It is the culmination of much internal analysis and external research. Thinking about the outcome, one can define SWOT analysis as the extent to which a firm’s current strategy, strengths and weaknesses are relevant to the business environment that the company is operating in.
SWOT analysis is often presented in a matrix form:
SWOT Analysis Matrix
Strengths and weaknesses are internal aspects and Kotler (1988) suggests that these should cover the four areas of marketing, financial, manufacturing and organisational.
Opportunities and threats look at the main environmental issues such as the economic situation, social changes such as the population getting older and technological developments including the internet.
A SWOT analysis example for a cosmetics manufacturer might include:
Strengths
* Strong, experienced marketing team
* High brand recognition
* Well established consumer testing panel
Weaknesses
* Prices perceived to be too high
* Costs spiralling out of control due to increases from raw material suppliers
* Inconsistent brand identity
Opportunities
* Growth of the internet leading to an increase in the number of consumers willing to buy online
* New emerging teen market
Threats
* New ‘affordable luxury’ entrants to the market threatening to take share from premium brands
* Major competitor planning to integrate vertically and sell direct to the consumer
* Rise in popularity of nail spas leading to decline in demand for nail products
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