|by jean-louis zimmermann|
The S.W.O.T. analysis is a key factor in the overall success of an organizations’ strategic plan. It identifies the strengths and weakness of the business entity as well as the opportunities and threats. The strengths of a business can be defined as those actions, activities or characteristics that elevate the business entity above its competition. Strengths include but are not limited to:
Convenience, Customer Service, Effectiveness, Location, Pricing, Quality, Reliability, Reputation, Respect, Responsiveness, Speed, Thoroughness, Variety
Many of these strengths are generally considered intangible in that they are only measurable through the opinion of the customer. Some of these strengths appear obvious, but often as business entities mature, they can lose sight of some of the fundamental strengths that aided them in their success. Entities that recognize, enhance and appreciate their strengths generally experience long-term success. Entities that ignore what some consider their core basis for success and venture forward without regard to past success lose focus and quickly fail.
Whether the business entity is profit based, not for profit or Faith Based Organization, the fundamental principles apply. In the case of a Faith Based Organization for example, whose strength in attracting participants is the services provided to a local community as well as targeted activities; If they were to refocus their resources in primarily outreach activities outside the local community, there is a good chance that the local congregants who were drawn in by the stated goal could leave. The intent may have been to increase outreach, but if those doing the work feel ignored or taken for granted, they may ‘vote with their feet’.
Another example; a pizzeria known for the tastiness of their dishes because the dough was made fresh daily attracts and maintains a steady volume of customers although their prices are higher than those of the typical chain restaurants that serve pizza. When they change to ready-made dough the strength of their attraction will be impacted and the quality of the pizza, now comparable to the large pizza chain businesses, no longer warrant the cost to the customer, and the business decreases. Quality, must be paramount.
While these examples are not absolutes, they are accurate. The similarity in both instances is that the strength of the business entity was either ignored or overshadowed by other forces. In many instances, business entities seeking to change the direction of the organization can successfully do so over time. Virtually any goal can be achieved when a strategic plan is meticulously outlined and followed, and typically any effort not thoroughly considered will fail.
For each strength business entities have, a similar and sometimes equal weakness exists. The goal is to identify, minimize or neutralize the weaknesses while maintaining the strengths. A short list of strengths versus weaknesses is provided below:
Speed of delivery
Note that the factor considered a strength, can also be reflected as a weakness due to time or cost. In many service oriented industries, the primary consideration that causes consumers to return or not return to a business revolve around how they perceive they were treated, and how much time was dedicated to them or to their situation. If one considers the restaurant business, many people will generously tip servers who are more attentive, bring extra napkins when needed, correct orders quickly without argument and present an atmosphere of competence.
A business that relies on personal service largely links its reputation to the persons interacting with the customer. While a positive service experience will be shared with few people, a negative service experience will be shared with many. The cost to the business in terms of time and training of its employees often is directly reflected as a strength or weakness for the business.
Opportunities can be realized when weaknesses are identified. Some weaknesses in a business are generic to the industry and as such provide an opportunity for growth or for a business to elevate itself to a higher level of excellence by minimizing, neutralizing or eliminating the weakness. For example, a pizza business that prepares pizzas when ordered seeking to compete with similar businesses may recognize as an industry weakness the number of checks returned for insufficient funds as the time delay experienced by customers while the cashier validates the check information.
One cost effective method of neutralizing this industry weakness is to accept credit card, debit card and other similar transfers in lieu of personal checks. Another method may be to achieve or increase the business’ presence on the Internet by accepting orders and payment via the Internet. Payment for the product (pizza) is secured prior to the product being provided, thus minimizing liability for the business, while simultaneously attracting business through a previously under used market. This practice is currently employed in several service-oriented businesses. Some correlations between Strengths, Weaknesses and Opportunities include:
Speed of delivery
Opportunities also relate to furthering the success of an organization through a meticulously outlined and implemented strategic plan. For example a restaurant business seeking to increase revenue without relocating, may consider as part of their strategic plan, delivery, catering or hosting special events such as gaming tournaments during non-peak business time-frames; mid-week, optional holidays, etc. A business might consider merging their strengths with the strengths of other complementary businesses, such as contracting with a reputable local Internet Service Provider (ISP) and increasing its global presence by through offering special coupons for on-line customers, while prominently displaying the ISP in its table and print advertising.
Threats are generally considered those internal and external factors that are most likely to negatively affect a business entity. Examples include the threat of a dynamic change in population due to a shift in a major industry; a significant increase in material costs due to global increase in demand or production cost increases. Threats also come from the activities of the competition including pricing, quality/quantity, technology and market availability.
On way of addressing threats is to contrast the threat against a strength, for example, the threat of a new competitor entering the field brings the possibility of new inventory or increased variety. The strength of the business that is following a strategic plan likely includes partnering with complementary business entities that market the business’ variety, availability and reputation. These strengths aid in offsetting new competition, which must first be considered established in the industry, before they can expect to grab a share of the market. This is true with the established chain business entities, as well as the independents.
Conclusion: Essentially, when a SWOT analysis is completed part of the strategic plan suggests that Strengths be contrasted with Weaknesses; Weaknesses be contrasted with Opportunities; Opportunities be contrasted with Threats; and Threats be contrasted with Strengths. While the strategic plan should be developed to capitalize on the Strengths with Opportunities, the business entity must contently be mindful of its Weaknesses and Threats.
Dr. Eugene Matthews