SWOT for Growth

SWOT analysis is a structured planning tool for performing internal and external
analysis. This can be carried out for product/service, place, organization, industry or
a person. It is a technique for understanding your Strengths and Weaknesses, and
for identifying both the Opportunities and Threats.

SWOT is a basic and straight forward framework which can help your company face
its greatest challenges and find its most promising new markets. At the end of the
analysis, you will have a strong strategic plan for your growth. It is simply listing out
your strengths, weaknesses, opportunities and threats by which you will have a clear
picture of what you have? and Where do you lack? What is available and what is to
be done.

SWOT Analysis in a Business Context

Strengths and weaknesses are often internal to your organization while opportunities
and threats generally relate to external factors. For this reason, SWOT is sometimes
called Internal-External Analysis and the SWOT Matrix is sometimes called an IE
Matrix.

How to use the Tool?

You need to list out your company’s strengths, weaknesses, opportunities, and
threats. Here are the some ideas which might help you in listing out your’s based on
your requirement.

Strengths
•What are your unique selling points/propositions?
•What do you do better than anyone else?
•What quality of your product/service you think can resist the new entrants in the
market?
•What do customers see as your strengths?
•What do your competitors see as your strengths?
•What is your lower cost management?
•What makes you unique from any other competitor?
Don’t list out any quality which is in common with your competitor, because
strengths are only the qualities of your organization that make it outstanding.

Weaknesses
•What are you lacking at?
•What are the reasons for fewer sales?
•What are the complaints you usually get from your customers?
•What are the strengths of your competitor?
•What are the qualities which you couldn’t resist or anticipate few that could not be
resisted?
Be ready to accept the truth. Be bold in listing out the weakness as it’s high time to
face it.

Opportunities
•What good opportunities can you find from the needs of customers with the change in
lifestyles and profiles?
•What are latest updates in regards to your industry?
•What are the Current events?
•What are the new markets suits your product/service to emerge?
Threats
•What are the competitors doing??
•What if any new entrants are in the market?
•Are there changes in external factors that can affect your company’s position?
Strengths and weaknesses can also be from your experience what has worked and
what not. Opportunities and threats may be from new Govt. rules, any
environmental changes or technical developments. Pestle analysis and Porter’s 5
Forces can help in listing out internal – external factors and ensure that you don’t
overlook the Factors.

How does SWOT Analysis help you Grow?

It helps you focus on your strengths, minimizes threats, and takes the greatest
possible advantage of opportunities available to you. This can be a solution for
problems, helps in identifying the barriers which are limiting your goals and ensures
effective decision making with the steps to face change externally or internally.

It can also be used as an ice-breaker with brainstorming sessions, or in a more

sophisticated way as a strategy tool. It allows organizations to accumulate
meaningful information in order to maximize their potential.

You can also use it to get an understanding of your competitors, which can provide
acumen to you, or to craft a coherent and successful competitive position.

Design a strategy for growth, keeping your weaknesses in mind, so as to reduce your
threats, enhance your strengths, and drive you towards opportunities.

Note: When carrying out your personal analysis, be realistic and rigorous. Apply it at
the right level.

Porter’s 5 Forces

Before developing a firm’s business-level strategy, enterprises should primarily

understand the forces which will determine its profits. Michael E Porter developed a
theory “Porter Five Forces” which argues that all the firms in a particular industry
face forces within their industry that significantly affect profitability.

Porter’s five forces is a kind of framework to analyse business strategies and

industry. It is developed as an answer to SWOT analysis.

What are the 5 Forces that Influence the Business?

Below is a simple structure for analysing the competitive strength & position of a
company.

This theory is based on the concept of five forces which specify the rivalrous nature
of the market. With the help of Porter’s five, we are able to address where power lies
in a business situation as it necessary to understand current competitive position of
the organization and the future position where business wants to move. It also used
to find out profitability aspect related to the new products or services. It also helps
us to know where actually power lie, what are the Strengths & Weaknesses of the
organization (Competitive Strategy, 1980).

External analysis of an industry helps us to decide if a company can be an attractive

organization. This is influenced by factors such as bargaining power of suppliers &
customers, threats from new entrants & substitute products finally affecting the
competitive rivalry in the particular domain.
Here I’m explaining the model taking retail industry as an example.

Threat of New Entrants

If the Industry is experiencing high returns, then there are higher chances for new
firms in the market. The new entrants need not educate people since the products
are already in the market and may learn from the mistakes of other existing firms, so
they can lower the cost.

Ease of entrants can also depend on the industry structure. For example, in the
retail industry, as competition is very strong, firms hesitate to give space on shelves
for new or untested products. This barrier of distribution channels can limit the new
entrants. Another kind of example for the limitation of new entrants is in the
automobile industry, where the equipment for production of cars is very costly.

Some other characteristics that will lower the threat of new entrants in the retail
industry are country’s regulations and barriers for foreign companies, huge price
war, hard penetration due to established firms, customer loyalty, and capital
investment.

Substitutes
Availability of a product that the consumer can purchase instead of the industry’s
product which can perform a similar function but not in the same way. This affects
the profitability of an industry under investigation. The availability of close substitute
products can make an industry more competitive and decrease profit potential for
the firms in that specific industry. The gap in price-quality factors influences buyers
to explore more than one option to satisfy their needs.

Switching cost and the ability of customers to compare quality, performance and
price will influence the power of substitutes. Continuing the example of retail
industry, alternative options like online shopping, various payment modes, low-cost
products, home delivery and lack of loyal customers are the factors that increase the
threat of substitutes.

Bargaining Power of Suppliers

Suppliers are those who provide input to the industry. Input can be of the raw
material, assets, financial support and labour. The factors that affect the power of
supplier are
•Substitute inputs: If the quality and performance is unique, then the ability of an
industry to switch the suppliers decreases. Then the power of suppliers is high.
•Own Supply: Credible threat of backward integrity will weaken the supplier.
•Demand for the supplier’s products: More demand for inputs will increase the
power of supplier.
In the retail industry, despite having substitute inputs many of manufacturing
companies have their own retail outlets. Own supply and dread of losing their
contract with industry giants and channels of distribution will make the bargaining
power of supplier LOW.

Bargaining Power Buyers

Individuals or firms who actually purchase the output of industry are the buyers.
Buyers includes Consumers, retailers, distributors and industrial
buyers.Characteristics that determine the buyer’s power are –
•Substitute Products: If buyer can switch from one supplier to other then the buyers
power is high
•Volume of Purchase: If the buyers are more concentrated i.e. small group of buyers
purchase most of the output. Then the Buyers power is high
•Quality: If is it critical to the quality of what is produced, then industry power is high.
In the retail industry, the power of buyer is very high as there is the availability of
substitutes, cost sensitivity, purchase volume and less brand loyalty.

Competitive Rivalry
The rivalry among the firms in an industry is the last of the five forces. The higher
the rivalry, the more likely forms are cut down on the prices. It will affect
the profitability until unless any change in process technology.

The factors that will increase the rivalry are –

•Increase in number of competitors
 •Production on economies of scale
•Switching of customers among producers
•Survival of firms
In the retail industry, the below are the factors that influence the power of rivalry
derived from other 4 forces of the model.
•Established Retail giants
•Product cost limitation
•Quality of services
•Customer satisfactio
•Some new acquisition & partnerships
•Intensified competition of price
•Variety of options and offers offered to regular customers.
From the above, we can analyze that, high Competitive rivalry is a very common
feature in the retail industry. According to the Porter if Rivalry among the firms is
high, it can be regarded as the threat because it depresses the prices. A weak
competition in the industry will be viewed as an opportunity because it allows
companies to earn profits.

These five forces specify the rivalrous nature of the market. With the help of Porter’s
five forces, we are able to address where power lies in a business situation as it is
necessary to understand current competitive position of the organization and the
future position where businesses want to move. It is also used to find out profitability
aspect related to the new products or services. It also helps us to know where
actually the power lies, what are the strengths & weaknesses of the organization.