A market and competitor SWOT analysis is a great way to assess a company's position in its market. Most companies are familiar with this well-established strategic planning tool. Our approach will be to assess the impact of competitors within a company's market, while also assessing the overall health of the market itself.
So, how can the analysis help small and medium-sized businesses assess their market position, their market's health and their competitor's strengths?
A Simple Strategic Planning Tool
SWOT refers to Strengths, Weaknesses, Opportunities and Threats. It is an established planning tool used by companies when they need to do an honest evaluation of a given business operation. When performing a market analysis, it’s important to be transparent about the company’s strengths and weaknesses. It’s the essential first step in ensuring the company is able to identify those opportunities and threats that are present within its market.
We'll use the analysis to assess a company's position in its market, and we'll use another analysis to define the threats posed by the company's competitors. When using the analysis, it's important to keep information clear and concise. You can use bullet points and then elaborate on them later. You don't want too much information under some headings and not enough under others.
The above video explains the differences between a SWOT and TOWS analysis. You can read more by going here.
SWOT Analysis on the Company’s Market Position
The focus here is to assess the company, its market position, in addition to the market's health and future. Again, it's important to keep the items under the headings succinct and to the point. Focus on the most obvious points.
Strengths: What are the inherent strengths that the company has within its market? Is the company a market leader, follower or challenger, and is this position in line with the company’s strategy? Does the company have certain strengths that lend itself well to increasing market share? For instance, does the company have a proactive and aggressive sales team and a tech-savvy marketing team? Is the company known for excellent customer service and is that after-sales service well-known in the market?
These are the types of questions companies must ask themselves. The strengths portion of the SWOT analysis is meant to put forth the company’s strongest attributes. These attributes could be related to its costs structure, its strength in distribution and sales, its expertise in design and engineering, or its manufacturing capabilities. Focus on capturing the company’s core competencies in this first quadrant.
Weaknesses: What are the main weaknesses of the company itself? Does it lack the essential market information to capitalize on opportunities? Does the company lack strong engineering and design capabilities, or is it burdened by high inventory costs that make it unwilling to hold certain products to capture opportunistic sales? The weaknesses portion of the SWOT analysis must be transparent. Companies must be willing to admit their faults without apprehension.
Opportunities: What are the opportunities for the company within its market? Is the market growing at a sustainable rate, or does it have above average growth? Are there any recent technological advances, emerging trends, or customer likes and dislikes, that the company can capitalize on? There are opportunities at every turn. They may relate to increasing sales and revenue, capitalizing on smaller market niche’s, or adjusting marketing initiatives to capitalize on customer needs. Focus on those opportunities the company must close on.
Threats: What are the threats posed by the market itself, or by any extenuating circumstances outside the market? For instance, is there a competing technology in another industry that may make the company’s product and service offerings obsolete and outdated? Is the company lagging behind in terms of new product designs? Threats must involve those issues that are internal to the company and external to its market.
Market Position SWOT Analysis Summarized
It’s important to note that there are several points that can be included in all the headings of the SWOT analysis. A company’s current market share could be viewed as a strength, or it can be viewed as a weakness. Even the opportunities within the market could be viewed as threats if not acted upon by the company. Be sure to note which point of view you've taken within your assessments.
SWOT Analysis on the Company’s Competition
In this analysis we are reviewing the attributes of the company's biggest competitors. When looking at their weaknesses, try to isolate those issues that your company can capitalize on - if it can.
Strengths: What are the strengths of the company’s competition that would allow competitors to steal customers and sales? Is the competitor a more dominant player in the market and if so, why? What does the competitor do well and why do customers buy from them? Understanding your company’s competition and its strengths is paramount to success. Imitation is the sincerest form of flattery. Companies emulate one another all the time and the one attribute you should emulate is the one that allows you to steal business.
Weaknesses: What are the weaknesses of the competitor and can the company capitalize by stealing customers? Has the competitor recently come on hard times? Have they lost market share, or are they encountering problems with quality and on-time deliveries? Understanding the competitor’s weaknesses will help set the stage for capitalizing on those mistakes and weaknesses later on.
Opportunities: In this economy, it’s not uncommon for companies to drastically cut costs and reduce marketing. This is always a bad decision as reducing a company's market presence in a down economy always leads to lost market share when the market returns. Therefore, has the competitor dropped their guard and allowed cost cutting measures to impede their ability to service and sell to their customers? Again, there are opportunities everywhere. It is incumbent upon your company to identify these opportunities as a result of your competitor’s current situation.
Threats: What new products has the competitor come up with that will allow them to capture market share? Are they ahead of the curve in terms of new product design? Do they have stronger relationships with their customers? When looking at the threats posed by your competition, be cognizant of the costs of not acting. Be aware of what these threats are and how your company can better prepare itself.
Competitor SWOT Analysis Summarized
Again, several points can be found in all quadrants of the SWOT analysis. In these analyses we've used questions as a way to open up discussions.
When companies take the time to perform a thorough SWOT analysis, on either their market or their competitors, they gain tremendous insight into areas of concern, while also uncovering potential opportunities. However, it's important to note that the analysis is predominately a brainstorming tool. As such, it's important that your company keep the items under the headings to a minimum. Again, it's not uncommon for companies to focus too much on their strengths and opportunities, while largely ignoring their own weaknesses and threats.
In the end, the tool allows companies to get their ideas down on paper and assess the strengths, weaknesses, opportunities and threats within their market or whatever business function they are reviewing. All you need to do is follow up on the items you've uncovered.
If you want to read more about how this straightforward tool can be used to assess your company's supply chain, please go here.
To see how the tool can be used to improve your customer service, please go here.
Comments