SWOT Analysis - Comprehensive Economic Analysis of Business Activities

SWOT Analysis

SWOT analysis (situational analysis) is called so by the first letters of English words: Strengths - strengths, Weaknesses - weaknesses, Opportunities - opportunities, Threats - threats. SWOT analysis is the definition and evaluation of internal and external factors in four components (the structure of the matrix of SWOT analysis is given in Figure 4.2), which affect the firm's position in the competition.

The analysis can be conducted on the organization as a whole on the markets where products are sold (or can be sold), by types of products, as well as for the evaluation of the sales organization, is convenient for justifying new lines of activity and independent projects, a specific situation.

Weaknesses of the enterprise - is its vulnerability compared to its competitors. They can be designated as

Fig. 4.2. Matrix 5 SWOT-analysis

The absence of something important for the functioning of the enterprise or what has not yet been achieved in comparison with other companies and puts the enterprise in an unfavorable position. Examples of weaknesses include lack of funding, too narrow a range of products, low reputation in the market, unsatisfactory level of service, etc.

Market opportunities - are favorable factors, a successfully developing situation that contributes to the successful development and promotion of business. As an example of market opportunities, you can lead to a deterioration in the position of competitors, a sharp increase in demand, the emergence of new technologies for production, an increase in income levels of the population, etc.

Market Threats - events that may adversely affect the enterprise. Examples of market threats: entry of new competitors to the market, tax increases, changes in customer tastes, declining birth rates, etc. For example, for a store selling expensive products, an increase in the incomes of the population may lead to an increase in the number of customers (in this case, it is about opportunities). At the same time, for a discounter store, the same factor can become a threat, as its customers with a rise in wages can move to competitors offering a higher level of service.

Market opportunities and threats are determined for each individual enterprise under study individually. Information on external opportunities and threats is received from various sources: from buyers, suppliers, consultants, from the media, etc. Information on the strong

and weaknesses (elements of internal and external environment) can be obtained from reports, budgets, financial indicators and, of course, based on the results of the analysis of economic activity.

The methodology for conducting NMR analysis:

1) The first step is the determination of the estimated parameters of the enterprise under study (an approximate list of elements is given in Table 4.3).

Table 4.3

A sample list of elements of the internal and external environment for the conduct of the 8UO analysis

Elements of the internal environment

Elements of the external environment

Marketing - evaluation of the quality of goods (services) by consumers, brand awareness, range, price level, advertising effectiveness, company reputation, efficiency of the marketing model used, , qualification of maintenance personnel

Demand Factors - market capacity, growth or contraction rates, demand structure for enterprise products, etc. Competition factors - the number of major competitors, the availability of substitute goods on the market, the height of entry barriers to the market and exit from it, the distribution of market shares between major market participants, etc.

Sales factors - the number of intermediaries, the availability of distribution networks, the terms of supply of materials and components, etc.

Engineering , innovation - the frequency of introduction of new products and services in the enterprise, the degree of their novelty (minor or cardinal changes), the payback period of the funds invested in the development of new products, etc. and product development

Economic factors - the ruble (dollar, euro) rate, inflation level, changes in the income level of the population, tax policy of the state, etc.

Organization - assess the level of qualifications of employees, their interest in the development of the enterprise,

Political and legal factors - the level of political stability in the country, the legal literacy of the population, the level of law-abidingness, the level of corruption of power, and the like.

End of the table. 43

Elements of the internal environment

Elements of the external environment

Production - production facilities, the quality and degree of equipment wear, the quality of the product, the availability of patents and licenses (if necessary), the cost of production, the reliability of supply channels and materials, etc.

Scientific and technical factors - the level of development of science, the extent to which innovations (new products, technologies) are introduced into industrial production, the level of state support for the development of science, etc. .

Socio-demographic factors - the size and structure of the population of the region in which the enterprise operates, the birth rate and mortality rate, the level of employment, etc.

Finance - evaluation of production costs, availability of capital, the speed of its turnover, financial stability of the enterprise, business profitability, etc.

Socio-cultural factors - the traditions and the system of values ​​of society, the established culture of consumption of goods and services, the available stereotypes of people's behavior, etc.

Company Resources

Other

Natural and environmental factors - the climate zone in which the enterprise operates, the state of the environment, the public's attitude to environmental protection, etc.

International factors - the level of stability in the world, the presence of local conflicts, etc.

Other

2) The second step is the completion of the table, where the evaluation parameter is recorded in the first column, and the second and third - the total of the distribution of the parameters to the strengths and weaknesses of the enterprise (Table 4.4).

Table 4.4

Distribution of strengths and weaknesses of the enterprise

Options

Valuation

Strengths

Weaknesses

Organization

High level of qualification of the leading employees of the enterprise

Low interest of ordinary employees in the development of the enterprise

Production

High quality of manufactured goods. Proven and reliable component supplier

High degree of equipment wear (up to 80%) for certain groups. The cost of production is 10% higher than that of the main competitors

The most important (the strongest and the weakest sides) are selected from the whole list and written to the corresponding cells of the SWOT analysis matrix in order of decreasing importance. The optimal number of strengths and weaknesses of activity should contain from five to 10 positions. The methodology for determining market opportunities and threats is similar to the method for determining the strengths and weaknesses of an enterprise (Table 4.5). An evaluation list of parameters is also drawn up, according to which the market situation is characterized. For each parameter, it is determined what is an opportunity and what is a threat for the enterprise with the subsequent entry of the most significant opportunities and threats into the matrix of SWOT analysis.

Table 4.5

The distribution of market threats and opportunities

Options

Valuation

Features

Threats

Competition

The entry barriers to the market have risen: from this year it is necessary to obtain a license to engage in this type of activity

Expected to enter the market of a large foreign competitor

Sales and Distribution

The market has a new retail network, which currently chooses "suppliers

Since this year, our largest wholesale buyer determines the suppliers by the results of the tender

The indicators of strategic positions are given in Table. 4.6.

Table 4.6

Indicators for evaluating the strategic position of the organization for analysis

Elements of the internal environment

Elements of the external environment

Strength

Features

Great experience

Release of new products

High quality products

Implementing new technologies

High reputation of the company

Formation of new needs, including unconscious needs

High sales

Capturing of adjacent segments - studying situations of switching consumers

Leadership in the industry, segment

Identify the target audience

Provision of technology, patents

Provision of additional services

Low cost

Trends in demand growth

Customer Satisfaction

Commonwealth with other companies

Spent Business Processes

Increase advertising

(cohesive team in

Weaknesses

Threats

Few working capital

11Matching substitute products

Weak product image

Emergence of new players on the market

Low reputation of the company

Supplier weakness

Weak distribution

Product Life Cycle on Decay

Weak marketing

Change in demand trends

Low corporate culture

Instability of legislative regulation

Lack of strategy

Emergence of new customs barriers

Narrow product line

Lobbying for competitors

Low employee qualifications

Competitor activity

Internal conflicts

Additional services

Seasonal decline

Economic recession

3) The third step is to compare the strengths and weaknesses of the enterprise with the opportunities and threats of the market. The goal is to get answers to questions related to further business development:

• How can you take advantage of the opportunities that are opening up, using the strengths of the enterprise?

• What are the weak points of an enterprise that can prevent it?

• What are the strengths that can be used to neutralize existing threats?

• What threats, aggravated by the weaknesses of the enterprise, should be most feared?

To compare the capabilities of an enterprise with the market conditions, a matrix is ​​constructed: two fields (strengths and weaknesses) are highlighted on the left and the strengths and weaknesses of the organization identified at the first stage of the analysis are entered; In the upper part of the matrix there are also two fields (possibilities and threats), where all the identified opportunities and threats are introduced (Table 4.7). At the intersection of the sections, four fields are formed:

• & quot; SIV & quot; (strength and capabilities);

• & quot; SIU & quot; (strength and threats);

• & quot; SLV & quot; (weakness and opportunity);

• & quot; SLE & quot; (weakness and threats).

Table 4.7

Matrix 5WOT analysis

Parties

Features:

1. Entering new markets or market segments.

2. Expansion of the production line

Thunderstorm:

The possibility of new competitors

Strengths. A more educated, dynamic, flexible, and younger middle management

SIV & quot; field

Entering new markets - reputation, flexible pricing policy, active role of marketing, packaging. Expansion of production - active role of marketing, educated leadership

The & quot; SIU & quot; The emergence of new competitors - a flexible pricing policy, an active role of marketing, reputation, packaging

End of the table. 4.7

Parties

Features:

1. Entering new markets or market segments.

2. Extension of the production line

Threats:

The possibility of new competitors

Weaknesses:

1. Old equipment, large amounts of waste. 2. Close industrial premises

"Slave" field

Old equipment - expansion of the production line.

Close production facilities - vertical integration

The & quot; SLE & quot; field Competitive pressure - old equipment, lower profit due to high costs

On each of the fields, all possible pair combinations are selected, which should be taken into account when developing the recommended strategies:

• & quot; SIV & quot; - A strategy is being developed to use the strengths of the organization in order to benefit from opportunities;

• & quot; SLV & quot; - due to emerging opportunities, ways of overcoming existing weaknesses are determined;

• & quot; SIU & quot; - the use of force of the organization for eliminating threats is justified;

• & quot; SLE & quot; - proposals are being developed aimed at getting rid of weaknesses, an attempt to prevent the threat that threatens the organization.

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