If you went to Business School or even took a hefty amount of business courses in college you probably have heard of a SWOT analysis. As a recap, a SWOT analysis is used to measure Strengths, Weaknesses, Opportunities and Threats of a business. Although it’s mainly used to assess new business ventures, as part of your business plan, it can also be easily used to measure almost anything in your business that is influenced by external and internal factors. My focus for this article will be on the applications outside of your business plan because I assume most of my readers already have a business venture. I will also not go deep into “how you use” the tool and will save that for a #TacticTuesday article in the future.
Some applications for SWOT Analysis in your business:
- Product Development Cycle (this is where I will focus)
- Marketing Campaigns and Rebranding
- Capital raises or restructuring
- Operational Efficiency
- Game Theory based on competitor’s strategic move
So why should your sports nutrition or fitness CPG business spend the time to do a SWOT analysis when launching a new product?
- Simplicity – It allows anyone to participate without prior knowledge of the methods and encourages participation. The participation part here is key because generally product development is done without the proper input from your ALL key stakeholders because its generally technical. This causes a larger percentage of failure rate in the market.
- It clearly differentiates between internal (strength/weaknesses) and external (opportunities/threats) factors to help decision making. I will say from firsthand experience that looking at both the external and internal factors are missed 90% of the time during product development. This as well causes a larger percentage of failure rate in the market.
Lets break down the components of a SWOT analysis…
Strengths – These areas are your critical success factors and they give your product development its competitive advantage. Identifying these strengths can help you make sure you maintain them. Growing and scaling your business involves finding ways of using and building on these strengths. (Example: Your business has a strong partnership with a contract manufacturer that gets raw materials at lower than average industry rates.)
Weaknesses – These are the characteristics that put your product development at a disadvantage to others. This will help you identify these characteristics and minimize or improve them before they become a problem. It is important to be realistic about your weaknesses in your business so you can this strategically about fixing them. (Example: Your business is not very good at the packaging design aspect of the product development cycle.)
Opportunities – If these are identified, your business will likely make more revenue and greater profits from the new product development. The key to the SWOT analysis is it will help you understand the internal factors that will influence your ability to take advantage of a new opportunity. If your business doesn’t have the capability to seize an opportunity but decides to anyway, it could end your business. Similarly, if you do have the capability to seize an opportunity and don’t, it could leave your business far behind a competitor. This is the biggest area of “strategy” in the SWOT Analysis in my opinion! (Example: Your business meets the head of the USA Olympic Committee and he would like you to partner with him on a product line.)
Threats – These are external factors that could cause problems for your business. A proper SWOT analysis can help you identify ways to counteract threats, depending on your strengths and weaknesses. Since they are external factors, these are sometimes hard to “change” but your business should be nimble and smart enough to spot and adapt. (Example: Your business functions within an industry that has a major regulatory change that could effect the components of your new product.)
When you’re conducting a SWOT analysis, keep in mind that a strength for one issue might be a weakness for another. You might also identify a weakness, such as a gap in the market that you’re not covering, that could be an opportunity for your business. A SWOT analysis should be a fluid discovery tool that is used by a business to create and adjust strategies. This is the “fun and games” in business!
If you are looking to complete a SWOT analysis for your business, here is an example template.