Whenever you do an internal analysis or SWOT analysis of a company, you first observe the strengths of the company. The reason for observing the strength in swot analysis of a company first is because that is what is giving you the competitive advantage. The stronger the company, the more difficult it will be to defeat it. Hence, the SWOT analysis starts with strengths, then progresses to weaknesses, opportunities and threats respectively.
There are two ways you can conduct a SWOT analysis. First, you can do your own SWOT analysis and therefore find out your own SWOT. Or you can also do the SWOT of your competitors, which after a detailed analysis, will reveal their strengths and weaknesses to you. It will also reveal the opportunities available to your competitors and the threats to them. All in all, you can get into your competitors psyche with a SWOT and the way ahead becomes clearer for you.
There are numerous variables which can act as strengths for the organization. A strength of the organization can also be looked as its competitive advantage. Because the firm is strong where its strengthening factors are concerned, it will be difficult to beat the firm where it is strong. Hence, firms generally carry out weaknesses secondary so that the parent company can actually cover their own weakness, or uncover the weaknesses of a competitor.
Here are some examples and variables of Strength in SWOT analysis.
1. Technological advantage
If you have a technological advantage over any other competitor then it is a great strength to you. The top few technology leaders of the century each have a technological advantage over the other. Where Microsoft has Windows, Apple has their own operating system which is different, but nonetheless a technological leader. Similarly, in Televisions and Smartphones, Samsung is known to be the technological leader.
2. Brand valuation / brand equity
Brand valuation, brand recall, brand equity as well as brand’s image and reputation in the market play a major role in strengthening the core of the brand. A brand which has a high brand recall is more likely to have automated sales in the market then a brand with less brand recall. This is why, many small businesses when they start need investments, because they have to build their brand to start selling in this tough market.
3. Distribution network / Internal customers
If you ask me, the support of your internal customers is the best strength in the SWOT analysis of a company which a company can have. You cannot make a company a success by the brains of the top management only. You need ears on the ground. And for this, your internal customers play a crucial role. Your employees, your dealers and distributors are all your informers. They will inform you what the competitor is planning and might have their own ideas to defeat the competition. As a result, a company which has loyal and active internal customers will have a strong advantage over a competitor.
4. Customer loyalty and customer relationships
Just like internal customer relationship is important, external customers are even more important because they are the ones generating the revenue for you. There are multiple ways you can look at customers as the strength of your company. Telecom companies will look at their subscriber base and show them as stronger against competition. Social media companies will show the number of followers and users they have and therefore show their dominance over the competition.
A B2B company will show the number of Long term contracts it has with various businesses, which in turn shows how strong the B2B company actually is. There are multiple ways you can measure customer loyalty and their relationships with your company or with that of your competitors. This measure will give you an idea of how likely a customer is to favour a competitor over your own business or company.
5. Experience & Management
Experience matters a lot. This does not mean that the company has to be old. But if the company has some experienced player in its management panel, then definitely the competitors have to sit up and take notice. This is why when a company is valued, the angel investor specially considers the people who are going to form the management team of the business. This is because the experience of the management team and their ability to give results matters.
If i tell you to think of companies which always have high quality products, then some of the brands which come in mine are Siemens, Intel, Daikin or Dell. These are brands which have given good quality products year on year and decade on decade. As a result, you can blindly rely on these companies for the quality of their products. The better the quality of your products or your competitors, the more is the strength in SWOT analysis.
7. Geographical advantages
Firms which are geographically far apart are finding it easier to penetrate emerging and rural markets because of globalisation. However, even after this penetration, many of these firms realise that localisation is a challenge. Top marketing firms like McDonalds or Pizza hut have localised themselves as per the market they are catering to. This becomes their major geographical advantage. On the other hand, it is possible that some firms have various logistical and supply chain advantage over competitors due to their geographical location. Thus, location and geographical advantages have to be considered as a strength in SWOT analysis.
8. Resources of the firm
There are many resources a firm may have. Financial resources are critical to a firm and the more financial resources it has, the more success the firm can have. Limited financial power is crippling to a growing firm. Other resources include manpower, infrastructure, government support, internal customer support etc. The more resources a firm has, the more chances of the products being a success. Look at HUL. Because of the hge amount of resources available at its beck and call, each new product that it launches in the market, generally has the backing to make the product a success.
It has a set distribution network already prepared for its beck and call, it has a brand name which shines across markets, it has the manpower which can focus on this new product and it has the financial advantage to make this new product a success. In general, the more the resources of a firm, the more are the possibilities of the success of the firm.
9. Production capacity / Infrastructure
If you look at the cement industry, the leader of the market in each country is the company which can manufacture maximum Cement in a year. So for example, in India, Ultratech has the maximum production capacity in a year as a result of which it is leading the market easily. It is a need based sector where demand might be lesser then supply. Hence, a firm which has a high production capacity in a market where demand is more then supply will obviously have the upper hand and this forms a strength in SWOT analysis.
10. Economies of scale
Whichever part of the world you are, i am sure you have heard of Walmart which is the leading modern retail giant in the US and which spawned the whole modern retail industry. The same can be said for E-commerce players like Amazon and Ebay. These companies work on Economies of scale. The larger they are, the more competitive they become because they can then reach everywhere. These companies have lower fixed costs and higher variable costs due to which they can achieve economies of scale.
11. Organizational Culture
The culture in the organization plays a major role in employee attrition as a result of which, companies which pay attention to organizational culture, actually retain more employees and get more work done from them. Some companies which thrive due to an excellent organizational culture are Accenture, Google, Facebook, Adobe. As these companies have an excellent culture, they attract the best talents from within their industry.
12. Cost or differentiation advantage
There are two advantages as per michael porter which have to be considered as a strength in SWOT analysis of a firm. One of them is the Cost advantage, where the cost of the products of the firm is so low that the competitors cannot match the pricing of the firm. The other advantage is the differentiation advantage, where the company differentiates its products so well that consumers always prefer the companies products over competition.
13. Selling power
Some companies have a fantastic selling power and salesforce as compared to competitors. They are known for their aggressiveness and their sales skills. Once such company in India is Eureka Forbes, which is known initially for its vacumm cleaner and later on for its Water purifiers. Eureka forbes is known for its aggressive strategy wherein incentives play a major role in motivating the sales force. At the same time, the sales force has a tremendous target to achieve, which makes them aggressive and at the same time, more competent then competitors.
14. Low Overheads and debts
An example of a company which is excellent in terms of products and brands but is suffering due to high overheads and debts is Toshiba. Due to its nuclear power plant problems, Toshiba has huge debt. Thus, this is a major weakness for Toshiba. Consequentially, a company which is not much in debt and has low overheads is a company which is strong in its financial structure.
15. Marketing and communications
Finally, the company’s marketing and communications exercises can lend the company a great competitive advantage over all others. Coca cola is a company known for its brand equity and for its mass following across the world. Although it has an arch rival in Pepsi, Coca cola still manages to win over hearts and sell more products by the day due to its continous marketing and communication efforts. Vodafone Zoozoos, Adidas, Harley Davidson bikes and many other such campaigns are proofs that great companies generally come out with great marketing campaigns. It can also be considered vice versa, that great marketing campaigns actually make great companies.
The above are the various ways that you can analyse the strengths of an organization or they are examples of strengths in SWOT analysis of an organization.
Index of Article
- Here are some examples and variables of Strength in SWOT analysis.
- 1. Technological advantage
- 2. Brand valuation / brand equity
- 3. Distribution network / Internal customers
- 4. Customer loyalty and customer relationships
- 5. Experience & Management
- 6. Quality
- 7. Geographical advantages
- 8. Resources of the firm
- 9. Production capacity / Infrastructure
- 10. Economies of scale
- 11. Organizational Culture
- 12. Cost or differentiation advantage
- 13. Selling power
- 14. Low Overheads and debts
- 15. Marketing and communications