By Anja van den Berg
For many years, most of business textbooks have taught executives to conduct a SWOT
analysis, a tool that identifies the strengths, weaknesses, opportunities and threats faced by the firm in a particular market and industry.
Doing so is useful, in some respects, says Sharif Shalaby, Country Supervisor at Pharma International, “but it fails to organise the output into answers to important strategic questions, such as those covering market and industry attractiveness, or the ability of the firm or its offering to achieve sustainable competitive advantage.”
A SWOT analysis leads to four individual lists (strengths, weaknesses, opportunities and threats). However, the tool provides no mechanism to rank the significance of one factor versus another within any list. As a result, any one factor’s true impact on the objective can’t be determined.
Furthermore, data collection and analysis entail a subjective process that reflects the bias of the individuals who collect the data. In addition, the data input to the SWOT analysis can become outdated fairly quickly.
Wendy Thacker, Merchandising Director at ScanSource Security, says that the SWOT tool is not obsolete but that it should be used to facilitate the planning process. However, merely drawing up a SWOT analysis is not sufficient. She recommends a multi-layer approach, focusing on several key points during any planning process:
- What does your company do well? Is your strength your technical prowess, your people, your dominance in the space, etc.?
- How do you capitalise on it? You need to market what you do well and where you have had success.
- What opportunities are out there? Expansion into a new vertical with an existing application may be one. Another could be taking your business into a new geography. Or, you could expand your portfolio of offerings with another product line.
- What sets you apart from your competition? Do you have more resources, more experience, tighter vendor relationships, better software?
- Why would a customer buy from you versus a competitor?
- What does your competition do well? Everyone has something they do better than you. Be honest about what it is so you can determine how to combat it.
- How do you neutralise the threat? What can you do to advertise yourselves without disparaging the competition?
Although input from team members should form part of the planning process, it’s best to answer these questions by means of statistics, which are measurable and not subject to human error or biased views.
The Sources: http://blogs.scansource.com/is-the-swot-analysis-outdated/
Harvard Business Review: https://hbr.org/2017/09/prioritize-your-opportunities-with-this-checklist