An essential part of market research is understanding your current market position. One effective means of assessing this position is to conduct a SWOT analysis.
RECIPE FOR SUCCESS INGREDIENT CARDS
Ingredient 2: Marketing
Question:
What is meant by a SWOT Analysis?
Answer:
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats.
The purpose of conducting a SWOT analysis of your business is to determine your business venture’s strengths and weaknesses and identify and evaluate opportunities and threats in the marketplace.
Strengths and weaknesses are what we call ‘internal factors’ and these as the owner of the business have control over, whereas opportunities and threats are ‘external factors’ and therefore you have no control over.
Internal factors
Strengths
Every business will have particular strengths. These could range from existing market share, product quality, excellent service, low operating costs, convenient location to management and staff skills.
Weaknesses
It will be an extremely lucky operator whose business has no weaknesses. These could range from a poor market position, insufficient investment capital, poor product range, a decline in the main customer base, a poor location and lack of appropriately skilled staff.
External Factors
You will be affected in some way by what goes on outside your business. The important thing about the external factors is that they are not controllable factors there is nothing you can do to stop these changes. You have to recognise the changes and how they can improve or damage your business.
The PESTL analysis encompasses the factors outside of your business that influence the survival of the business eg political, economic, sociocultural, technological and legal forces. For example, a business can lobby the government to reduce the tax on wine but they cannot directly control the rate set by the government. Also, failure to plan based on emerging trends can lead to business closure.
Opportunities
After analysing the PESTL factors to your current situation, can you see any future opportunities for your product, service and/or idea?
Market trends, such as the growth in weekend breaks and the increase in the number of retirees with disposable income, provide the food business operator with potential new markets.
Threats
Food businesses may be affected by the prevailing economic climate, government legislation or a decline in a particular market. Threats may also occur to a food business by the emergence of increased local competition and the loss of skilled staff.
Want to know more about what is meant by a SWOT Analysis?
Download a copy of
How to Discover Your Market eGuide
for ONLY $19.95
