To make a small business successful, an owner needs to have a thorough understanding of the status of their companies, its growth potential and the pitfalls it might face in the future. One framework that has consistently provided founders with that essential information is a SWOT analysis. Its methodology prescribes for the granular examination of the business’s strengths, weaknesses opportunities and threats. However, while SWOT is still a useful tool, the fact that it was conceived in the late 1960s means that it does not take into account the unique challenges that businesses face in the 21 st century. Here are a few different business intelligence strategies that are updated for today’s marketplace.
Although it shares some surface similarities to SWOT, the PEST analysis model, which deals with the political, economic, social and technological factors affecting the business, calls for more precise and nuanced examination of various market forces. For instance, numerous recent studies have found that millennial consumers place a high priority on interacting with brands that embrace social responsibility as a core value. As millennials are quickly becoming America’s largest market demographic, companies that fail to address this issue will quickly find themselves losing a foothold in the marketplace. As this increasingly important factor can’t be easily quantified as either a threat or an opportunity, it might be missed in a SWOT analysis.
Another business intelligence framework that owners might want to employ is VIRO (Value Imitation Resource Organization), a strategy that is designed to examine a company’s competitiveness within the marketplace. It does this by questioning a firm’s ability to provide consumers with the best value in the market — the capability of its rivals to create imitations of its products, the relative rarity of its offerings and it’s organizational readiness. As with PEST, VIRO’s greatest virtue is its ability to provide granular analytics. As an example, two reasons Apple Inc. has been able to occupy a dominant position within the electronics sector are its dedication to continual innovation and its strict adherence to a highly idiomatic design aesthetic. Because of those two core values, its rivals have had little success selling imitation products to the market.
21st Century SWOT
A recently published and very insightful Entrepreneur article lays out a way to use SWOT analysis in a 21st century context. The piece calls for a drilling down of the four SWOT categories. Under the strengths and weaknesses columns, it recommends looking at a brand’s core competencies, the unique cumulative knowledge possessed by its employees, the advantages granted by its geographical position and the qualities the public associates with the company. The in-depth framework the write-up outlines will likely be most helpful for burgeoning entrepreneurs who are unfamiliar with the mechanics of performing an internal quantitative analysis.
This article was written by Mario McKellop for Small Business Pulse