SWOT analysis method SWOT analysis is a method of enterprise strategy analysis, that is, according to the enterprise's own established internal conditions to analyze, to find out the enterprise's strengths, weaknesses and core competitiveness of the place. Among them, S stands for strength, W stands for weakness, O stands for opportunity and T stands for threat, of which S and W are internal factors and O and T are external factors. According to the complete concept of enterprise competitive strategy, strategy should be an organic combination between what an enterprise "can do" (i.e., the organization's strengths and weaknesses) and "what it can do" (i.e., the environment's opportunities and threats).
Specific Steps in SWOT Analysis
Strengths-Weaknesses-Opportunities-Threats
From a competitive point of view, the choice of cost measures is analyzed not only from the point of view of the cost measures, but also from the point of view of the cost measures. Choice analysis, not only from the analysis and judgment of the internal factors of the enterprise, but also from the analysis and judgment of the competitive situation. The core idea of SWOT (Strength-Weakness-Opportunity-Threat) analysis of cost is to analyze the external environment and internal conditions of the enterprise, to make clear the opportunities and risks that the enterprise can utilize and may face, as well as to identify the risks that the enterprise may face and the opportunities that the enterprise may face. opportunities and possible risks, and to combine these opportunities and risks with the strengths and weaknesses of the enterprise to form different strategic measures for enterprise cost control.
Basic Steps of SWOT Analysis
(1) Analyze the internal strengths and weaknesses of a company both relative to its goals and relative to its competitors.
(2) analyze the external opportunities and threats faced by the enterprise, may come from changes in external environmental factors unrelated to competition, or may come from changes in competitors' strengths and factors, or both, but the key external opportunities and threats should be identified.
(3) Match the external opportunities and threats with the firm's internal strengths and weaknesses to form a viable strategy.
There are four different types of combinations in SWOT analysis:
Strengths-Opportunities (SO) combination, Weaknesses-Opportunities (WO) combination, Strengths- -threat (ST) combination and weakness-threat (WT) combination.
Strengths-Opportunities (SO) strategy is a strategy that develops a firm's internal strengths and exploits external opportunities, and is an ideal strategic model. This strategy can be adopted when the enterprise has advantages in specific areas and the external environment provides favorable opportunities to exploit such advantages. For example, external conditions such as good product market prospects, supplier scale expansion and competitors' financial crisis, paired with internal strengths such as increased market share of the enterprise can be a favorable condition for the enterprise to acquire competitors and expand production scale.
Weakness-Opportunity (WO) strategy is to use external opportunities to make up for internal weaknesses, so that the enterprise to change the disadvantage to gain advantage of the strategy. There are external opportunities, but due to the existence of some internal weaknesses that prevent the enterprise from utilizing the opportunities, measures can be taken to overcome these weaknesses first. For example, if the weaknesses of an enterprise are insufficient supply of raw materials and insufficient production capacity, from the cost point of view, the former will lead to under-starting, idle production capacity, and higher unit costs, while overtime will lead to some additional costs. On the premise of a positive product market outlook, enterprises may take advantage of opportunities such as suppliers' expansion, price reductions of new technology and equipment, and competitors' financial crises, to realize a vertical integration strategy and reconstruct the enterprise value chain in order to ensure the supply of raw materials, and at the same time, they may consider the acquisition of production lines to overcome the weaknesses of insufficient production capacity and aging equipment. By overcoming these weaknesses, the enterprise may further capitalize on various external opportunities to reduce costs, achieve cost advantages, and ultimately win competitive advantages.
Strengths - Threats (ST) strategy refers to the enterprise's use of its own strengths to avoid or mitigate the impact of external threats. Such as competitors use new technologies to significantly reduce costs, giving enterprises a lot of cost pressure; while the supply of materials is tight, its price may rise; consumers demand a substantial improvement in product quality; enterprises also have to pay high environmental costs; and so on, these will lead to further deterioration of the cost of the enterprise situation, so that it is in a very unfavorable position in the competition, but if the enterprise has sufficient cash, skilled technical workers and Stronger product development capabilities, it can use these advantages to develop new processes, simplify the production process, improve the utilization of raw materials, thereby reducing material consumption and production costs. In addition, the development of new technology products is also an optional strategy for enterprises. The development and application of new technologies, materials and processes is the most promising cost reduction measure, and at the same time it can improve product quality, thus avoiding the impact of external threats.
Weakness-Threat (WT) strategy is a defensive technique aimed at reducing internal weaknesses and avoiding threats from the external environment. When a company has internal and external weaknesses, it often faces an existential crisis, and cost reduction may become the main measure to change the disadvantage. When the enterprise's cost situation deteriorates, the supply of raw materials is insufficient, the production capacity is insufficient to realize the economies of scale, and the equipment is aging, which makes it difficult for the enterprise to have a great action in cost, then it will force the enterprise to adopt the strategy of target aggregation or the strategy of differentiation, in order to avoid the disadvantages of cost and the threats brought by the causes of cost.SWOT analysis used in the analysis of the enterprise's cost strategy can give full play to the strengths of the enterprise, take advantage of the opportunity to Overcome weaknesses, avoid risks, obtain or maintain cost advantages, the enterprise cost control strategy is based on the analysis of internal and external factors and the judgment of the competitive situation. If you want to fully understand the strengths, opportunities, weaknesses, and risks you are facing or will face; value chain analysis and benchmarking analysis provide methods and approaches.
There are two basic types of market segmentation strategies:
Concentration, which focuses marketing activities on a single sub-segment, and differentiation, which divides two or more sub-populations according to different criteria. The second is the "differentiation strategy", which involves dividing two or more subpopulations according to different criteria, and then targeting marketing activities to each of these segments.
Targeting a large segment of the market with a focused strategy and using a unified marketing effort to develop a broad market is a strategic choice that is tempting to many decision makers. In this choice and decision-making process, the decision-makers first consider the potential and size of the number of consumer groups "big" enough to give more consideration to the broader consistency of this market. Because in a "big" market with broad **** and universal consistency, the demand of consumer groups is also much larger than in other markets. It is worth noting, however, that the large attractive segments are often the ones that multiple companies are targeting at the same time, while no one tries to capture the relatively small markets. This is often referred to as the "majority fallacy". Sometimes the segments with the highest potential are not necessarily the most profitable ones when considering marketing costs. For example, capturing a smaller market segment, even if it represents only 5% of the total market, is likely to be more lucrative than a large market with more than a dozen brands competing for 70% of the total market. Of course, for some small companies, targeting those small market segments is also an option to implement a concentration strategy, which is often referred to as the "appropriate strategy". Because it would be suicide for a small company to try to compete with a large company in a large market segment, it is possible for a small company to do very well by focusing its efforts on the special needs of a small market where a large company is not suited to operate.
Unlike the concentration strategy, the differentiation strategy is one in which the company does not limit itself to a single market segment, but has several marketing activities going on at the same time, each adapted to a particular market segment. General Motors may have been the first to exemplify the practice of differentiated marketing activities due to different product lines. In its early days, the company decided to develop an upscale line (i.e., Cadillac), an economy line (i.e., Chevrolet), and several lines to fill the gaps in between. In this way, the company covered the entire market and at the same time skillfully subdivided these markets, with products for each segment. It is worth noting that segmentation is not only about segmentation of consumer groups, but it also requires a segmentation of product features according to the target audience. Therefore, in many cases, for the different characteristics of the same brand, the advertisement may emphasize a certain characteristic in one segment, while emphasizing other advantages in another segment. For example, "youth treasure" is a kind of popular health care products, in order to fight for middle-aged and old-aged consumer groups, it will emphasize its own "palace secret recipe", "delay the mourning of old age"; in order to attract all kinds of consumers indiscriminately, it also emphasizes its own "secret recipe", "delay the mourning of old age". Various types of consumers, it also emphasizes that it is "the people can afford to buy health care products".