Analyzing the strengths, weaknesses, opportunities, and threats (SWOT) of a business is a well-established tool that is widely used by academics, consultants, and advisors. Although it is a simple concept, business owners often struggle when trying to use it because it is so broad. It is difficult to determine where to start, what questions to ask, and where to focus. The obvious problems get attention while many other important issues get overlooked. SWOT analysis is a great tool, but its effective use requires additional structure.
Strengths and weaknesses relate to internal factors, while opportunities and threats cover external ones. The internal factors can be divided into five categories: management, workforce, sales and marketing, operations, and financial. The external factors are also divided into five categories: threat of new entrants, bargaining power of suppliers, bargaining power of customers, threat of rivalry from competitors, and threat of substitution.
To approach the analysis in a structured way, prepare a checklist using the categories mentioned above. Identify factors within each category that are important to your business. Under management for example, a major weakness for virtually every small business is relying too heavily on the owner. What would happen to the business if something happened to the owner? In the workforce category a factor could be employee turnover and the availability of new hires. The threat of new entrants might include the possibility of a big box retailer opening near your business. The bargaining power of suppliers and customers categories should consider the possibility of losing a major supplier or customer. Come up with several factors for each category to complete the checklist. It is important that you do not try to rate or solve each issue as you identify them. If you do, you will get bogged down on each factor and never complete the analysis.
Once the checklist is complete, you should rate each factor based on its importance to your business. Use an alphabetical scale from A to E, where A = very important, B = important, C = some importance, D = little importance, and E = not important. Next rate each factor based on proficiency (internal) or vulnerability (external). Use a numerical scale from 1 to 5, where 1 = very proficient or not vulnerable, 2 = proficient or little vulnerability, 3 = average proficiency or some vulnerability, 4 = poor proficiency or vulnerable, and 5 = deficient or very vulnerable.
The factors with the lowest letter and highest number (A5) are the biggest weaknesses or threats. The ones with the lowest letter and lowest number (A1) are the biggest strengths or opportunities.
Using this structured approach makes a SWOT analysis possible and practical for any small business. To make this process worthwhile you must use this information to take action. Work to fix the worst problems first, prepare for the biggest risks, take advantage of the best opportunities, and build your secondary strengths.
Using SWOT Analysis To Improve Your Business
Conducting A Market Analysis On Your Business
The term "market analysis" is often confusing to entrepreneurs, especially for people who focus on a specific niche or market segment.
In fact, many small business owners don't understand the process or complain that conducting a market analysis is too complicated or too expensive and wonder why or if it is necessary.
What is market analysis?
In the most basic terms, a market analysis is an assessment of:
- A particular problem or opportunity in a market.
- The needs of the target market relating to the problem or opportunity.
- Ideas for marketing a particular product or service that fills the needs of the target market.
When should you conduct a market analysis?
- When you are starting a business.
- When you are entering a new market.
- When you are considering a new product or service.
Why should you conduct a market analysis?
- To minimize business risks.
- To understand the problems and opportunities.
- To identify sales opportunities.
- To plan your marketing/sales approach.
The process of conducting a market analysis can be divided into
three parts:
Part 1 - Understanding Market Conditions
This gives you basic information about your entire market -- the size, the competition, the customers.
Part 2 - Identifying Market Opportunities
This gives you more targeted information about potential problems or opportunities in the potential market, and includes information about growth, current and future trends, outside factors and more information about specific competitors.
Part 3 - Developing Market-Driven Strategies
Here is where we get into what market research does for you. It helps you to pinpoint opportunities to grow your business. By understanding the market and knowing what opportunities are available you can create a marketing strategy that leaves your competitors in the dust!
Here are 10 questions that can help you get started:
1. What is the market I want to reach?
- Who are they? (Basic Demographics)
- What is their biggest problem in relation to this market?
- Are their needs being met by the products or services provided in this market?
2. Who is my competition in this market?
- Are they successful in this market?
- Are they marketing a similar product or service?
- What is the market share of the three biggest competitors in this market?
3. Is there room for growth in this market?
4. What is the size of this market?
- Is there room for growth?
- Is the industry growing? Stable? Saturated? Volatile? Declining?
5. How is my product or service different from the competition?
6. How can I reach this market?
- How is my competition currently reaching this market?
- Is it the most effective way?
- What are the alternative ways of reaching this market?
7. What are the business models of my competition in this market?
- Are they effective?
- Is there a way to do it differently or better?
8. What do customers expect from this type of product or service?
- What are the core competencies of this product or service?
- What would make the product "new" "different" or "better" for the customer?
9. How much are customers willing to pay for this product or service?
10. What is our competitive advantage in this market?
Knowing the answers to these questions will not only help you figure out if there is a need for your product or service, it will help you figure out the best ways to reach your customers, price your products or service and ultimately make more sales!
Analysis of the success and failure of doing business in China
Why some foreign-funded enterprise became successful when entering the China market while others fail, and why some grow relatively faster than the rest? Reasons to explain all these are complex and varied. The following factors can determine how well or bad foreign-funded enterprise fare in China:
1. Establishment and implementation of enterprise's development strategy. In China, successful MNCs and foreign-funded enterprise will definitely implement long-term development strategy, adopting a long-term outlook for their business, unlike other unsuccessful companies which do not look far and only concentrate on short-term gains. Besides adopting a development strategy that is of long time horizon, the strategy will need to be a flexible one as market conditions are constantly changing due to the presence of globalization. The enterprise need to be flexible as to react immediately to any changes without affecting its business operations.
2. Leadership of the top management plays a decisive role in deciding the success of the company. In face of greater competition brought about by globalization, management today will need to possess stronger judgment, decision ability, adaptability and greater foresight. Ability to look far is crucial as one need to be able to foresee unforeseen circumstances in order to be ready at all times to react to any changes.
3. Form key competitiveness for the enterprise, and grow together with the economy. Treat your staff with an open heart, cultivate the enterprise’s values and vision constantly into them to foster togetherness within the organization and strengthen the organization’s strengths. .
4. Build and strengthen the institutional framework and economic system of the enterprise. MNCs usually will establish main or Asian headquarters in key cities in China. Beside that, research and development centre, training centre and logistic base will also be built. Therefore it is vital for the organization to have a strong organization structure dealing with its cash flow, flow of information and manpower movement in order to ensure its success in China
5. It is essential for the foreign-funded enterprises to understand the China’s culture, especially regarding the culture of Guangxi (relationship), so as to be able to gain the popularity and trust of China population. With a good relationship, business can become smoother and probability of failure will be greatly reduced. Stronger bonds can also be built with the customers, suppliers and partners.
Business Directory Analysis & The Future
A Business Directory is normally published free of charge for users. Businesses get a free listing which is usually a name, address and phone number. If they want more information displayed they have to pay a fee.
Businesses and householders can now ask for a private number which means that their number is no longer listed. This has the advantage of reducing unsolicited calls but can harm the ability of a business to generate sales.
The size of the advertisement determines the price. Business names are listed in alphabetical order. This means that if a business name begins with the letter "a" it invariably has an advantage over a business that starts with the letter "t".
Now many countries are creating opt out rules which mean they businesses can still be listed in a telephone directory but can not be contacted by companies who wish to sell them products. This has totally changed the landscape for telemarketing companies and businesses which have been burdened by new regulation.
The Yellow Pages generally refer to business listings whilst others refer to personal phone numbers and addresses. The main logo that is used is world famous and is a static image of two fingers walking on a yellow background.
At the beginning of existing directories you can usually find information for the emergency services, transport information as well as international dialling codes.
Now business directories are moving online. In the old days these were limited and barley used due to the low download speeds and the time it took to find a phone number.
Now many people no longer use the paper version as they have access to high speed broadband. This makes searching for a phone number much easier utilising the internet and keyboard then relying on a printed version which is probably out of date.
This is the real value of an internet directory. Information that is updated is available to all and sundry the minute it has been modified. Meanwhile most paper directories are six months out of date by the time they land on your door step.
Many people also use internet directories to enhance the ratings of their websites online. It is important that there is a live weblink in your business listing and you focus only on the well known and reputable directories.
Search engines love inbound links from quality sources but dislike link farms which just sell links. Generally speaking the more inbound links a website has the higher it appears for its search terms.
Many websites have disappeared of the search engines radar primarily because they bough cheap and nasty links from the link farms. It is far better to have a few quality inbound links than hundreds from pages that are not rated by the search engines.
What is going to happen with the advent of internet facilities for the mobile phone? Business Directories are now being created that are dedicated specifically for mobile phone user1! Technology is improving so rapidly now that even the business directories are struggling to keep pace!
Approaching Business Strategy - Analysis
Many people talk about business strategy but have a great failure to realise exactly what this is - is it surprising that a great deal of business people have a huge problem discussing this when they do not exactly know what this is!
Questions that should be asked may include the determination of the fact that is there even a strategy in existence or if so, is this the correct one? Additionally, how do we determine what a strategy is and how does one go about developing one?
It is important when developing strategy to look at some of the issues and why a chosen path can go wrong-if one keeps doing the same thing, one will get the same results.
Many complaints about strategy range from the fact that it is difficult to determine, it gets messy and unfinished, and many people involved either do not contribute or attempt to dominate proceedings and a general feeling of the future and the failure of any future chosen path.
Broadly speaking, some schools of thought hold with notion that there are three main reasons for a failure of strategy.
Managers often fail to realise what these differences are; business schools talk about corporate-centre strategy and business-unit strategy. Business-unit strategy is for controlled organisations that may be part of conglomerates or single-business units whereas the other is for conglomerates planning growth through the use of single business units.
Another is often no clarity of purpose; for example there is no point in using models that are simply intellectually attractive when the purpose of the task is to discover options and directions and gather proof to support decisions about the future.
The business - unit level requires methods that are relatively straightforward and the only real obstacles are intimidation by "professionals" and their jargon. Most means of analysis are in excess of 35 years old but there is a general lack of understanding of them amongst business people and most of them do not know how to use them.
So how do we correct this anomaly?
Initially, the ground rules need to be set so participants need to arrive with open,clear minds. Strategy may be likened to seeing everything around, from every angle available and even into the future and the following requirements must be met to be successful: Customers are paramount and form the basis of market uuderstanding, practicality must take priority over theory, the business needs of now and the future need to be thought about and the strategy needs to be measurable.
It is worth at this point to touch on the philosophy behind a strategy.
The best place to start is to take the old adage of begin with where you want to be and work backwards to where you are now.
If, on the other hand, one believes that strategy is an analytical process then start with where you are and work forwards. However there is a difficulty with this approach as straightforward arithmetical thinking stifles creativity.
Perhaps, in the real world, a combination of both methods is probably a necessity.
This is all, of course, driving towards growth of the business and that is largely down to marketing. So why are not all growing firms good marketers and why have not they developed a good strategy?
Very briefly, this begins with a failure to understand the difference between selling and marketing - marketing is about developing products or services that customers will want where selling is about simply getting people to but the product.
The rest, for the moment, I leave you to ponder on.