SWOT analysis: what it is, characteristics and examples

We explain what SWOT analysis is, its variables and characteristics. Also, its importance, examples and what CAME analysis is.

The SWOT analysis allows us to understand the current situation of an organization in the market.

What is SWOT analysis?

SWOT analysis is a technique that It allows you to know the status of an organization, product, service or project in a given context or market. His name is an acronym made up of the first letter of the following words: Fortalezas, EITHERopportunities, dweaknesses and TOthreats.

The objective of a SWOT analysis is to provide data for decision-making and to design a strategic business plan. The data arise from the analysis of both the competitive advantages and weaknesses of the organization, as well as the market opportunities and threats that may impact the business.

• For example: A company that is going to launch a new product needs to first carry out a SWOT analysis to know what qualities that product must have to stand out from the competition.

SWOT analysis is also known by its English name. SWOT analysis made up of the first letters of the following words: Yestrengths, meaning strengths, Weaknesses, meaning weaknesses, EITHERpportunities, which means opportunitiesand Threats, which means threats.

Features of SWOT analysis

The SWOT analysis comprises four main factors that make up the acronym of its name, and which are grouped into two types of variables: internal and external to the organization.

INTERNAL VARIABLES OF THE ORGANIZATION

Strengths. They correspond to the internal and positive variables that are related to the attributes, differential advantages and all the qualities that the element to be analyzed has (which can be a service, a business, a product) and that distinguish it from competitors.

To know the strengths we must answer the following questions:

• What advantages does it offer over direct competition?
• What benefits does it provide to consumers?
• Does it minimize its environmental impact and is it sustainable?

Weaknesses. They correspond to the internal and negative variables that are related to the deficiencies and aspects that the element to be analyzed (product, service, business) must improve in order to be profitable, competitive and sustainable in the market.

To know the weaknesses we must answer the following questions:

• Why do customers choose competitors instead of choosing our proposition?
• Does it meet customer expectations?
• Do you analyze the impact that your activity generates on the environment?

VARIABLES EXTERNAL TO THE ORGANIZATION

Opportunities. They correspond to the external and positive variables that are related to the moment or circumstance of the environment in which our business takes place and that can mean a benefit for the organization. For example: New legislation that facilitates the export of my product to sell abroad.

To know the opportunities we must answer the following questions:

• What modification can we make to our business so that it meets an extra need, in addition to the one for which it was created?
• What needs does the current market demand and how does our business respond to those demands?
• What limitations do competitors have to expand? Can we overcome any of those limitations?

Threats. They correspond to the external and negative variables that are related to the problems and developments in the environment in which our business develops. It understands the situation of the market and direct competitors, which may affect our business to a greater or lesser extent.

To know the threats we must answer the following questions:

• Are local marketing and manufacturing laws hurting us?
• Can we face the increase in raw material prices?
• How do new legislations affect us?
• Have new competitors emerged that offer something different?

SWOT analysis example

A proposal to carry out the SWOT analysis of a business is to write down the internal and external variables in list form and in columns as they correspond to the strengths, opportunities, weaknesses and threats, in addition to adding the respective suggestions for each analysis. In this way, we can detect if the advantages or disadvantages predominate and what actions are possible for each instance.

Below is an example of a company that manufactures a line of skin care soaps and wants to perform a SWOT analysis of its soaps:

STRENGTHS
What is our differential advantage in the market? The quality of the raw materials that are natural and 100% pure vegetable.
Suggestion: Maintain quality and work processes.

OPPORTUNITIES
What is the main need to be met for consumers of this type of products? Use a safe and waste-free packaging, something that in the world of marketing is known as zero wastean expression in English that means “zero waste.”
Suggestion: Keep our reusable organic cotton cloth bag wrapper made by employees of organizations that work in a dignified manner.

WEAKNESSES
What is our main disadvantage? The limited logistics scope for marketing our products throughout the country and abroad.
Suggestion: Establish agreements with business chains and points of sale that are not directly related to our industry, but that share the same values. For example: stores that sell food products in bulk and that usually sell industrialized products that promote fair trade and healthy eating.

THREATS
What is our main threat? The new regulations, issued by the state regulator and supervisory body, require more instances of analysis and monitoring for the conservation and logistics of cosmetic products, which represents high costs for carrying out tests, procedures and forms.
Suggestion: Move forward as soon as possible with an advisory service to carry out the procedure requested by the regulatory entity and obtain a certificate of “authorization in process” and be able to continue marketing the batches already produced. In addition, moderately increase the prices of the next batches of products to cover these expenses.

Importance of SWOT analysis

The SWOT analysis allows the company to carry out accurate strategic planning.

SWOT analysis is a technique that allows you to study certain internal and external factors of the organization to understand the state of the business in the market.

It is important to carry out a SWOT analysis, both when starting a business or launching a product, and during its development, because it allows the organization to guide itself in making sound strategic planning, after identifying its strengths and weaknesses.

In business, optimal marketing conditions, necessary investment and market rules are not always present. Therefore, it is important to make strategic decisions based on concrete and real data, not just personal assessments. SWOT analysis is one of the many market research methods that allows obtaining concrete data.

CAME analysis

The SWOT analysis is another analysis technique that allows you to move forward after having performed a SWOT analysis, that is, it is the next step and the implementation. The name of the method is an acronym formed by the first letters of the following words: ccorrect, TOto front, Mhold and ANDxplotar and correspond to the words of the acronym SWOT.

• Correct weaknessesActions are proposed that contribute to modifying or reducing the deficiencies and negative aspects of the business.
  For example: Soaps are not yet marketed on a mass scale throughout the country and it is necessary to establish agreements with other chains and stores.
• Facing threats. Actions are proposed that allow conflicts to be overcome or avoided.
  For example: Expand the variety of products so as not to depend only on a limited line of items that may no longer be competitive due to the large number of competitors in the market.
• Maintaining strengths. Actions are proposed that maintain the qualities of the business over time and that represent a differential advantage.
  For example: Always use the same quality of raw materials and its manufacturing process. The soaps are very effective, they do not cause allergies and both their production and consumption are sustainable and do not generate a negative impact on the environment.
• Exploiting opportunities. Continuous improvement actions are proposed that seek to optimize strengths and detect new productive advantages for the business.
  For example:More and more consumers are choosing natural products due to the dissemination of information about the negative aspects of conventional soaps made with a large amount of chemicals that can be harmful to health.

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References

• Raeburn, A. (2021). SWOT Analysis: What It Is and How to Use It (with Examples)from: Asana
• Schooley, S. (2022). SWOT analysis: What it is and when to use itfrom: BusinessNewsDaily
• Ramírez Rojas, JL (2009). Procedure for preparing a SWOT analysis as a strategic planning tool in companies. Universidad Veracruzana, Mexico, from: UV