Strength Weaknesses Opportunities & Threats (SWOT)

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SWOT analysis is an assessment of the:

  • Strengths (e.g. loyal customers)
  • Weaknesses (high price point)
  • Opportunities (new markets globally to enter)
  • Threats (not a unique product)

SWOT analysis is a business analysis methodology to assess the Strengths, Weaknesses, Opportunities, and Threats of the business in relation to its position in the market, and that of its competitors. SWOT analysis in the real world can often be viewed as a waste of time, and only holding value in the classroom, but the reverse typically holds true, and it is suggested to deliver an analysis once every year, or more often in rapid changing environments such as ecommerce where new competitors enter a market rapidly, and geographic barriers have all but been eradicated with competitive shipping driving costs lower for consumers than ever before.

SWOT analysis covers both internal and external factors;

  • Strengths and Weaknesses are internal
  • Opportunities and Threats are external

An example of a SWOT analysis for a hypothetical ecommerce store that is selling own-branded sporting goods may be as follows:

Internal

Strengths

  • Production costs are low as the manufacturing is done off-shore
  • Manufacturing processes are streamlined and able to handle expansion
  • Website operations and capacity are able to scale quickly and reliably
  • Provide a faster page load / shopping experience time than competitors 
  • Fully responsive design and interaction

Weaknesses

  • Product quality is quite poor; subsequently product life time is considered low
  • High staff turnover, so training time is constantly required and knowledge is lost
  • Shipping is more expensive than competitor’s shipping

External

Opportunities

  • Traffic volumes increasing from Germany, France & Italy, where we don’t currently ship to – new markets to trial
  • Production setup enables us to expand into additional lines with relative ease
  • In a good position to release an app that fully integrates into the order management flow

Threats

  • Low barrier to entry, therefore new competitors may prove numerous
  • Increasing production costs means may need to increase price
  • Amazon Marketplace share of the market is growing, as is their dominance of organic search

Whilst it should not be considered a fully exhaustive list as to the market conditions in which your business is operating, it provides a brief and easily digestible status as to immediate factors and influences in your market. Proving particularly useful in provoking thoughts and opening up discussions among staff which will inevitably lead to a growing list of opportunities, and more than likely – threats.

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By Matt