Reading: SWOT Analysis
Roy Larke
Company SWOT Analysis
The second sub-framework we can use to analyse the Company part of the 5Cs, is a SWOT analysis. SWOT is a very commonly used structure to consider the Strengths, Weaknesses, Opportunities and Threats related to the company. As with the PESTE analysis explained above, for a SWOT analysis, you should come up with a list of points that fit each of the four criteria. As with PESTE, there as some key rules which you should adhere to:
Strengths and weaknesses are internal to the company – they are elements which the company can control:
- Strengths are what the company is capable of doing (e.g. it has experienced executives or it has a widely used brand)
- Weaknesses are what the company cannot do (e.g. it has no experience selling in overseas markets)
Opportunities and threats are external to the company (as with Context elements) and are likely future trends – they are elements which the company cannot control:
- Opportunities are future developments or trends which the company can benefit from (e.g. the abolition of New Zealand’s ban on selling cigarettes will provide sales opportunities for tobacco companies and companies selling cancer treatments)
- Threats are future developments or trends which may cause problems for the company (e.g. the same abolition of the ban on cigarettes may have a long-term effect on sales of substitutes such as sweets)
- The opportunities and threats likely to impact a company in the future will almost certainly overlap with industry level trends outlined in your PESTE analysis earlier.
SWOT Analysis Mistakes
A SWOT analysis is simple to complete, but there are some common mistakes:
The results of a company’s actions are not strengths or weaknesses.
It is the capabilities of the company that are important, not the results of those capabilities. So “high sales” or “popular brands” are not strengths but rather are the results of strengths. Similarly, “low quality” or “high prices/expensive” are not weaknesses. They may be the result of weaknesses, but they are not weaknesses in themselves. (Although, remember that “high prices” are not usually a weakness even if, as a customer, you don’t like it.)
You should write down the strengths and weaknesses that create the company’s results, but try to avoid writing the results alone.
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When writing your SWOT elements, you should explain each one and use citations as proof of research wherever possible.
Opportunities and threats are outside the company’s control and future orientated
Opportunities and threats occur due to changes, trends and developments that are external to the company. So, for example, “competition” is not a threat (not an opportunity), but what competing companies do might be a threat (or opportunity). Similarly, Covid is neither a threat nor an opportunity because it is in past – opportunities and threats only arise from events that are happening now or will happen in the future.
You should write down the opportunities and threats, but make sure they are external to the company and future-orientated:
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When writing your SWOT elements, you should explain each one and use citations as proof of research wherever possible.
Simple SWOT Analysis Grid
Bearing in mind the rules outlined above, a SWOT analysis can be completed in a simple 4 x 4 grid.
SWOT Example
You will see SWOT analyses used in many types of business documents. You could potentially create a SWOT analysis for your own career and update it over time.
Imagine the case of a small, start-up company based in Hamilton, New Zealand. The company consists of just two people, who set up the company, and it creates bespoke iPhone (Apple iOS) apps for businesses. What might be a simple SWOT analysis for that company?
STRENGTHS
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WEAKNESSES:
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OPPORTUNITIES:
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THREATS:
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5Cs Company Analysis
When analysing companies, consider the mission and the SWOT analysis.
All companies should have a Mission Statement which briefly and clearly states why the company exists and which defines the future direction of the company that should be woven into all business planning. It defines the company’s basic aims for all stakeholders.
- Mission statements should be short and clear.
- A good mission statement should clearly demonstrate how the company hopes to provide value to its customers.
A SWOT analysis is a simple sub-framework used to create a snapshot of a company’s internal capabilities and what external trends are likely to impact the company in the near future. It should provide an analysis of the company’s internal strengths and weaknesses and the external opportunities and threats. The opportunities and threats are likely to mirror the PESTE analysis done earlier.
- Strengths and weaknesses are what the company can and cannot do at the current time – its capabilities. They are not the results of those capabilities (e.g. high profits).
- Opportunities and strengths are the external trends or actions by others (e.g. competitors) which may impact the company in the future.
