You can be a seasoned company with an established business plan, or you can just be starting out and still in the process of creating your website. Either way, identifying and understanding your competitors is a crucial component of any business strategy.
If you’re just starting your business, begin by performing market research on your competitors. Then, after you’ve been around for long enough to have a few successes and failures of your own, you’re going to want to take your competitor research efforts up a notch. This is where a SWOT analysis comes into play.
A SWOT analysis is useful for making improvements and keeping your marketing goals on the right track.
WHAT IS A SWOT ANALYSIS?
A SWOT analysis is a strategy used by businesses for measuring and evaluating their overall performance, and that of competitors, in an objective manner.
SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. All of these components are reviewed and assessed for each organization, including both their competitors and themselves.
The first two parameters, STRENGTHS and WEAKNESSES, involve internal factors such as your reputation, team, location and intellectual property. These are not necessarily permanent. It’s within an organisation's own control to keep or change them. So, assuming you want to make a positive change, you’re going to need to put forth the effort and time to see that happen.
OPPORTUNITIES and THREATS are related to external influences such as competitors, market trends, and prices of materials. Unfortunately these are not within an organisation’s control, and therefore you are not able to change them. However, an organisation should learn how to work with these factors to their advantage, and also adapt their strategies accordingly in order to compete with others in the field.
A SWOT analysis is a lengthy process used particularly for making big decisions, such as if a venture is looking to grow into a new field or rebrand itself. It can help businesses draw conclusions by enabling them to see the bigger picture clearly, and then formulate a clever plan accordingly.
HOW TO DO A SWOT ANALYSIS
Before you get started, assemble your partners for one of the most effective meetings you’ll host yet. Conduct a brainstorming session in order to get the best results from this activity. Hearing multiple opinions will enrich the discussion and the insights you'll gather.
1. ANALYSE STRENGTHS
Strengths are the big things that a particular company is doing well, which gives them a competitive advantage in their industry and benefits their customers. For your own business, identifying your strengths can help you leverage these by making them stronger.
What is this company’s competitive advantages in the industry?
What features do they offer that are unique and valuable?
What processes are they excelling in?
What draws customers in?
Are they a market leader? If so, how did they get here?
Is the organization expanding and hiring new employees?
What strong assets does the company have, i.e., intellectual property, stakeholders, buildings, etc.?
2. ANALYSE WEAKNESSES
These are the aspects of an organisation that could use some improvement. Here it’s important to be honest with yourself, especially for your own business. It might be a bit uncomfortable at first, but if you don’t draw attention to a weakness, there won’t be room for you to improve it.
What could this company do better?
What processes could be improved?
Is this company lacking an established reputation?
What is this company struggling with compared to others in the industry?
What do customers often complain about?
Is the organisation losing employees?
What assets is the company lacking, from patents to funding to employee positions and more?
3. ANALYSE OPPORTUNITIES
Owning a business is all about seizing the moment. Opportunities are probably the same for yourself and your competition, if not very similar. Recognising them is the first step, and taking advantage of them before your competition does is the second. Likewise, you should do so at the determined time that makes the most sense for your business, depending on what stage of development you’re in.
What is the latest trend or social media influencers to collaborate with?
What are some upcoming events to take advantage of, such as a trade show, holiday or recent news release?
Is there a loophole in your market, such as a cheaper supplier or opportunity to eliminate the middleman?
Is there an opportunity to expand to a larger building or better location?
Could the business be sold soon? Or on the other hand, could this business buy smaller, local businesses to expand?
4. ANALYSE THREATS
These are external factors which can affect a business in a negative way. And just like opportunities, threats are often similar for both you and your competitors. However, some threats can be individual to an organisation, such as a particularly bad PR scandal from an unhappy customer. It’s extremely important to learn how to mitigate these, and prevent them from turning into larger issues in the future.
Is a customer expressly unhappy with a particular product or service?
Is the market fluctuating, i.e., are prices rising, are consumers purchasing alternatives, etc.?
Are their new government regulations to watch out for?
Who are some of the new competitors entering the market and what is it that they are doing better?
Will new technology become available in the near future that could make this business’s products or services obsolete?
Are consumers no longer expressing interest in these services?
Now that you’ve laid out the most important components affecting the success of your organisation and your competition, you have the tools you need to develop a strategy. This strategy will guide you to make improvements in your company, and compete on a level playground with your competition.
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