What is a SWOT Analysis?
A SWOT analysis is a strategic planning technique to help you achieve your business and personal goals. By considering your internal Strengths and Weaknesses and external Opportunities and Threats (SWOT) it forces you to be specific about your objectives and to identify the key factors that will hinder or support your success.
I think it’s a great tool for thinking things through, making decisions and most importantly taking action. There are no guarantees with any road we close to walk down, but using the SWOT analysis can help us to tread more carefully and keep our eyes wide open as we go.
Let’s take a look at each of the elements and how retailers and publishers might use them. I’ll also talk about how we used the tool to decide whether or not to take on distributing BambooCup.
Your Objective
It’s important to get clear on what your goal is so that you use the SWOT analysis to examine the way forward with that objective. You might alter your objective at the end and redo the analysis, but it needs a focus to work. Most businesses, whether retailers or publishers, will probably be looking at how they can grow their sales. To decide on distributing BambooCup or not, we started by looking at our strengths.
Strengths
What do you currently do well in relation to the objective that you have in mind?
A retailer might list their prime location as a strength or even the fact that they own their own premises. The power of their customer relationships and the knowledge that they have of their customers are also strengths as is their business experience and a well trained team.
For a Publisher their strengths might an innovative design team or that they are financially stable and profitable. They could have a recognisable brand or a strong and active database.
With BambooCup I knew that we were strong on marketing, PR and Social Media. Blue Eyed Sun is a familiar name with many retailers. We have a great operational team and our own warehouse space to accommodate the project. Personally I also have a passion for taking care of the environment - It’s one of the main reasons I don’t eat meat for example (not a weakness btw ;).
Weaknesses
Where do you need to improve in order to reach your goal and is this possible?
A retailer may list ‘buying power’ as a weakness. It simply might not be possible to compete with supermarkets on price for example. Poor window displays on the other hand is a weakness that they can do something about. Other weaknesses might be include inadequate staff training, poor up-selling and bad stock control of best sellers.
A publisher might need to improve their business structure and be more demanding of suppliers and retailers. Their designs might not be strong enough or they might simply not have enough customers.
With BambooCup, we were not familiar with selling gifts. We didn’t know what we didn’t know about the category. The profit margins are smaller than cards and the business model is slightly different. The new products could put a strain on our cash flow. We weren’t known for gift products.
Opportunities
Where could this take us and how could it improve things?
A retailer might consider the internet and social media as new opportunities for growing sales. Collaborating with other retailers on their streets to create events could be another.
A publisher may identify they can grow their sales through new sectors and new export markets.
With taking on the UK and Ireland distribution of BambooCup, Blue Eyed Sun could expand into new retailers we didn’t already stock. We could increase order values with our current retailers. It would also allow us to diversify. We could even expand into B2C using our social media skills if we chose to.
Threats
What are the potential obstacles and dangers ahead?
A retailer might identify external threats that include business rates, poor parking on their high street or even competitors across the street from them.
A publisher could see the decline of the high street, SOR (Sale or Return), increased bad debts, improved competition and a lack of younger generations entering the industry as threats.
With BambooCup more experienced competitors, currency fluctuations, stock availability and supply chain issues were some examples of the threats we considered.
It’s important to be specific about the threats as it helps to figure out what can be done about them. Some things, like the weather, for example, cannot be controlled but they can be kept an eye on and can affect what strategies are best to use.
Strategies
Once you’ve completed your SWOT Analysis you can start to consider different ways to achieve your goal.
Strength-Opportunity
Which strengths can be used to maximise the opportunities you have identified?
A retailer could use their well trained team to improve customer experience in store to increase repeat business and average order values. Our publisher might use their innovative design team to expand into the white label market or export territories with the languages. We recognised that we could use our PR and marketing strengths to expand quickly into a fast growing product category with BambooCup.
Strengths-Threats
How can you use your strengths to minimise the threats identified?
Retailers with a well trained team will have a better chance of resisting the threat of competitors. Financially stable publishers will weather bad debts. With BambooCup we used our marketing and trade PR strengths to position ourselves against our more experienced competitors.
Weakness-Threats
How can you minimise your weaknesses to avoid the threats you’ve listed?
A retailer with weak window displays and sales staff can invest in training to boost sales to take on external threats. A publisher with weaker product might need to expand their design team. With BambooCup we trained ourselves up in product and category knowledge to fully understand and compete with our competitors.
Weaknesses-Opportunities
What can you do to minimise your weaknesses using the opportunities presented?
A retailer training their team to offer better customer experience might use this as an opportunity to integrate the improvements with their social media. Taking the improved customer engagement online increases their reach and can boost sales.
A publisher improving their weak business structure will allow them to successfully pursue new business opportunities abroad by taking on new team members who can facilitate this, for example.
Despite not having sold giftware to retailers before, as Chairman and long standing member of the Giftware Association we have the network and resources to figure out things as we go. We also have a lot of retailer friends that we can call for advice and feedback.
A Useful Tool
The SWOT Analysis is a really useful tool that can help you decide whether an objective is achievable or not. If not, it can offer up new goals worth considering. You can use it for your business life and for your personal goals. You can even use it to analyse your competition.
As a retailer it could help you to focus on where you want to take your business rather than the difficulties you might be facing. As a publisher it might help you to reassess the direction you are taking and open up new possibilities.
After much deliberation it helped us to make the decision on distributing BambooCup and strengthen our weaknesses, explore new opportunities and plan for external threats.
If it’s new to you, give it a go and let me know how you get on with it.
