SWOT analysis
SWOT is an analysis method, which is used to determine the strength, weakness, opportunity and threat of the enterprise itself, thus organically combining the company's strategy with the company's internal resources and external environment. Therefore, it is of great significance to clearly determine the advantages and disadvantages of the company's resources and understand the opportunities and challenges faced by the company for formulating the company's future development strategy.
Steps of SWOT analysis:
1. List the strengths and weaknesses, possible opportunities and threats of the enterprise.
2. Advantages, disadvantages, opportunities and threats are combined to form SO, ST, WO and WT strategies.
3. identify and select the STrategies of SO, st, WO and WT, and determine the specific strategies and strategies that enterprises should adopt at present.
SWOT matrix:
advantages and disadvantages
opportunity so strategy (growth strategy) wo strategy (reversal strategy)
threat st strategy (diversified business strategy) wt strategy (defensive strategy)
competitive advantage (s) refers to an enterprise's ability to surpass its competitors, or something unique to a company that can improve its competitiveness. For example, when two enterprises are in the same market or they both have the ability to provide products and services to the same customer group, if one of them has a higher profit rate or profit potential, then we think that this enterprise has a competitive advantage over the other enterprise.
Competitive advantages can be as follows:
● Technical skills advantages: unique production technology, low-cost production methods, leading innovation ability, strong technical strength, perfect quality control system, rich marketing experience, excellent customer service, excellent large-scale purchasing skills
● Tangible assets advantages: advanced production lines, modern workshops and equipment, rich natural resources storage, Attractive real estate location, sufficient funds and complete information
● Intangible assets advantages: excellent brand image, good commercial credit and aggressive corporate culture
● Human resources advantages: staff with expertise in key areas, motivated staff, strong organizational learning ability and rich experience
● Organizational system advantages: high-quality control system, perfect information management system, Strong financing ability
● Competitive advantage: short product development cycle, strong dealer network, good partnership with suppliers, sensitive response to changes in market environment, leading position of market share
Competitive disadvantage (W) refers to something that a company lacks or does badly, or refers to some conditions that will put the company at a disadvantage.
The factors that may lead to internal weakness are:
● Lack of competitive skills and technologies
● Lack of competitive tangible assets, intangible assets, human resources and organizational assets
● Losing competitiveness in key areas
Potential opportunities faced by the company (o):
Market opportunities are a major factor affecting the company's strategy. Company managers should confirm every opportunity, evaluate the growth and profit prospects of every opportunity, and select the best opportunities that can match the company's financial and organizational resources and make the company have the greatest potential for competitive advantage.
The potential development opportunities may be:
● The expansion trend of customer base or product segmentation market
● The transfer of skills and technology to new products and new businesses to serve a larger customer base
● Forward or backward integration
● The market entry barriers are reduced
● The ability to acquire and merge competitors
● The market demand is growing strongly and can expand rapidly
. Opportunities to expand market share
External threats that endanger the company (T):
In the external environment of the company, there are always some factors that threaten the company's profitability and market position. Company managers should promptly identify threats that endanger the company's future interests, make evaluations and take corresponding strategic actions to offset or mitigate their impacts.
The external threats of the company may be:
● The emergence of powerful new competitors who will enter the market
● Substitutes seize the company's sales
● The market growth rate of major products declines
● Adverse changes in exchange rate and foreign trade policies
● Demographic characteristics, Adverse changes in social consumption patterns
● The negotiation ability of customers or suppliers is improved
● The market demand is reduced
● It is vulnerable to the impact of economic depression and business cycle
Because of the integrity of enterprises and the extensive sources of competitive advantages, when analyzing advantages and disadvantages, we must make a detailed comparison between enterprises and competitors from every link of the whole value chain. Such as whether the product is novel, whether the manufacturing process is complex, whether the sales channels are smooth, and whether the price is competitive.
if an enterprise's advantages in one aspect or several aspects are the key success factors that enterprises in this industry should have, then its comprehensive competitive advantage may be stronger. It should be pointed out that whether an enterprise and its products have competitive advantages can only be measured from the perspective of existing potential users, not from the perspective of enterprises.
in the process of maintaining competitive advantage, enterprises must deeply understand their own resources and capabilities and take appropriate measures. Because once an enterprise has a competitive advantage in a certain aspect, it is bound to attract the attention of competitors. Generally speaking, after a period of hard work, enterprises have established a certain competitive advantage; Then it is in the situation of maintaining this competitive advantage, and competitors begin to respond gradually; Then, if competitors directly attack the advantages of enterprises or adopt other more powerful strategies, this advantage will be weakened. Therefore, enterprises should ensure the lasting competitive advantage of their resources.
The lasting competitive advantage of resources is influenced by two factors: the competitive value of enterprise resources and the duration of competitive advantage.
To evaluate the competitive value of enterprise resources, four tests must be carried out:
1. Is this resource easy to be copied? The greater the cost and difficulty of imitating a resource, the greater its potential competitive value.
2. how long can this resource last? The longer a resource lasts, the greater its value.
3. Can this resource really maintain its superior value in the competition? In competition, a resource should be able to create a competitive advantage for the company.
4. Will this resource be offset by other resources or capabilities of competitors?
There are three main factors that affect the duration of an enterprise's competitive advantage:
(1) How long will it take to establish this advantage?
(2) what are the advantages?
(3) How long does it take for competitors to make a strong response?
if the enterprise analyzes these three factors clearly, it can make clear its position in establishing and maintaining competitive advantage.
Of course, SWOT analysis is not just a list of four items. The most important thing is to evaluate the company's strengths, weaknesses, opportunities and threats, and finally draw the following conclusions: (1) How to make the best use of its own resources under the company's existing internal and external environment; (2) How to establish the company's future resources.