Do you know SWOT analysis?
SWOT analysis is one of the 5 steps that form an enterprises production and business strategy, including: establishing the businesss mission.
SWOT analysis, defining strategic goals, formulating strategic goals and plans, defining strategic control mechanisms.
SWOT is a collection of abbreviations of the first letters of English words: Strengths, Weaknesses, Opportunities and Threats - is a famous model in analysis. business of the enterprise.
SWOT analysis is one of the most commonly used templates along with 3C analysis, 4P analysis and PEST analysis.
So what exactly is a SWOT Analysis?
In this article, Chiasenow will introduce the most basic SWOT analysis, the points to pay attention to to use effectively in business and the SWOT analysis method.
Lets learn and apply it well to your business model with Chiasenow!
What is a SWOT analysis?
1. What is a SWOT analysis?
SWOT analysis is a strategy formulation by analyzing the external environment around the company such as competition, laws and market trends, and the internal environment such as the assets and brand strength of the company, as well as price and quality, both positive and negative.
This is one of the well-known patterns for making marketing decisions and optimizing management resources.
SWOT analysis stands for the first 4 letters in English words, which are understood as follows:
The acronyms of the four elements are interconnected and form a template for effective marketing analysis
For strategic planning and business planning, it is essential to correctly understand and analyze both the external and internal environments.
By using SWOT analysis, it is possible to derive future business strategies and opportunities and clarify issues based on the four items introduced earlier.
By the way, SWOT analysis can be used both before and after deciding on a strategy.
There are cases where a strategy is decided based on a SWOT analysis and cases when a decided strategy is reviewed using a SWOT analysis.
SWOT analysis also seems to be used by individuals to analyze their strengths and help them set precise goals.
2. The origin of the SWOT analysis matrix
Over the years, the SWOT matrix analysis method has been widely accepted and known. Many people believe that the concept was conceived by American management consultant Albert Humphrey.
While working on a research project at Stanford University, between 1960-1970, Albert Humphrey developed an analytical tool to evaluate strategic planning. At the same time, this tool also finds out why businesses plans fail. He named this data analysis technique SOFT - the first four letters of:
- S = Satisfactory, current satisfaction score
- O = Opportunities, an opportunity that can be exploited in the future
- F = Faults, mistakes at the moment
- T = Threats, challenges that may be encountered in the future
While most agree SOFT is the precursor to the SWOT model. But some believe that the concept of SWOT was developed individually and is not related to SOFT.
4 benefits of SWOT analysis
So when and how should a SWOT analysis be performed? Pay attention to the following points to use it in your business and marketing strategy.
1. SWOT analysis helps clarify the purpose of Marketing
Even if you somehow implement a stereotype like because business is not going well…, it will be hard to get results and it will be a factor in the discussion. Make sure you have a clear purpose, share it and analyze and discuss it.
2. SWOT analysis helps build prerequisites
Sort out the prerequisites like what the marketing analysis goal is, what kind of goal you are setting, what are the target customer attributes, where is the competition, etc and apply to specific marketing campaigns. body.
Different assumptions have different opportunities, threats, strengths and weaknesses. If you go into business without these characteristics clear, the SWOT analysis will have an inaccuracy, so build it up sensibly.
3. SWOT analysis helps to analyze each individual of the business to ensure a broad vision
When conducting a SWOT analysis, it is necessary to clearly define each S: strength, W: weakness, O: opportunity, and T: threat.
For that purpose, ideally, each individual from many different perspectives participates in the analysis of himself or herself in the corporate environment.
From there, we select the most suitable members according to the purposes and goals of SWOT analysis in Marketing, such as SWOT analysis for positions such as manager, sales and specialist, engineer…
4. SWOT analysis helps to understand the advantages and disadvantages of marketing analysis
Not only limited to SWOT analysis, There are very few patterns in the world that can be analyzed in general.
Therefore, lets use Marketing stereotypes after understanding the characteristics, advantages and disadvantages of each.
Advantages and disadvantages of SWOT analysis are introduced below, please refer to Chiasenow.
Advantages of applying SWOT analysis to Marketing research.
By looking at the internal environment as well as the external environment, you can capture the overall situation objectively.
It would be nice to be able to combine analysis of both sides, such as business opportunities and threats.
In addition, by conducting an analysis of each item, Chiasenow thinks it will be an advantage to gain a deeper understanding of the analyzed projects and be able to unify and reconcile the intentions of each individual in the business.
Difficulties of implementing SWOT analysis into Marketing
The classification of the internal environment: strengths or weaknesses can be considered a weakness.
Some things are difficult to categorize, some things have various strengths and weaknesses, so a SWOT Analysis requires an extremely thorough classification.
Simple steps of SWOT analysis
1. SWOT analysis for the first factor: Strength
The first element of a SWOT analysis is Strength, which includes the parts listed in the following image:
As you might have guessed, this factor deals with the things the business is exceptionally good at, such as a good work environment, or a unique sales idea, or great human resources, excellent leadership. sharp,..
Try asking questions to expand on the first element: Strengths, by listing questions around the companys strengths as follows:
- What do customers love about your business or product?
- What does your business do better than other businesses in the industry?
- What is the most attractive brand attribute of your business?
- Unique selling ideas that your business is cherishing?
- Or what resources only you have that your opponent doesnt?
The answer will give you an overview that will help you identify the core strengths of your business.
Dont forget to consider the advantage from both an insiders and a customers and industrys perspective. If you have difficulty, just write down the companys Unique Selling Proposition (USP) and maybe you will find strength from those characteristics.
You also need to think about your competitors.
For example, if all the other competitors offer high-quality products, then even if you have a good product, that is not necessarily to your advantage.
2. SWOT analysis for the second factor: Weakness
Overconfidence in its own strengths will become a weakness for businesses, when businesses cannot see the shortcomings that need to be changed.
Did you realize: What caused the business plan last Quarter to fail? The answer most likely stems from one or more of the following weaknesses:
Similarly, Chiasenow also has a list of a few questions to help you find your weak points:
- What do your customers dislike about your business or product?
- What are the issues or complaints that are often mentioned in reviews of your business?
- Why did your customer cancel the order or not make/complete the transaction?
- Whats the most negative brand attribute youre dealing with?
- What are the biggest obstacles/challenges in the current sales funnel?
- What resources do your competitors have that you dont?
As for weaknesses, you also have to have an objective and subjective overview: Are your competitors doing better than you? What weaknesses others see that you dont recognize? Be honest and straightforward in facing your weaknesses.
3. SWOT analysis for the 3rd factor: Opportunity
Next in the elements of SWOT analysis is Opportunity. Does your business have a large number of potential customers generated by the marketing team? That is an opportunity. Is your business developing an innovative new idea that will open up a new ocean? Thats another chance.
Businesses can take advantage of opportunities that come from:
- Trends in technology and markets
- Changes in government policy related to your sector
- Changes in society, population, lifestyle…
- Local events
- Customer trends
Some of the questions that Chiasenow suggests include:
- How can existing or potential customer support/sales processes be improved?
- What types of communication will drive customer conversions?
- How can I find more industry Gurus to advocate for the brand?
- What is the best way to optimize cross-departmental workflows?
- Is there a budget, tool, or other resource that the business is not making full use of?
- Or, which advertising channels are potential but businesses have not yet exploited?
The best solution is to look at your strengths and ask yourself if they can open up any opportunities. Also, consider your weaknesses and ask yourself, after overcoming and limiting these, what new opportunities could you create?
In short, this element of SWOT analysis covers everything you can do to improve sales, or advance your business mission.
4. SWOT analysis for the last factor: Threat
The final element of a SWOT analysis is Threat - Threats, Risks or Threats, there are many names for Threat, but generally anything that can put a company at risk for success or growth. enterprise.
This risk can include factors such as emerging competitors, changes in legislation, risks in financial mobility and virtually anything else that has the potential to negatively impact the future of the business. or business plan.
However, of course, there will be many potential Challenges or Risks that businesses face, which cannot be foreseen, such as changes in the regulatory environment, market fluctuations, or even Internal Risks. such as unreasonable salary and bonus hindering the development of enterprises.
When assessing opportunities and threats, use PEST Analysis - Analysis of the business environment based on Politics (P), Economy (E), Society (S), Technology (T) - to make sure you dont overlook external factors like new government regulations or technological changes in the industry.
How to apply SWOT analysis to marketing?
Chiasenow explained some important points, next lets learn how to apply SWOT analysis effectively.
SWOt analysis has four factors, but because the internal environment can be influenced by the external environment, therefore Chiasenow recommends that you first analyze the external environment O: Opportunity and T: Threat
1. SWOT analysis for external environment [OT]
The external environment corresponds to the market and social conditions. It may vary slightly depending on the type of business and marketing analysis goals.
SWOT analysis for the external environment can be done on several points:
- Market size, growth potential
- Competitive situation in business
- Economic conditions and financial position of the enterprise
- The political, cultural and social situation
- Business and Investment Law
Lets think about it by referring to the items given in some key points as above. It is useful in conjunction with another template to analyze such items.
Chiasenow will introduce some suitable templates for analyzing the external environment, so try it out for your business model.
One example is a template for macro analysis: Philip Kotler’s PEST analysis.
Example two is an analytical framework based on five competitive factors affecting industry profitability: 5F (Five Forces) analysis
- Threat of new entrants
- Buyers bargaining power
- Sellers bargaining power
- Alternative threat
- Threats from competitors
2. SWOT analysis for internal business environment [SW]
Next, we will analyze the internal environment S: strength and W: weakness.
Instead of making subjective decisions, consider the external environment and competitive situation then apply a SWOT analysis to the internal environment of your business, your current business model
In addition, more precise analysis can be specified using numerical values and data.
You can do an internal SWOT analysis based on the following common perspectives:
- Corporate image recognition and brand strength
- Enterprise infrastructure
- Price and product quality
- Sources of capital and finance
- Business deployment location
- Services provided by businesses
- Technical capacity that the enterprise has
Once done with the SWOT analysis, continue with the cross-SWOT analysis
If you think the elements of a SWOT analysis have been studied enough, but thats not all, the SWOT analysis is not over yet.
This is because the factors mentioned in the SWOT are situational, not strategic or tactical.
Lets grasp and analyze the current situation based on the content of each element, and try to achieve the marketing goal first.
Incorporate it into a business-specific marketing strategy.
To really incorporate it into strategies, tactics and plans, Chiasenow will introduce you to the following cross-SWOT analysis method.
1. SO (Strengths – Opportunities) Strategy: Pursue opportunities that match the company’s strengths.
Think about what your business can do to capitalize on its opportunities using the strengths of your existing business model.
Use this analysis when you want to grow your company or business.
2. WO (Weaks – Opportunities) strategy: overcome weaknesses to make good use of opportunities.
We will use our strengths to avoid the impact of threats on our business.
In some cases, treat them as opportunities. Threats to the industry can also be business opportunities in some cases.
This cross-SWOT analysis will show how to avoid threats and find business growth opportunities where possible.
3. ST strategy (Strengths – Threats): determine how to use advantages and strengths to minimize risks caused by the external environment
Always think of ways to take advantage of the opportunities that have been and are coming your way.
One of the ways to create opportunities for yourself is to strengthen existing weaknesses. Lets do a cross-SWOT analysis of what to do to take advantage of this opportunity.
4. WT (Weaks – Threats) strategy: establish a “defensive” plan to avoid the weak points being more heavily affected by the external environment.
These are two key points to determine the existence of a business in the market.
Understand your businesss weaknesses and think about what you can do to avoid or minimize the impact of threats.
Depending on the type of business of the company, the level of the threat has a heavy impact, so this is one of the cross-SWOT analyzes that you must focus on precisely.
Incorporating SWOT analysis into Marketing strategies, tactics and plans
Finally, based on the content of the cross-SWOT analysis, incorporate it into specific strategies, tactics and plans to be implemented in the future.
Also, if you review the strategy and find any problems, conduct a SWOT analysis for the marketing strategy again.
A SWOT analysis is pointless to just list the factors, so lets make sure to analyze each element in detail until we capture the specifics that are set forth as the original marketing intent.
Example Analysis of successful corporate companies
1. SWOT analysis in Marketing of Vietjet Air airline
Lets join Chiasenow to apply the SWOT matrix to Vietjet Air to better understand this analysis tool.
The companys first strong point is the rapid growth of market share year by year. Newly put into operation at the end of 2011, Vietjet has become the largest domestic airline with 42% market share. The company has reported profits continuously since 2013.
The second strength of Vietjet is having the lowest cost per product unit in Asia as well as in the world. Revenue from in-flight services is an important factor in the success of most low-cost airlines. This is also a factor that has helped the company quickly become profitable. Currently, this source contributes more than 23% of the companys revenue.
Vietjets brand is famous for its strong marketing activities that strike the right psychology of target customers. The nationwide distribution system is also one of the strengths not to be missed by this low-cost airline.
The companys weakness is that it does not have a joint venture partner. Next is to compete in markets that already have famous airlines, especially in the Thai market.
The next weakness to mention is that most of VietJets profits come from sale and leaseback activities, but in the long term, the airline will have to pay higher costs than the average rental price when the life of the aircraft increases.
Vietnam is emerging as a popular tourist destination, the number of visitors surpassed 10 million in 2016, an increase of 26% compared to the previous year. In the first 9 months of 2017, the number continued to increase by 30% compared to the same period last year. This trend is expected to continue. This is an opportunity for VietJet.
Currently, the airline has regular flights to Korea, Taiwan, Malaysia, Thailand and Cambodia. China is the largest source of tourists and the fastest growing.
Moreover, the geographical location of Vietnam is very convenient for transporting passengers from Southeast Asia to Northeast Asia.
Vietnam is a developing country, so low-cost airlines are chosen by many people and are more willing to pay. This is also the reason why the market share of Vietjet Air, a latecomer, has surpassed Vietnam Airlines in the past 2 years.
The competitive environment in the aviation industry is increasingly fierce. Leading Southeast Asian airlines such as AirAsia and Lion are both planning to set up joint ventures in Vietnam. Many low-cost airlines also see the potential of our countrys market and are eager to jump in.
After growing 20% - 30% in the period 2012-2016, Vietnams aviation market will decelerate. Slowing growth in the domestic market will put pressure on VietJet to rely more on the international market, which is not easy. Besides, the growth of domestic tourism demand is currently 4-5 times higher than GDP growth, which is an unsustainable rate.
Airport overload makes it difficult to open more routes as well as flight frequency.
SWOT matrix of Vietjet Air airline
- Market share growth has increased rapidly year by year.
- The cost per unit of product is among the lowest in Asia as well as in the world.
- Vietjet brand is famous for its strong marketing activities
- Distribution system covering the whole country.
- No joint venture partner yet.
- Must compete in markets that already have famous airlines, especially in the Thai market.
- Most of VietJets profit comes from sale and leaseback activities, in the long term the airline will have to pay higher costs than the average rental price when the life of the aircraft increases.
- Vietnam is emerging as a popular tourist destination
- Currently, the airline has regular flights to Korea, Taiwan, Malaysia, Thailand and Cambodia. China is the largest source of tourists and the fastest growing.
- The geographical location of Vietnam is very convenient for transporting passengers from Southeast Asia to Northeast Asia.
- Vietnam is a developing country, so low-cost airlines are chosen by many people and are more willing to pay.
The competitive environment in the aviation industry is increasingly fierce.
- After growing by 20% - 30% in the period 2012 - 2016, the Vietnamese aviation market will decelerate.
- Airport overload makes it difficult to open more routes as well as flight frequency
2. SWOT analysis in Starbucks marketing
- Starbucks is a corporation with a profit of up to $600 million in 2004
- As a global coffee brand famous for quality products and services
- Being in the top 100 most rewarding places to work, respect employees
- Enterprise with ethical principles and mission
- Understand customer tastes and trends
- Renowned cool hands in new product development and creativity. However, their ability to improve will sometimes fail very easily.
- Present throughout the US but need to invest in other countries to spread business risk.
- Mainly based on the competitive advantage of coffee retail, it is slow to encroach on other fields for growth.
- Starbucks is very good at seizing opportunities
- In 2004, the company cooperated with information technology group Hewlett Packard to open a CD-burning service at a Santa Monica store (California USA) so that customers could create their own music CDs.
- New products and services that can be retailed in coffee shops such as Fair Trade products
- There are opportunities to expand internationally, in new coffee markets such as India and the Pacific Rim
- There is potential for co-branding with other food and beverage manufacturers, as well as franchising for merchants of goods and services.
- Will the coffee market continue to ascend or will it be replaced by other drinking habits in the future?
- Risk of increasing prices of coffee and dairy products
- Since its debut at Seattles Pike Place Market in 1971, Starbucks success has spawned a new style for many competitors and many copies, leading to many potential dangers.
- Challenges from competitors
3. SWOT analysis in Nike’s Marketing
- Nike is a company with strong competition in the market
- And Nike doesnt have a factory, so theres no burden of location and labor. Nike aims to lean organization - businesses that create a lot of value for customers with the fewest resources)
- Strong in research and development to grasp customer trends
- An international brand
- Nikes weakness is that sports products are not yet abundant. Most of the income is based on the rich market share, so it is easy to be shaken if this market share decreases.
- The retail sector is very price sensitive. Nike has its own retail stores under the Niketown name. However, most of the revenue and profit comes from selling to other retailers.
- Product development presents Nike with many opportunities. The brand owner believes that Nike is not a fashion brand. But like it or not, Nike buyers dont necessarily wear these shoes for sports. But see it as trendy style. That creates an opportunity because the product, even if it is not damaged, is still outdated. So customers will continue to buy new products.
- Can develop products in the direction of sports fashion, sunglasses and jewelry. The more high-value accessories that go with the shoes, the more profit they make.
- Businesses can also grow internationally, based on global brand recognition. Many high-income markets that pay for expensive sports products such as China or India have more and more generations of young people willing to pay.
- Nike is also influenced by the nature of the international market. Buying and selling prices differ in many different currencies, so costs and profits are not stable over time. This situation can cause Nike to produce or sell at a loss. This is a common problem for international brands.
- The clothing and footwear market is extremely competitive.
- As mentioned above, the retail sector is extremely price sensitive. So customers can choose a cheaper supplier.
- Competitors are always something the company pays attention to.
Summary of SWOT analysis
SWOT analysis is a template that Chiasenow often hears about when businesses analyze marketing strategies.
Chiasenow would be happy if you could refer to this SWOT analysis article and apply it to your business as much as possible.
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