What is a SWOT Analysis?

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. It’s used to measure a product or organization and its environment. Many times this is the first step that marketers take to get a good picture of a product’s situation in the marketplace. Some rules for a successful SWOT analysis include: • Keep it simple. Don’t over analyze. • Use the terms better than or worse than when making comparisons to your competition. • Make a clear distinction between where you are today and where you want to be. • Be realistic about strengths and weaknesses. • Be specific. • Remember that this exercise is subjective. It’s important to remember with a SWOT analysis that strengths and weaknesses are internal factors while opportunities and threats are external factors. Here are some examples: Internal strengths could be: • A high level of innovation • Longevity in the marketplace • Your location • Your level of expertise with this product line • Any other value you bring to the product Internal weaknesses could be: • Lack of innovation • Being a newcomer to the marketplace • Your location • Lack of expertise with this product line • A bad reputation External opportunities could be: • A market need • A developing market (such as China) • Mergers, joint ventures or strategic alliances • Moving into a new market that promises improved profits • An underserved market External threats could be: • Competitors with less expensive products • A new competitor • A competitor with a new or innovative product or service • Competitors with better distributions channels • Taxes levied on your product or service When your analysis is done, it can be used to generate goals and strategy. During your strategy formulation is when the SWOT profile becomes important. For example, the strengths can be leveraged to go after opportunities and to avoid threats. Also, you will know what weaknesses to be aware of that might need to be overcome. All of this will improve your successfulness in the marketplace.