A SWOT analysis might be one of those things that you have heard about but still have very little understanding about. The name itself is an acronym that stands for strengths, weaknesses, opportunities, and threats.
Brands use it whenever they feel like their creativity sources have dried up or they cannot think of the next move to take their business to a higher level. And given how difficult some markets are, it is only natural that quite a few companies face similar problems.
Whatever the case may be, this SWOT Analysis guide by Oberlo is a good place to start if you want to get a better grip on what you can expect and should do. However, it is worth pointing out that a SWOT analysis will not work out in some situations.
Like most things in life, it has its own pros and cons as well. Here are some of the most important aspects, and let us start with the advantages.
Managing Vast Amounts of Data
Working with too much information is not something that every brand faces, but bigger companies will certainly encounter too much stuff. So whenever there is a way to simplify things, taking this opportunity should be a no-brainer. This piece of advice is good for all kinds of situations as well, so keep that in mind.
A SWOT analysis helps with processing large amounts of data. And you will still be able to grasp the overall situation while still having the opportunity to spend more time on more specific matters.
Identifying Opportunities and Threats
Being prepared in advance is always great, even more so when there is a lot of competition in the market. The method will help you determine both threats and opportunities on local, national, and even international level. It all depends on how much ground you want to cover.
Moving forward or coming up with new strategies becomes much easier when you have this kind of information in front of you.
Figuring Out the Most Useful Tools
A brand can benefit quite a bit if you can figure out which tools could help in reaching the goals. A SWOT analysis does a wonderful job of identifying pretty much everything you may want to know about a particular set of tools and helps you determine whether they are appropriate and should be used.
Starting from scratch without any prior knowledge about such a method is a real pain. However, if you were to browse the internet, you should not have any problems finding various case studies and other information about SWOT analysis.
Now that you know the positives of the said method, we can move on to the negative side. There are also a few things to cover.
Oversimplification is not necessarily a bad thing as it encourages more people to take a look and understand some things. However, if you get in the habit of it, then you may find yourself oversimplifying something extremely important, at the highest level. And if that happens, there is a chance that addressing certain issues will become impossible.
Lack of Objectivity
Those who do the analysis will always have some biases and tendencies that will surface whether you want it or not. Moreover, if there are personal interests involved, it is difficult to expect a lot of objectivity.
Figure these things out and make sure that they are not present when your brand is involved.
When the analysis begins, it may end up turning into something that has no limits and it can become really bothersome, especially when you are in the initial stages. If there are no frames, the difficulty of figuring out what is relevant and irrelevant rises quite a lot.
There is always a potential risk of unknown factors getting involved. Sure, when you are starting out, you are working with something that you already know. Nevertheless, results can be influenced quite easily with something you could not predict. A simple inadequate definition could do more harm than the entire analysis can do good.
Vague and Even Meaningless Terms
A SWOT analysis somewhat focuses on generalities rather than very specific terms. What does this lead to? Potential resource wasting. Certain phrases and jargon can be interpreted in a number of different ways, and if an argument ensues, well, you can guess what happens next.
No Obligation for Verification
Information provided after the analysis does not come with sources and all that stuff. In other words, it should be trusted more or less blindly, and it is only natural that not everyone would be willing to accept information on this level. Moreover, it could lead to some arguments inside the companies because different individuals will struggle to find common ground due to a lack of confirmation about certain aspects of the analysis.
Alternatives to a SWOT Analysis
In choosing your go to market strategy, a SWOT analysis is not the only tool you have at your disposal. If you find that the cons outweigh the pros above, here are some alternate frameworks that you might want to consider using for your business.
1. PESTEL Analysis: Political, Economic, Social, Technological, Environmental, and Legal factors are analyzed to assess the external macro-environmental factors affecting a business.
2. Porter’s Five Forces: Analyzes the bargaining power of buyers and suppliers, threat of new entrants, threat of substitutes, and competitive rivalry in an industry.
3. Ansoff Matrix: Provides a framework for market penetration, market development, product development, and diversification strategies.
4. Product-Market Fit Analysis: Assesses how well a product or service aligns with the needs and preferences of a specific market segment.
5. Blue Ocean Strategy: Focuses on creating uncontested market space by innovating and offering unique value propositions rather than competing in crowded, existing markets.
Each of these also has its own pros and cons, which we’ll cover in more detail in a later post.