Do you want to make more informed strategic decisions than your uncle who hesitates between living in a big city or having a quiet life in the country? Then stay with us, because today we’re going to discover the SWOT method. Strengths, weaknesses, opportunities and threats will be terms that you will master to perfection by the end of this article. Here we go 🚀! Just so you have an idea of today’s menu, here’s what we’ll be able to learn on our adventure :
- Definition of SWOT analysis
- SWOT Method: How to do it?
- The advantages of SWOT
- The disadvantages
- Differences between SWOT and PESTEL
- 4 examples of companies
What is a SWOT analysis?
SWOT analysis is an acronym for Strenghts, Weaknesses, Opportunities and Threats. It is a strategic analysis tool to identify :
- Your strengths.
- Your threats.
This will allow you to evaluate your company’s current position, define objectives and then set up a strategy to achieve them.
How about a deep dive into each of the facets of this term, how about that?
The first step in the SWOT analysis is to identify your company’s strengths. This is one of the internal elements that makes your company stand out from your competitors. You can differentiate yourself on several levels:
- Your brand 💫.
- Your talent 🧠.
- Your brand reputation 💓.
- Or your patents 🧪.
- What are the strengths of my business?
- How do my customers view my brand?
- What are the things that make me stand out against in this competitive industry?
By identifying your strengths, you can help your company gain market share, increase profitability, or improve your market position.
You will also need to identify your weaknesses in this SWOT analysis. This internal element allows you to identify what is preventing you from growing. These include:
- Poor cost management.
- A lack of innovation.
- Lack of skills (if you don’t have a specific talent in your team for example).
These weaknesses can lead to a drop in your sales, a loss of market share or a decrease in your profitability 😔. Knowing your weaknesses will allow you to take steps to correct yourself and thus improve your sales and positions.
What are the things that can be profitable ✅ for the business? These are called opportunities in SWOT analysis. These opportunities will allow you to grow and expand. They can include:
- New markets.
- Strategic partnerships.
- Technological advances.
You need to stay on top of and evaluate opportunities to help you improve your sales 💸. For example, you can do some intelligence in your industry to quickly implement them later.
Here we are talking about external elements in your marketing environment that can have negative impacts on your business. This can include:
- Increased competition.
- Geopolitical risks ❌.
- Weather events.
- Or economic crises.
These threats, you will have understood, can lead to a decrease in your sales 💸 and you will absolutely have to be aware of your potential threats in order to minimize the risks for your business. Once you have identified these four elements, you can use this analysis to develop an effective strategy.
Of course, it’s not about doing this analysis as a “one shot” 🥛but rather reiterating it to adapt to your evolving industry. If you do this on a regular basis, you will be able to keep your business competitive and constantly adapt to changing markets.
SWOT Method: How do I do it?
Well, as we said before, SWOT analysis is a management tool that allows companies to identify different internal and external elements regarding their brand or project. In order to perform this analysis properly, you will need to follow a few key steps 🗝️.
SWOT Analysis: Internal Elements
The first thing to do is data collection. This may include:
- Information about your company (its current state) ✒️.
- Its reputation/awareness 👀.
- Your expertise (what you bring to the table, the need you fill) 🧠.
- Your financial resources 💰.
- Your positioning 🌓.
- The patents you own 📄.
- Your intellectual property 🤓.
This is what we call the diagnostic phase. Here you take stock of what you already have in your possession. By doing this diagnosis, you will already have an overview of what your strengths and weaknesses are.
Swot: the external elements
The second step is to identify 👀 the external elements that can be favorable or unfavorable to your company, to spot your weaknesses. As you can imagine, you will have to gather information about the elements that could be beneficial to your company. Sometimes you will also have to make predictions 🔮 about what could have as developments.
These external elements can include the arrival of new customers or new technological advances when we are going to talk about opportunities. You also need to think about elements that will negatively impact your business such as a competitive company, risks specific to your sector or economic crises.
Once you have all this information in your possession, it is important to analyze it thoroughly and use it to develop an effective strategy. This will allow you to maximize your chances of success ✅ in the market.
To help you give visibility to these different elements in your analysis, there is a template that allows you to visualize it all.
You can for example reuse this template and write down all your elements directly on it.
The advantages of using SWOT regularly
As you can imagine, the regular use of SWOT analysis has many advantages for your marketing strategy, including
- 🟢 A better understanding of thecompany’s environment since you analyze 4 pillars of it. This gives you the opportunity to better understand the challenges you face and therefore make improvements to your business.
- 🟢 Better decision making: This matrix provides you with key information that helps you make informed decisions about your business strategy. Once you’ve gathered your data, you’ll be able to identify areas to prioritize and areas to avoid.
- 🟢 Better change management. Indeed, you will be able to prepare your company for various upcoming changes by making an analysis of opportunities as well as future threats.
- 🟢 Better management of competition: By understanding the strengths and weaknesses of your market sector, you will also understand the strengths and weaknesses of your competitors. This will allow you to put strategies in place to differentiate yourself from the competition.
- 🟢 Improving your internal communication: You will be able to involve your different departments in the analysis so that each stakeholder can understand the company’s objectives and priorities.
What are you waiting for to start using it? Oh, you want to know the drawbacks maybe? Let’s take a look.
SWOT Matrix: the drawbacks
This analysis still offers you a lot of advantages, but there is also a dark side to this matrix.
- 🔴 The first thing to know is that the SWOT analysis is based on the opinions and perceptions of the individuals involved in the analysis. Therefore, your results can be influenced by personal biases and prejudices, which can skew your analysis and your decisions that will result 😔 from it.
- 🔴 This SWOT analysis is a simplification tool that reduces complex information to a list of key factors. This simplification can result in the loss of important information that could have been useful in making decisions.
- 🔴 You cannot prioritize the different factors that this matrix takes into account. This makes it sometimes difficult to determine priorities in terms of what strategies to implement.
- 🔴 Difficulty measuring in objective ways (related to the first point) your results.
- 🔴 There are no recommendations. This analysis does not provide any specific recommendations for strategies to implement. It is therefore up to the various decision makers to determine what actions to take based on the results.
Now that you have the list of advantages and disadvantages, it is up to you to use them efficiently.
What are the differences between SWOT and PESTEL?
The SWOT matrix and the PESTEL analysis are two different but complementary strategic analysis tools. They are often used together to help companies understand their business environment and make good decisions. SWOT analysis focuses on the strengths, identified weaknesses, opportunities and threats of a company.
It focuses on the internal and external factors of the company.
The matrix will allow you to build a picture of their current and future position by taking into account market trends, industry changes and internal factors such as your company’s skills and resources. PESTEL analysis, focuses on the macro-economic factors that affect a company. Do you know what PESTEL means?
- Legal (we speak of legal).
We have an article entirely dedicated to Pestel analysis elsewhere, if you want to know more 😉. The main differences between the two analyses lie in their scope and purpose. As we told you before, SWOT analysis is more focused on internal factors of the company while PESTEL focuses more on external factors.
SWOT analysis is more practical and focuses on the immediate aspects of the company while PESTEL is more theoretical and focuses on future trends and developments.
SWOT is often considered simpler and easier to understand for companies of all sizes, while PESTEL can be more complex and requires in-depth knowledge of the macro-economic factors that affect the company. To know how to use it well, we’ve prepared 4 examples of well-known companies 👇.
4 examples of SWOT analysis
Let’s dive deep into examples of big companies that will help you know how to use the SWOT matrix.
We’ll directly start with a very big company that you all probably know: Coca-Cola.
What are the strengths of Coca-Cola?
Coca-Cola ☕ is an iconic brand, known worldwide for its logo and its flagship product: the soft drink with the same name. The company has an extensive distribution network in many countries and has partnerships with several major retail chains. It also has highly developed marketing and advertising capabilities.
SWOT Methodology: Coca-Cola’s Weaknesses
Although this brand is a global leader in the soft drink industry, it faces increasing competition from competitors such as PepsiCo and Nestle. The company has also been criticized for the sugar content of its beverages, which has caused many consumers to turn to healthier alternatives.
Opportunities for Coca-Cola
The brand has the opportunity to expand into new and growing markets such as Asia 🌏 and Africa, where the demand for soft drinks is steadily increasing. The company can also seize the opportunity to develop healthier products in response to health and nutrition concerns.
Regulations are becoming increasingly stringent on health 🧑⚕️ and food safety. This may pose a threat to Coca-Cola, as may the boycott of sugary drinks movement. Climate change can also be predicted to affect the production and availability of ingredients in the manufacture of their products.
Coca-Cola’s SWOT: The recap
Let’s make a little chart of everything we said to make it easier.
|Internal||Iconic brand. Extensive distribution network. Developed marketing capabilities||Increasing competition, Criticism of sugar content in beverages||Development in new markets, Opportunity to produce healthier drinks.||Strict health and food safety regulations, Boycott movements against sugary drinks.|
|External||Climate changes that may affect the production and availability of ingredients.|
How about we move on to the next example? Come on, we’re off to Netflix now.
Fans of small movie nights? Wouldn’t it be interesting to look at its SWOT matrix? We think so.
SWOT Matrix: Netflix’s strengths
Netflix 📺 is a leading streaming platform that relies on high-quality original content and advanced personalization technology. There is a huge range of movies, series, cartoons and documentaries to choose from.
However Netflix is dependent on certain titles, which can be a risk for the company. In addition, the costs of producing content are high, which can be a problem. Finally the growing competition in the market (with pachyderms 🐘 in the wake like Amazon or even Disney+).
Netflix, has the opportunity to expand even more in order to strengthen its position in the market.
What are the threats that Netflix may face?
Netflix faces several threats, including rising costs 💰 of broadcast rights, budget constraints for subscribers, and reliance on third-party providers for infrastructure. In addition, regulatory changes regarding intellectual property and competition may impact our beloved Netflix.
|Internal||Leading streaming platform. High quality original content, Advanced personalization technology.||Dependency on certain titles, High content production costs. Increasing competition in the market.||International expansion, Opportunity to offer new content formats.||Increasing broadcasting rights costs, Budget constraints for subscribers.|
|External||Growth of the streaming platform market. Increased demand for on-demand content.||Dependence on third-party providers for infrastructure, Regulatory changes regarding intellectual property and competition.||Potential for acquisitions to expand content offerings, Increased partnerships with third-party content providers.||Increased competition from new players such as Disney+ or Amazon Prime Video. Increased pressure to reduce production costs.|
Let’s talk cars, let’s talk electric, let’s talk Tesla.
What are Tesla’s strengths?
Tesla is known for being at the forefront of technological innovation in the automotive industry. They were the first to introduce a high performance electric car 🚗 with a high range, which has attracted a loyal customer base. Their brand image is strong as a pioneer in electric mobility. Their marketing strategy, as well as the personality of founder Elon Musk, has helped make Tesla a highly recognizable brand around the world.
Tesla SWOT: Weaknesses
With such a charismatic CEO, Tesla is highly dependent on its CEO, which could be a problem if he were to leave. Second, production costs are relatively high, partly due to the advanced technology of their cars and their integrated supply chain. This may prevent them from reducing prices and expanding into cheaper segments. Finally, battery dependence: battery technology is critical to Tesla’s business and a failure of this technology could have a significant impact on their business.
As with most brands, they can definitely expand into other countries as there are still many markets 🌏 to conquer. There is also a growing demand for electric cars.
As you can imagine, there is increased competition in this type of market. Other traditional car manufacturers have started to develop their own electric models, which could reduce Tesla’s market share. In terms of regulations, some of them concerning the environment could change at any time and thus have a negative impact on Tesla’s business.
Finally, the volatility 🦟 of raw material prices (such as the increase in the price of lithium for example) could affect Tesla’s production costs.
Tesla’s SWOT recap
|Internal||Technological innovation. Strong brand image and vertically integrated supply chain.||Dependence on Elon Musk. High cost and battery dependency.||Expansion. Product diversification and growth in demand for electric cars.||Increased competition. Regulations and volatility of raw material prices.|
Yep, Waalaxy is one of the really big companies we wanted to talk about 😏. Well ok, not that big, but still, it’s worth looking at our SWOT too 🙄.
This company is an expert in developing a SaaS software. It has a deep knowledge of LinkedIn and its features. It helps automate prospecting tasks, which can increase the efficiency and productivity of its users. By the way if you feel like finding out more about this little wonder, go here 👇.Découvrir Waalaxy 🪐
You should know that there is a lot of competition in the SaaS LinkedIn prospecting software market. And of course, the platform can decide at any time to change its functionality, which can affect Waalaxy’s operation.
As far as opportunities are concerned, we benefit from the increasing demand for online prospecting software. There is also the possibility to diversify the tool’s functionality to meet other marketing needs.
Swot: Waalaxy’s threats
Finally, one must also take into account that large companies can develop competing solutions. You also have to take into account the rules 📏 of privacy and data protection that can change and affect the collection of customer data.
The short recap for Waalaxy: SWOT
|STRENGTHS||Expertise in SaaS software development. In-depth knowledge of LinkedIn and its features. Ability to automate prospecting tasks, which can increase efficiency and productivity.|
|WEAKNESSES||Increased competition in the LinkedIn SaaS prospecting software market. The LinkedIn platform can change its features at any time, which can affect the operation of your software.|
|OPPORTUNITIES||Increased demand for online prospecting software. Opportunity to diversify software functionality to meet other digital marketing needs. Opportunity to expand your offering to other social networking platforms|
|THREATS||Large companies may develop competing solutions. Privacy and data protection rules that may change and affect customer data collection, Corporate marketing budgets may be reduced, which may reduce demand for your software.|
By the way, just for you, we decided to let you download the template 👇.Download Waalaxy's SWOT
In summary, SWOT analysis is a simple and effective strategic management tool that allows you toidentify the strengths, weaknesses, opportunities and threats of your company or project. This will give you the opportunity to adapt your strategy accordingly.
Don’t forget that it must be used regularly to ensure the competitiveness and growth of your company. So that you can have the common thread in mind, here is what we saw today:
- ➡️ The definition of SWOT analysis
- ➡️ SWOT Method: How to do it?
- ➡️ The advantages of SWOT.
- ➡️ The disadvantages.
- ➡️ Differences between SWOT and PESTEL.
- ➡️ 4 examples of companies.
SWOT article FAQ
In order to encompass all the topics about SWOT, here are some more concepts that can help you. It’s free 🎁.
SWOT: Definition (the reminder)
Come on, after seeing all this content, we thought it would be nice if you could have a reminder of the definition of SWOT analysis.
The SWOT analysis will allow you to make an internal diagnosis as well as an external diagnosis of your company or your project according to your field of activity 💡. You will thus be able to identify:
- Your strengths.
You collect two types of data: internal and external and thus you can identify the strengths and weaknesses of what you have in place.
When to use SWOT?
As mentioned earlier in this article, the SWOT analysis matrix is an analysis tool to assess the strengths, weaknesses, opportunities and threats of a company or project. It can be useful in many situations, including determining the development strategy of a company to assess the feasibility of a project or to identify areas for improvement.
It is useful for companies seeking to evaluate their positioning in relation to their competitors and to identify growth opportunities.
How do you do a SWOT for a project?
As with your business, you will need to analyze the 4 pillars of the SWOT method for your project. This may include factors such as:
- Your resources.
- The skills of your team.
- Market trends.
- Certain potential risks.
Once you have identified these factors, you can organize them in a SWOT chart using the four categories (as we did earlier in this article). You will then evaluate each factor in terms of its importance to the project and its potential impact. The purpose of the SWOT is to help identify the key areas where you should focus your efforts to maximize the chances of success.
You now know all about SWOT.