science and business practice in recent years. The main points in the discussion are being told below.
SWOT analysis: Subjective manager process
The SWOT analysis suggests certain objectivity and neutrality. Despite the structured approach, this is not the case. Both the selection of the evaluation dimensions and the assessment of whether something is a strength/weakness or an opportunity/risk is done on a subjective basis. Subjectivity can be somewhat weakened if several people are involved in the determination phase of strengths and weaknesses and the criteria are compared with other reference values in the sense of benchmarking. At the same time, the advantage of the method lies in subjectivity. The SWOT analysis can be used in any corporate context and is therefore very flexible and solution-oriented.
Temporal divergence in the SWOT analysis
The SWOT portfolio compares opportunities/risks and strengths/weaknesses. The analysis often does not take into account that the strengths and weaknesses analysis is based on the values of the past. The strengths and weaknesses are the results of past decisions. However, the opportunities and risks are aggregate states of the future. Compatibility is therefore often not given. Many managers reflect the opportunities and risks in the here and now and in many cases hide the development of the trends.
The 3 most common mistakes in a SWOT analysis
- A very common case in practice is the omission of a predetermined goal for carrying out SWOT analysis. However, the previously defined goal is a decisive factor in the SWOT analysis, because the results are otherwise too vague and can no longer be used.
- Another common mistake is the mixing of internal and external factors. There is a strict separation of one’s own strengths and weaknesses (internal analysis) and opportunities and risks (external analysis), which is by no means easy but is crucial for a good SWOT analysis.
- It is often assumed that the SWOT analysis is completed after the internal and external factors have been compiled. But here, too, there is a mistake: because after that it really starts! As part of the analysis, all the scenarios should be run through with the collected factors, on the basis of which strategic measures can be developed.
Create a SWOT analysis with a checklist
The creation of a SWOT analysis should be managed using a structured approach. A checklist helps to illustrate the essential points and not to focus exclusively on things that come to mind quickly and easily, and may only be judged as strengths and opportunities. A SWOT analysis is always created in a specific context, i.e. H. it is never worthless, but to be created for a specific purpose. Accordingly, the scope of the strengths and weaknesses or opportunities and risks to be analyzed must be geared to the purpose. In the first step, the internal strengths and weaknesses are identified. It should be noted that an analysis initially only represents value-free documentation of the current status quo of a company’s or division’s capabilities. Only the subsequent evaluation and comparison in terms of benchmarking make a resource’s strength a strength or a weakness.
It is therefore advisable to use external expertise for the SWOT analysis in order to achieve a sensible classification. An extensive SWOT analysis naturally also includes an external analysis, i.e. the opportunities and risks that arise for the company from the market. For this, it makes sense to carry out market analysis in order to supplement it with trend analysis. It is also important here that market development is initially a neutral condition. Only through the reflection in the company and the subjective assessment of the management does a market development become an opportunity or a risk. Here, too, it helps to use a checklist to record the generally relevant megatrends and then to assess the relevance for the situation in which the company finds itself and to reflect what extent this trend now represents an opportunity or a risk for the company.
Checklist for the analysis of the relevant strengths and weaknesses
When analyzing the strengths and weaknesses, it is important to identify the strengths and weaknesses that are relevant to the business model. For example, the following points are recommended:
- Number, distribution
- Socio-economic characteristics (occupation, income, education)
- Purchasing power
- Willingness to pay
- Needs (benefit creation)
- Customer types
- Buying & consumption habits
- Willingness to innovate
- Behavior-oriented characteristics (brand and shopping center choice, product choice)
- Number of competitors
- Competitive strength
- Importance of the individual providers in the market (market share)
- Positioning of competitors
- Target groups of the competition
- Degree of differentiation
- Competitors’ strengths and weaknesses
- Potential new competitors
- Number, distribution
- Service portfolio
- Product and program orientation
- Supply strength
- Power relations
- Relationship to the competition
- Customer churn rate
- Well segmented customer base
- Efficient acquisition of new customers
- Effective and efficient sales channels and their reach
- Network effects through sales channels
- Coordination of the sales channels to the customer segments
- Strong customer relationships
- Strength of the company’s brand
- Positioning of the company aligned with customer requirements
- Customer satisfaction
- Competitive advantage through positioning
- Strong synergies in the product portfolio
Cost / sales estimates:
- Achieve high margins
- Predictable sales and frequent repeat purchases
- Broad sales
- Expenses are only made after the company’s sales are secure
- Cost structure suitable for the business model
- Cost-effective business operations
- Positive economies of scale
- Main resources too difficult to copy
- Predictable resource requirements and timely procurement of resources
- Efficient and difficult to imitate execution of the core services
- High quality of the processes
- The balance between in-house and outsourced processes
- Coordination with partners (if necessary)
- Harmonious business relationships with the main partners
Checklist for analyzing the opportunities and risks of a company
When analyzing the opportunities and risks, the following points should be considered and examined:
- Macroeconomic development: gross national product, disposable income
- Monetary value development: consumer prices, wholesale prices, raw material, and producer prices
- Foreign trade development
- Economic developments
- Seasonal fluctuations
- Values & change of values
- Consumption habits
- Influence of ethics and religion
- Leisure behavior: the importance of entertainment, sport, and recreation
- Work mentality, mobility, propensity to save
- Social structures
- Country-specific cultural peculiarities
- Availability of ecological resources: soil, water, air, light
- Availability of energy: oil, gas, electricity, coal, other energy sources
- environmental pollution
- Waste situation
- power supply
- Renewable energy
- Development of energy and raw material technologies
- Government and private investment in the development
- Production technologies: automation, process technologies
- Development of key technologies
- Substitution technologies
- Information and communication technologies
Political and legal factors:
- Global political developments: local or international conflicts
- Stability of the political system
- Form of government in relevant countries
- Economic policy
- Developments in international trade
- Economic legislation (patent, labor and competition law, consumer protection)
- Tax policy
- Regulation / deregulation
- Population development
- Population structure: family formation, the death rate
- age structure
- Number and size of households
- Structure of households: one vs. one Multi-person household
- Level of education
- Regional distribution of the population
- Income distribution
SWOT Analysis and Its Importance for SEO
Holisticseo.digital’s main purpose is that showing the SEOs and Developers that they can unite the power of marketing and coding in their vision to empower their business opportunities and career. SWOT Analysis is not just an analysis for business development strategist but it also can be applied for the Holistic SEOs.
In a very brief time, a Holistic SEO can understand that his strength can be UX and weakness can be Brand Power. Opportunities can be Social Media Channels and weaknesses can be the negative reputation of the company. Also, with SWOT Analysis a Holistic SEO can prepare a strategy for development and marketing teams along with the CRM and PR Departments to show them how people think and how the company should respond those thoughts. Search Engine can show how a society thinks and lives along with what they need and want even if they are not aware of those. A Holistic SEO can use this insight and implement it with coding and marketing.
As Holistic SEOs, we will continue to improve our vision with Marketing Terminology to understand the Search Engine Ecosystem’s nature in a better way.