SWOT Analysis for competitive advantage.

Calendar October 12, 2009 | Posted by lmfoong

 

 

One commonly used Strategic Planning tools is none other than the popular SWOT Analysis. Although it is a simple tools normally used along with a template, its outcome depends on your experience. There are many application of the template. You may use it to analyse your business perofrmance i.e. data pertaining to the business in general in the four SWOT factors namely:Strengths; Weaknesses; Opportunities and Threats, doing it on blogging, open up a restaurant and many others.

When performing SWOT Analysis over and over again, you may find that it could not give you new ideas or take your to a higher level of success. One of the obvious reasons is that your data collection is very much limited to within your own operation or business and four SWOT factors. As such, the SWOT itself may not lead you to be the strongest among competitors. You may be wondering why the SWOT Analysis did not provide you the necessary competitive advantage.

One of the obvious reasons for this happened is merely the strategies you have developed may be survival in nature i.e. to improve to an acceptable level of performance. In order to have competitive advantage, your improvement must be competitive in nature. To achieve this, your SWOT Analysis should focus on analysing competitive elements in the business environment.

In order to be competitive, we need to stay focus and do well with it. The question is what should you focus on?

A World Class Business Model : Baldrige Criteria

Baldrige Criteria (year 2001) clearly spelled out the six factors to be analysed in the Strategic Planning Management Category 2.1. The six factors are listed below:-

1. Customer / market needs
2. competitive environment & capabilities
3. Risk e.g. financial / societal
4. HR Capabilities
5. Operational capabilities – R&D etc
6. Suppliers / partners capabilities

Based on the six competitive factors, you can perform a SWOT Analysis to each of these six factors. The focus here is on competitive leadership, which usually depends upon revenue growth as well as operational effectiveness.

This requires a view of the future that includes not only the markets or segments in which the organisation competes but also how it competes. “How it competes” presents many options and requires understanding of the organisation’s and competitors’ strengths and weaknesses. Although no specific time horizon is included, the thrust here is sustained competitive leadership.

The data required to be filled in the SWOT analysis template calls for information in the planning process (e.g. Business Plan & Budget) and for information on all the key indications that influences, risks, challenges and other requirements that might affect the organisation’s future opportunities and directions – taking as long a view as possible. Remember, it should be fact-base and supported with quantifiable historical data long far enough to see trend. Adhoc events may not be useful for this purpose.

The main purpose is to provide a thorough and realistic context for the development of a customer- and market-focused strategy to guide on-going decision-making, resource allocation, and overall management.

An important part of strategic planning is projecting the competitive environment. The purposes of such projections are to detect and reduce competitive threats, to shorten reaction time and to identify opportunities.

With this in mind, your SWOT Analysis will be a fairly comprehensive and challenging. Hence, Strategies or key initiatives derived from it will be aimed at long term competitive advantage

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