SWOT Analysis: A Methodology for Identifying Weaknesses and Strengths

We offer you a simple and convenient methodology, with the help of which you can easily determine the strengths and weaknesses of your product in a SWOT analysis. The methodology contains many examples and a detailed description of all internal environment factors, which have to be considered in the analysis.

Simple Methodology

Strengths and weaknesses analysis is easiest in a comparative evaluation with key competitors. Strengths can include everything in which your company, product, or service is better than your competitors. Weaknesses include those factors in which your company is worse than your competitors. To most accurately identify your company’s strengths and weaknesses, the ideal method is to use a SWOT analysis template. Otherwise, follow these four steps:

• Write out all of the internal factors that can influence the strength or weakness of your company’s product competitiveness. Figuratively speaking, write a character reference letter for court about your company.
• Determine which of the factors listed are the key success factors in the marketplace at this time — in other words, those factors that a company must have to become the best in the marketplace.
• Evaluate your company’s strengths and weaknesses relative to your competitors.
• Fill out the company’s strengths and weaknesses in a table.

Key Groups of Factors

The SWOT analysis factors to consider when analyzing a company’s strengths and weaknesses can be grouped in this way:

• Product properties. Write down what properties of the product are key for the consumer and what needs the consumer is trying to solve when buying the product or service. It is a strength if your product or service solves the key need better than anyone else’s or has the best important product qualities. Otherwise, it is a weakness.
• Level of awareness. Knowledge of the product or service among the audience makes it easier for consumers to choose it and is an element of trust in the product. It is a strength if knowledge (or brand awareness) is higher than your competitors can boast or higher than the market average. Otherwise, it is a weakness.
• Level of loyalty. High product or service loyalty is a strength because it provides high repeat purchase rates, a low rate of switching to competitors, and long-term sales stability. Low loyalty is a weakness.
• Brand perception. If your product or service has stable associations, a certain image, which allows the product to look, in the eyes of the consumer, better than the competitors’ products — this is a strength. On the other hand, if one has negative associations concerning the product (such as “inefficient,” “outdated,” “low-quality,” “simple,” “too cheap,” etc.), it’s a weakness.
• Consumer qualities. If your product or service has the highest consumer qualities in a certain area (for example, the most natural or safest), proven in comparative tests (or by other techniques), this is a strength. If your product has the lowest consumer qualities, that’s a weakness. (It’s important to specify that only the consumer can judge the product as “good” or “bad”).
• Packaging and appearance. Attractive packaging and design can be a product’s strength if this factor influences its purchase. Conversely, an old, outdated design can be a product’s weakness.
• The cost of the product. The ability to charge higher prices than competitors without losing customers is a company’s strength. Conversely, it’s a weakness if the company needs to constantly adapt to average market prices and the target audience’s sensitivity to price.
• Assortment range. The breadth of the assortment can be both a strength and a weakness of a company. In some cases, the breadth of the assortment provides consumer choice and satisfies the need for variety, and reduces the likelihood of switching to competitors. In other situations, breadth of assortment significantly increases the company’s costs and makes it impossible to manage inventory efficiently, leading to chaos and unnecessary losses.
• Personnel and intellectual capital. Personnel can be a company’s strength if they are highly competent and significantly increase productivity and minimize costs (relative to the industry average). Conversely, high turnover, low motivation, or low skill sets can be a weakness if inefficiency results in customer churn.
• Product location. The convenience of the location can be a strength if it is an important criterion for purchase in the market. And vice versa, location in an inconvenient place for the consumer can significantly lower possible sales, which is a weakness.
• Level of distribution. Achieved leadership in certain distribution channels, channel monopolization, or unique access to a particular distribution channel can be a strength. Conversely, a failure to reach strategically important distribution channels can be a weakness.
• Cost advantage. It is a strength if a company can produce a product or service at a lower cost than competitors. If the product or service cost is higher than the market average, that’s a weakness.
• Ability to invest. A company’s ability to invest high (above market), access to high advertising budgets, and a high level of available working capital is a business strength. Conversely, the inability to invest at or above the average market level is a weakness.
• Advertising presence and promotion methods. A comparative analysis of methods to promote a product or service. Channels of communication, the intensity of communication, and the use of word-of-mouth technologies should be an integral part of the comparative analysis of promotion methods. In connection with the intensive growth of internet communications and mobile devices, a SWOT analysis should include evaluation of presence on the internet (a company’s website, presence and high ranks in search results, activity in leading social networks, the use of mobile applications, and other possibilities of internet communications).
• Flexibility and speed of reaction to changes. Technology has greatly increased the speed of change in many markets. The ability to quickly adapt to new market realities is a company’s strength, while the slowness to react is its weakness.

Conclusion

When conducting a SWOT analysis, involve experts in relevant fields. The result or the analysis, positive or negative, shouldn’t affect them. This will allow them to reach more objective and reliable conclusions.