How to make a SWOT analysis of an enterprise. SWOT and PEST analysis

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

For most, the concepts of "SWOT" and "PEST-analysis" seem to be something very complicated, from the category of higher economics. But in fact, absolutely anyone interested can conduct a little research. All it takes is time and a little bit of your attention. SWOT analysis is especially relevant for business owners who, using this simple marketing tool, can protect themselves from many risks. You can read more about what a SWOT analysis of an enterprise is and how to conduct it in your company in this article.

What is SWOT analysis

SWOT-analysis of a trade enterprise is a method of assessing the current situation and future business prospects. The abbreviation SWOT stands for strength - strengths, weaknesses - vulnerabilities, opportunities - opportunities and threats - threats. It turns out that such an analysis is carried out for a more detailed study of all four parameters incurrent and future time. Often, executives have a vague idea of what development their company can expect. For newcomers to the business field, SWOT analysis helps to see the real picture of what is happening, without any embellishment. When conducting research, four main questions are usually asked:

• What can a company do?
• What would you like to do?
• What can really be done from the plan?
• What do consumers and partners expect?

A well-conducted SWOT analysis of an enterprise and LLC allows you to sort out what was inaccessible at first glance and structure knowledge. It helps to see the strengths and weaknesses of the enterprise. For example, a retail store owner thought he was good at selling tomatoes and was about to open a new outlet to sell fresh vegetables. But the SWOT analysis showed that the most popular product in his shop was candy. If a businessman had invested all his money in the purchase and sale of vegetables, then most likely he would have gone bankrupt. This is how a simple example can show the effectiveness of the SWOT method in action. In addition, a competent assessment allows you to see possible risks for the company and prevent them in time. Where there are risks, there are opportunities. Often employees do not even realize in what unexpected places they can benefit. This happens due to the fact that when doing the same work day after day, the leaders “blur” their eyes. But the SWOT analysis helps to look at the matter from a different point of view.

PEST analysis as a marketing tool

PEST- or STEP analysis is another powerful tool in business and marketing. It is used to study political - political, economic - economic, social - social and technological - technological factors of the environment. That is, when compiling a PEST analysis, you will have to apply your knowledge not to the company that interests you, but to indirect factors. At first glance, they may not affect the work of the business in any way, but play a significant role in the further development of the company. The results of the analysis are formalized using a matrix in which the main environmental factors are indicated. Where can PEST analysis be used? First of all, at those enterprises that are consumer-oriented and work with sales. With this marketing tool, you can predict the fall or development of demand and prevent many risks. PEST-analysis is also used in government structures, in which it is important to correctly form a budget based on the needs of society. The results of the PEST analysis can be used to determine the list of threats and opportunities of the SWOT analysis.

5 reasons to deal with this if you have your own business

The ability to use marketing tools is an integral part of the financial and economic literacy of a manager. Knowing how and why the SWOT and PEST analysis of an enterprise is used, one can avoid many of the difficulties associated with insufficient planning and organization of the business. Why else would you use these tools?

1. Designing an effective business strategy thathelp the company grow. SWOT gives a complete picture of the strengths and weaknesses, based on which it is possible to draw a conclusion about the directions in which it is worth developing.
2. SWOT analysis can help identify the causes of effective or inefficient business performance and correct them in the future.
3. Analysis of environmental factors helps to distinguish competitors and strengthen the company's position in the market.
4. SWOT can prevent business failure: together with PEST analysis, it identifies opportunities and threats that can be considered in developing a strategy.
5. SWOT-analysis helps to find the very zest that many startups lack. In today's business world, there is fierce competition, and the same companies multiply like mushrooms after rain. But with marketing, you can make a difference by sorting things out and identifying what specifically sets you apart from your competitors. By focusing on this, you can significantly increase the company's sales.

SWOT-analysis exists of several types:

• Quick analysis is usually used in a limited time or for personal assessment. This type is mainly used to identify strengths and develop a marketing strategy focusing on them.
• Summary SWOT-analysis allows you to visually show the existing picture of the enterprise and future development opportunities. Summary analysis is usually used to achieve strategic goals. It can be used to quantify the factorsidentified by other methods (for example, PEST analysis).
• Mixed type is a combination of the two previous types of SWOT analysis. The cross matrix built using this method allows you to perform a deep analysis of the factors and reveal the full picture of events.

How to do your own SWOT analysis

When drawing up a marketing plan, many are faced with inconsistencies and inconsistencies in the course of work. For example, a company does not have enough budget for an advertising campaign. The management decides to cut it down and abandon the promotion. But as a result, sales fall even more, and the company becomes bankrupt. Yes, this is an exaggerated case, but nevertheless similar scenarios take place in real life. If the director of this company had made a SWOT analysis in time, he would have revised this strategy and the company would have remained afloat. In order to make a SWOT analysis, it is not necessary to seek the help of specialists. Absolutely anyone can do this, and a few questions will help in this:

• What are your company's strengths and how can you use them to increase your competitiveness?
• What are the weaknesses of your business? Do they cause a decrease in competitiveness and how can they be leveled?
• Which aspects should I focus on first?
• What measures should be taken to protect your company from negative factors in the future? What actions will help mitigate the risks?
• What external political, economic, climatic, social factorshave an impact on your business? Does this influence have a negative or positive connotation?
• How can external factors be used to the benefit of the company?

The SWOT analysis matrix on the example of an enterprise should be a table in which all factors are listed in the appropriate columns. In the classic version, in four tables, you indicate the strengths and weaknesses of the business, then the opportunities and threats that may await you.

How to conduct a SWOT analysis

How to make a SWOT analysis of an enterprise? For self-analysis, you will need to perform several sequential steps:

1. Preparation. In this part, you need to conduct market research, product characteristics and customer reviews. Then you should analyze competitors and their advantages. The strengths and weaknesses of the company must be considered precisely in the light of rivalry with other firms. So, your advantages can become a significant help in a further marketing strategy, and knowing your weaknesses will allow you to eliminate or reduce them in time.
2. The next step is to identify all the opportunities and threats that may lie in wait for you in the future. To do this, in the appropriate columns, you need to write out all the factors that in one way or another affect the company's sales.
3. At this step, all collected information needs to be structured. The SWOT analysis matrix on the example of an enterprise should be a table with four sections and factors in the corresponding columns, inwhich records data in order of importance.
4. Finally, on the basis of the study, conclusions can be drawn. To do this, you need to describe how you can improve the competitiveness of the business, based on the strengths of the product. Vulnerable qualities should be tried to be made strong, and, if this is not possible, undesirable consequences should be minimized. To protect against the threat, it is also worth developing a number of strategies that will help reduce risks for the company as soon as possible.

Main factors for SWOT analysis

There is a certain set of factors that are analyzed during the SWOT method:

• Product properties, the ability to satisfy certain customer requests.
• Fame of the brand of the product, how it is heard by people.
• Consumer evaluation of the product, which often differs from the reality.
• The price of the product and the breadth of the range, availability on the market.
• Availability of advertising campaigns and established promotion strategies.
• Efficiency of technologies used in business.
• Opportunity to enter new markets.
• Attracting new customers, winning the attention of other target groups.
• Opportunity to reduce production costs thanks to modern technology (without sacrificing quality).
• Economic environment, financial crises, laws and taxation that exist in the field of work of the company.
• Possibility to expand the rangeproducts.

When is it worth doing a SWOT analysis of a trading company? It will come in handy if you need a fast and efficient method to get a picture of the current state of the business and to modulate the strategy. It is quite accurate, but at the same time reflects only the roughest information. You can compare it with a rear-view mirror, which shows only a fragment of the whole picture. Also, SWOT analysis can be used along with other methods that can complement and enrich it.

SWOT analysis example

Many students write their final qualification work on the topic "SWOT-analysis of the enterprise". WRC helps to understand and understand this marketing tool in detail. But since we do not need to receive a diploma, we can limit ourselves to simple examples, on the basis of which it is easy to understand the logic of the SWOT method. SWOT-analysis of the enterprise should be based on exclusively truthful and fresh knowledge. The SWOT matrix can provide significant assistance in drawing up a marketing strategy. By carefully looking at the intersection of graphs, you can get ready-made tactical actions aimed at all areas of the company.

• Columns "S" and "O" are ready-made actions that need to be added to the mandatory list for the further development of the company. After all, they are already working, which means they can be successfully applied in the future.
• The intersection of columns "W" and "O" will help develop a defense strategy. To do this, you need to pay special attention to weaknesses and think about how opportunities canchange the status quo for the better.
• The "S" and "T" can help avoid some of the threats by building on the firm's strengths. For example, you know that your product has a wide range and high quality. But copies of competitors at a lower price may appear on the shelves. After conducting a SWOT analysis, it can be assumed that this problem will disappear if you make an additional line that is more economical and affordable for the buyer. Looking through each of the threats, you need to consider strengths as an opportunity to protect yourself from negative factors and minimize risks.
• Going to the bottom of the table "W" - "T", it is worth analyzing which of the weaknesses directly or indirectly affect the growth of threats and which of them should be neutralized first.

SWOT analysis of an agricultural company

An example of how to do a SWOT analysis of an enterprise can be found in every area of the economy. Let's analyze an agricultural enterprise that has sufficient reputation in the market and has good competitiveness, but profits and technology suffer. It should be noted that when compiling a SWOT analysis of an agricultural enterprise (and any other), you should not make too long lists. This will only lead to ambiguity and vagueness and will not improve the situation in any way. In the case of a dairy farm, the SWOT analysis would look like this:

1. External environment (opportunities):

• International contracts and the prospect of selling goods forborder.
• Enter new product markets.
• Increase in consumer demand for products due to the fashion for he althy food.

2. External environment (threats):

• Increasing number of competitors.
• High level of taxation in the country.
• Economic crisis and declining purchasing power.

3. Indoor environment (strengths):

• Great production capability.
• Long work experience, skills of company leaders.

4. Internal environment (weaknesses):

• Customer distrust due to an unformed personal brand.
• Lack of effective sales strategies.

5. Indoor environment (opportunities):

• Introduction of new technologies into production, cost reduction.
• In-house processing of products.
• Establishing contact with new suppliers and contractors.

Internal environment (threats):

• Frequent frame changes.
• Short product shelf life.
• No ads.

Example of construction firm analysis

On the example of a construction company, SWOT analysis also clearly shows the effectiveness and relevance of its timely implementation. Take, for example, StroyDom, a company registered in Moscow. In the SWOT analysis matrix, you need to enter the main strengths and weaknesses of the company, as well as the threats and opportunities that the external environment puts forward.

1. The strengths of the enterprise can be considered a goodrecognition and connections in the city government. Thanks to these factors, there are a lot of positive reviews about StroyDom on the Internet, and the scheme for obtaining permission to build a house has been worked out, i.e. does not slow down the delivery of the object.
2. Weaknesses include savings on materials and systematic non-payment of wages to employees. In the future, this may adversely affect the company's reputation.
3. External factors provide a range of opportunities that can play into the hands of the construction business. The economy class sector in suburban construction is actively developing, and there are few competitors. In addition, the company can enter the market in related areas.
4. Threats of the external environment consist in foreign exchange fluctuations, which can increase the cost of objects. The economic crisis reduces the purchasing power of the population, which is reflected in demand.

What conclusions can be drawn from this table? You can outline an approximate strategy for the development of the company. Income can be increased by acquiring a land plot, on which in the future the company will be able to build up a sector with private economy class houses. Since the organization has a shortage of funds, the manager can take out a loan to buy land. It is likely to be approved, as the company has a good reputation and already has real estate that can be mortgaged. To remain highly competitive, you should abandon the savings on materials and look for other methods to reduce costs. Thanks to such a simple analysis, this construction company will surelywill be able to avoid many difficulties and mistakes.

Where else can these methods come in handy

SWOT-analysis on the example of a trade enterprise can clearly demonstrate the effectiveness of this marketing method. But where else can it take place? SWOT analysis is used for personality analysis. Thanks to this method, we can look at ourselves from the outside, discover talents and be more effective. To build a matrix of SWOT analysis of your personality, it is enough to answer the same questions that company executives ask themselves, but you need to do this as impartially and objectively as possible.