Avoid needing a SWAT team with a good SWOT analysis!

December 8, 2010 by Ted in Marketing Management, Strategic Planning

Reading time: 5 – 8 minutes

This is the sixth post in the series on Strategic Planning.  Note that you can subscribe to the blog postings by completing the form in the “Subscribe Free” tab.  Or, you can link with an RSS feed.

If there is a SWAT team nearby, then you know there is a crisis of some sort.  That is what we are trying to avoid with some good planning.  And, the SWOT analysis is the next step toward the strategic plan.

This is exciting! With a pool of data and a set of assumptions you are ready to complete a SWOT analysis.  The reason this is exciting is because as you finish the SWOT analysis, you will start to see a clear picture of where you are right now.  You will know the starting point, point A, on the map of your strategic journey.  This will position you to set your Key Goals which are the equivalent to the destination or Point E.  And, this will help guide you in the selection of your Key Strategies and Tactics which are the equivalent to the road you plan to follow from Point A to Point E.  As indicated in the first post in this series, you want to keep this road from wandering around too much on your way to achieving your Key Goals.

Another note – A SWOT analysis can be used for decision making related to a variety of projects and proposals.  The Data Gathering and Assumptions steps some management gurus may compare to a PEST analysis.  We are trying to keep this simple yet effective.

SWOT = Strengths, Weaknesses, Opportunities and Threats

Strengths and Weaknesses are attributes related to your business and products.   These factors are internal to your company.  A strength is an inherent advantage your team and/or technology has in the market.  A weakness is something that puts you at a disadvantage relative to the other players in your market.  You have to be very intellectually honest in this exercise.  Surely you are very proud of your products.  However, you cannot list as a strength that “We are the gold standard” unless you have irrefutable data that supports this.  And, you cannot claim as a strength that you will be the next gold standard.  That is a goal.

Examples of Strengths would be:

• Lowest cost of manufacturing.
• Key product features that are exclusive and protected by patents.
• Mostly top tier distributors in US sales channel.
• Sales team with high close rate when working with distributors.
• Solid financial base at current revenue and expense levels.
• Strong R&D allows for reaction to competition.
• Good KOL support for Product Z.
• High market awareness of Product Z. Try to have a quantitative measure here.
• Large customer base in certain product categories.

Examples of Weaknesses would be:

• US sales channel not complete – open areas.
• No relationships with KOLs in target market segment for new Product X.
• Low market awareness for Product X.
• International sales channels dominated by competitors.
• Manufacturing is at 95% capacity – could limit growth.
• Website isn’t designed for commerce like the top two competitors.
• No internal knowledge of social media.
• No system to manage and track leads (basic CRM).
• Outdated pricing on Federal Supply Schedule.

Opportunities and Threats come from outside the company.   They can be economic, technological and related to competition.

Examples of Opportunities are:

• US Market for all our product categories is forecast to grow by 6% (your data should back this up).
• Competitor B is exiting the market.
• Section 179 tax break at current level in US extended for at least one year.
• India’s Defense department has issued a bid for 1,000 units of products in the “Z” category.
• Non-competitor Cureeverythinginsight sales representatives claim that doctors who use our Product Z in conjunction with their products obtain better clinical results with their products. This has lead to increased sales of their products.
• A completely new medical market has shown interest in Product Z.

Examples of Threats are:

• Supplier D of main parts for Product Z is taking actions that indicate they are considering making their own product and entering the market.
• Competitor C has added more regional sales managers to manage their distributors.
• Competitor C received $Y million dollars in venture financing to support the launch of products competitive to ours.
• Competitor E continues to offer to make an OEM product like Product Z to our largest distributor.
• Chinese companies are making higher quality imitations of our Product M.

There is a lot of information on the Internet related to SWOT analysis if you want to dig into this further and give your team more guidance:

• http://www.businessballs.com/swotanalysisfreetemplate.htm
• http://en.wikipedia.org/wiki/SWOT_analysis
• http://www.quickmba.com/strategy/swot/

So….schedule two meetings for the SWOT analysis.  Get two flip charts in the room with several markers.  Spend the extra money for the Post-It type of flip charts so you can easily put completed sheets of paper up on the wall for all to see.

The first meeting is the first run at the SWOT analysis.  In this meeting you will have created a draft SWOT.  After the meeting be sure to summarize the draft SWOT in a memo and send it to all the participants for review.

The second meeting is to refine the SWOT.  The second meeting could be very productive now that you have everyone thinking strategically.

The discussions in both meetings should be fun and interesting.  Encourage debate.

In the next post on Strategic Planning we will explore setting Key Goals and the Key Strategies that support these goals.  Your strategic journey is becoming clearer.