Marketing SWOT Analysis
Dave Carlson - November 13, 2008
An evaluation of a company’s strengths, weaknesses, opportunities, and threats is called SWOT analysis. SWOT analysis consists of internal and external factors. Strengths and weaknesses are paired as internal factors, while opportunities and threats are paired as external factors. These factors are evaluated in the light of specific goals leading to the formulation of appropriate marketing strategies. Two market trends emerged from this study of Services Conglomerate Inc., Annalist Services Division (ASD); one opportunity and one threat. The primary opportunity is the continuing need for services ASD offers. The most significant threat is the increasing competition fueled by continually shrinking budgets. ASD anticipates its strengths will neutralize its weaknesses and help position the company to overcome threats and exploit opportunities.
Marketing SWOT Analysis
Marketing analysis begins by establishing a foundation upon which to build the analysis. Harvard Business School (2005) recommended that many business activities should start with a SWOT analysis (see Table 1). “The overall evaluation of a company’s strengths, weaknesses, opportunities, and threats is called SWOT analysis. It’s a way of monitoring the external and internal marketing environment” (Kotler & Keller, 2009, p. 49).
Table 1. SWOT Analysis. (Harvard Business School, 2005, pp. 2-3)
|Strengths||Capabilities that enable your company or unit to perform well—capabilities that need to be leveraged.|
|Weaknesses||Characteristics that prohibit your company or unit from performing well and need to be addresses.|
|Opportunities||Trends, forces, events, and ideas that your company or unit can capitalize on.|
|Threats||Possible events or forces outside of your control that your company or unit needs to plan for or decide how to mitigate.|
Harvard Business School leaders (2005) suggested SWOT analysis consists of internal and external factors (see figure 1). Strengths and weaknesses are paired as internal factors, while opportunities and threats are paired as external factors. These factors are evaluated in the light of specific goals leading to the formulation of appropriate marketing strategies.
Figure 1. External and Internal SWOT Analysis
(Harvard Business School, 2005, p. 3)
To illustrate marketing SWOT analysis, this paper will present an analysis of a division from a major government contractor company. Organization and personnel names mentioned in this paper are fictitious to help prevent disclosure of potentially sensitive information about the company. The name of the company for the purposes of this discussion will be Services Conglomerate Inc. (SCI). The division name will be Annalist Services Division (ASD). The key individual in this analysis will be identified as Carl Fisker, marketing manager.
Over the past ten years, SCI has grown primarily through acquisitions. SCI has acquired many smaller government contractors in a variety of business sectors. Each acquired company was successful in its own niche market, making it a desired target for adding to the SCI family of companies. The successful implementation of this acquisition strategy has caused SCI to grow to almost five times its original size, both in number of personnel and annual revenues. Along with this significant growth came numerous challenges.
The author recently interviewed Carl Fisker, marketing manager for ASD (C. Fisker, personal communication, November 3, 2008). During the interview, Mr. Fisker discussed several ASD marketing issues. ASD has grown from three business units with an annual marketing budget of $80,000 to eight business units with an annual marketing budget of $500,000 in the past three years. Even though the division almost tripled in size and increased its marketing budget more than six-fold in a short period of time, the administrative overhead remained about the same.
Mr. Fisker’s interview and the author’s personal experience with the organization revealed information about ASD marketing strengths, weaknesses, opportunities, and threats. Overall, Mr. Fisker’s comments were positive. He conveyed the broad message that ASDs strengths overcame weaknesses and opportunities outshone threats.
The following are primary ASD strengths:
- Talented people. Most of the personnel in each business unit have impressive resumes and demonstrated success in their individual fields. These talented people are ASD’s greatest strength.
- Solid reputations. All of the organizations in the business units had solid reputations in their industries. The legacy companies absorbed into the SCI family had well-known and well-respected names within their respective markets.
- Valuable experience. This combination of individual and organizational experience, along with previous success, empowered ASD, a newly-formed division of SCI, to be fairly successful almost immediately. The synergy of past experiences will continue to expand ASD’s collective experience.
The following are major ASD weaknesses:
- Customer awareness. Name recognition will remain a recurring challenge for SCI and ASD. SCI is not as well-known as the legacy companies that make up ASD business units. SCI has not had the opportunity to establish its own reputation in the government contracting marketplace yet.
- Service offerings. ASD does not offer any physical products. ASD is a service-based organization, offering diverse analysis services to its customers. This lack of tangible products makes it difficult to market the organization at trade shows, since potential customers are not able to view any demonstrations or test a product.
- Stovepipe organization. ASD is struggling with communication issues between business units. Since each business unit has been accustomed to operating independently for so long, it is difficult for the entire division to focus on unified marketing objectives. A significant weakness to overcome is that several business units tend to bid on the same contracts, thus diluting the company’s ability to increase its efficiency.
The following are encouraging ASD opportunities:
- Military requirements. The United States currently is engaged in several military conflicts around the world. There will be a requirement to support various wartime and peacetime military endeavors for some time. Those with the appropriate products and services will continue to thrive supporting the defense industry.
- Homeland security. As this world grows more dangerous, there will continue to be a need to defend critical infrastructure. Maintaining current capability and improving execution methods will continue to be in the forefront. Those with appropriate products and services will continue to grow by supporting Homeland Security.
- Emergency services. There will continue to be a requirement for those who have mastered the technology and skills to provide more valuable, more effective, and more efficient emergency services. A growing market is the expanding need to integrate federal, state, and local emergency services.
The following are looming ASD threats:
- Internal organization. The internal weakness of the current stovepipe organization may threaten the future viability of the division and the entire company. It is a primary concern which company leadership must address. The organization will not be able to meet its potential unless it becomes more effective in its communication and operations.
- New government. Business leaders are uncertain about the attitude and future actions of the new U.S. administration. On January 20, 2008, the United States democratic process will usher in a new President and may cause a change to the current attitude about expanding support for the Military. It is almost certain that there will be deep cuts in some areas of present spending to help pay for new programs and reduce the staggering debt produced by recent government bail out activities.
- Shrinking budgets. The condition of the U.S. and world-wide economies is a concern for most non-profit and for-profit organizations. Shrinking budgets are a reality of the current economic environment almost everywhere. Less money available to spend will cause increasing competition for decreasing opportunities.
Two market trends emerged from this study of ASD; one opportunity and one threat. The primary opportunity is the continuing need for services ASD offers. The most significant threat is the increasing competition fueled by continually shrinking budgets. The company’s primary strength is talented people with extensive industry experience. A significant weakness that will continue to create avoidable challenges is the stovepipe organization, which would be in the best interest on the organization to change. Overall, ASD anticipates its strengths will neutralize its weaknesses and help position the company to overcome threats and exploit opportunities.
Harvard Business School (Ed.). (2005). Strategy: Create and implement the best strategy for your business. Boston: Harvard Business School Press.
Kotler, P. and Keller, K. L. (2009). Marketing management (13th ed.). Upper Saddle River, NJ: Prentice Hall.