Conducting a SWOT Analysis


This week we continue with our Marketing mini series and take a closer look at an old marketing favourite – the SWOT analysis.

An important part of market research is understanding your current market position.  To assess your current situation, you need to undertake a marketing audit using a SWOT technique.

SWOT analysis is a process by which you analyse you current business characteristics and the environment in which your business operates.  SWOT stands for:

S - Strengths
W – Weaknesses
O – Opportunities
T – Threats

From this assessment you can build a plan or strategy.  You can also apply it to your competitors so you can learn their strengths and counter them, and exploit any weaknesses where you have an advantage.

It also helps you to recognise opportunities and threats.  It can help you get into the product life cycle at the right time, or prepare to get out before the market declines.  In short, it helps you to plan your strategy or your direction rather than leave it to change.

First look at your business; where are you strengths and weaknesses?  Strengths are those things that you are good at and the things that make you business prosper.  Write them down.

Now have a look at your weaknesses.  Weaknesses are those things that you do not do as well as you think you could and are able to improve.  Write them down.

Strengths or weaknesses could appear in any of the following areas

Finance- cash flow, debt/equity, level of assets, profitability, capital available,

Production – plant & equipment, quality control, research & development, patents, production methods

Marketing – customer base, price structure, distribution, location, promotion, product range

Personnel – staff size, key personnel, morale, leadership, communication

Next look at the opportunities and threats in the external environment.  Opportunities are those areas where we may sense there are currently gaps in the market not being filled.  this could be because of changes in technology or in customer preferences.  Write down the opportunities.

Now look at the threats you face.  Threats are factors which could affect your business in the future and over which you have little control, often caused by changed competitive or economic conditions.  Write down the threats.

Opportunities and threats may be in the following areas:

Competition - new competitors, import competition, aggressive competitors,

Economic – inflation, interest rates, credit availability, unemployment

Government Policy – taxation, imports & tariffs, legislation

Social - changes to customer preferences, social values, population changes

Technology- new technology, changing cost structures, obsolescence, new products

Suppliers – mergers/monopolies, prices, distribution, competition

You have now completed a basic marketing audit which will assist you to develop an integrated marketing strategy.  To develop the strategy you need to see the whole picture.  To do this complete a SWOT grid.


An overall picture should now be a little clearer; the strategy you should follow may even just make itself obvious by completing the grid.  Let’s look at an example.

The business is a small shoe manufacturer based in Brisbane.  The SWOT grid looks like this:

SWOT Analysis

In order to:

  • Minimise weaknesses or convert them to strengths
  • maximise strengths
  • avoid threats
  • capitalise on opportunities

What should this business do?

Look back at the SWOT grid; are there any strategies that become obvious?  Before reading any further write them down.

There are many potential strategies for this business but perhaps an obvious one looks like this:

  • concentrate on quality shoes.  There is a growth in quality shoe sales and the Australian devaluing dollar has made imported shoes more expensive.
  • minimise cheaper lines.  Increasing cheap imports and tariff cuts will make these lines even less profitable.
  • develop a wider range.  There is more design expertise available and more sales in this area means a greater opportunity to target specific markets.
  • Update plant and equipment.  To restore profitability and deal with competition, cost-efficient manufacturing is necessary.  Finance may be available by mortgage over buildings.

Take a moment and conduct a SWOT analysis on your own business.  It may just surprise you what opportunities are out there.

Virtual Business Advisor


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