In the modern world, a person constantly makes decisions in any situations. Before making a choice, you must carefully weigh the pros and cons. In business, situation analysis is even more important because the success of the company is at stake. That is why, even at the stage of developing your business plan, it is necessary to conduct a so-called SWOT analysis, which will open up new facts about your company and its capabilities. So let's go!
SWOT analysis: what is it
This method of analysis is aimed at an initial assessment of the current situation in order to identify the company's strengths and weaknesses, as well as threats to it from the outside and emerging opportunities.
The abbreviation SWOT stands for: S - Strengths, W - Weaknesses, O - Opportunities, T - Threats. The first two concepts of SWOT analysis mean the strengths and weaknesses, respectively. The third is company capabilities, and the fourth is threats.
Usually swot analysis is executed in the form of a square matrix or a table consisting of two columns and two rows.
In what cases should it be carried out?
Swot analysis should be done if:
- it is necessary to identify the effectiveness of the future business, product;
- need to analyze an existing business;
- it is necessary to assess the investment benefits and risks;
- required to review the policies and mission of your organization;
- you need to find a way out when a large competitor appears.
In these and other situations, the analysis will help determine how competitive a company or product is, what weaknesses should be addressed in order to eradicate them, what risks exist and how to block them with new opportunities.
What is needed for analysis
Firstly, you must a priori be fluent in all information about the company (from the name to the sale to the customer). SWOT analysis does not like vagueness and subjectivity.
Secondly, there is no need to spare yourself and your company in terms of criticism, you should not mention what is not. Otherwise, the result is an invalid picture. If the initiator of the research doubts his knowledge in any field, then staff is allowed to be involved. After all, he, like no one else, knows the organization from the inside.
Thirdly, the study will take some time. The terms are completely different, but it’s better not to rush and fill each quadrant of the matrix with feeling, plainly, with arrangement.
Types of analysis
An express analysis allows you to find out what advantages, together with opportunities, will prevent threats and what disadvantages will prevent this.
Consolidated: there is a use of numerical indicators of the organization. This view also contributes to instant strategy development. The downside is the complexity and time-consuming.
Mixed. As the name implies, it contains elements of the first two types. He is deeper. At the very beginning, a strategic analysis is carried out.
Sections of the SWOT analysis matrix and their characteristics
Now we dwell in more detail on the quadrants of the matrix and consider the basics of SWOT analysis.
- Benefits. When we selected an object of study, for example, whether to introduce a new type of product to the market, we need to collect all the advantages of the company (enhanced advertising, long life cycle, UTP (unique selling proposition), high-quality equipment, qualified personnel, location, low cost price, cooperation with intermediaries, etc.).
- Disadvantages. This should include the remaining aspects that were not included in the first group. That is, if you did not indicate in your merits information about the high quality of the product, then most likely this is a minus for the company. You will have to work on this in the future. Other examples: the high cost of delivery to the shelves, the presence of many intermediaries in the distribution channels, low return on advertising campaigns. It is in this column that you should not embellish and wave your hand at the weaknesses of the company. Every little thing is important, as, in principle, in the whole analysis.
- Capabilities. In fact, these are promising areas of enterprise development. Here again, compare yourself with competitors. Why can they offer the client installments, for example, and you do not. Here is the opportunity for development. Other examples: arrange delivery to doors, carry out an online order, open another outlet and more. A major role is played by the technical equipment of the company. What do you have that the competitor does not have and what can benefit you in the future? It all depends on the specifics of your company.
- Threats. Risks should always be considered in great detail and to the smallest detail. It is important to know whether a new competitor is going to the market, whether the current ones also want to introduce a new product. Perhaps they have advantages for luring your specialists. There is always a risk, but as they say, whoever is warned is armed. Therefore, you need to know exactly what to do if your competitor decides to make such a product.
Example: a hotel restaurant
Let us turn to the practical application of the SWOT analysis of a restaurant, an example of which we will now analyze.
Suppose, in the city of N. with a population of 400 thousand people, the Welcome Hotel was opened in 2014. After 4 years, the founders decided to open a restaurant on the ground floor of the hotel. The period of business planning of the restaurant at the hotel began. A financial document begins with market research and analysis. After getting to know the competitors (separate restaurants and analogues at hotels) and their features, our owners came to the cherished moment - a SWOT analysis of the hotel restaurant. We will help them in this difficult matter and we will analyze all the nuances in grains.
Advantages and disadvantages
Let's start the SWOT analysis of the restaurant as it should - with strengths. The advantages of the institution in this case will be:
- high level of demand for hotel services;
- favorable location of the object - the city center and near the station, near an amusement park and a pond with birds;
- hotel prices are not higher than average market prices;
- high market share due to the lack of similar facilities with restaurants in this area of the city;
- good traffic intersection;
- active advertising campaign and high return;
- convenient mode of operation of the future restaurant for customers;
- discounts and promotions for guests and regular customers.
This is a list of advantages over other restaurants at hotels in the city. They are the highlight.
Next, we pay attention to the weaknesses of the hotel and the future restaurant:
- salaries of restaurant employees are lower than in separate establishments;
- inconvenient work schedule for restaurant staff (from early morning to late evening);
- menu restrictions due to the lack of some equipment;
- restaurant suspense;
- the prices in the restaurant at the hotel are higher than in its isolated analogues.
Cons can soon turn into pluses if you competently work on them. You should not immediately rush to the worst to correct deficiencies, it is enough to choose 1-3 weighty points to start, fix them, and then the rest.
Opportunities and threats
Now let's think about the opportunities that the hotel and restaurant owners have for improving their business and reaching a new level:
- establish a convenient settlement system (all forms of payments);
- make it possible for guests to order food from the restaurant to the room;
- privileges for meals of hotel staff;
- expanding the menu when buying the necessary equipment.
It will turn out to realize these opportunities if you try. And they will become the benefits of a restaurant and hotel. Of course, you won’t be able to do everything all at once, if the bank box does not have the required large enough amount. Here again, you need to select the most affordable items at cost and importance and optimize them.
In the future, the company will have “trump cards” in stock to maintain competitiveness, as manufacturers of well-known brands of smartphones do. After all, they did not immediately release a version of the phone with all the novelties, but do it gradually to maintain intrigue and keep the consumer audience.
Concluding the SWOT analysis of the restaurant, let's talk about logical threats to a new direction in business. These will be:
- the appearance of a competitive restaurant near the facility;
- decrease in demand for hotel services;
- staff turnover due to low wages;
- lack of demand due to the scarce menu and high prices;
- changes in legislation;
- fluctuations in the price of fuel or utilities;
- increase in purchase prices for semi-finished products and products for the restaurant.
Assuming risks, our heroes will know how to act in the event of a particular situation. For example, in the “Risk Assessment” section of the business plan, owners will calculate a breakeven point, which will allow them to survive temporary price fluctuations, without losing a minus.
This completes the SWOT analysis of the restaurant, it remains only to take measures to further develop the company.
