Improve Your Competitiveness

All companies would like to understand their competitiveness in the marketplaces that they serve. This naturally leads to better decision making. Fortunately there is a straightforward exercise that you can do on a regular basis to ensure that you are continually making headway in the challenge to improve your competitiveness. You may have heard of a SWOT analysis before. Paired with some software analytics, and a little help from AI, any company can apply these SWOT principles and become more competitive.

If you are not familiar with the term, SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses represent internal factors, such as high profitability (S) or excessive customer returns (W). Opportunities and Threats on the other hand are usually expressed as external to the business like an increasing demand for your product or service (O) or a new retail center being built a few blocks from your business (T).

Building and analyzing a SWOT diagram is easier using software tools like SmartDraw, or miro. If you are interested in trying SWOT with AI tools built in, then look for Osum or Jeda.AI. The important thing to remember, like all software tools if the inputs are not right, then the results won’t really end up being useful. In other words, “garbage in, garbage out”. You have to be brutally honest with yourself no matter where it leads you. Let’s work through some examples.

S is for Strengths:

• The boss has been in the business for 20 years and knows everything about the product*.
• You have a high customer satisfaction rate.
• You keep a lot of inventory on hand so that your product can be easily customized*.

*Note: it is not uncommon for a strength to also be a weakness. In our example a boss who really knows the industry is clearly a plus, but the flip side is if she is the sole source of knowledge then should something happen to her, then the company can’t operate. Similarly, in the example of a high inventory position that gives you versatility, it also means a lot of capital is tied up in inventory making it unavailable for other uses.

W is for Weaknesses:

• Margins might be low or declining.
• You are not able to fill your opportunity pipeline with sufficient prospects.
• Your customers are not paying bills within 30 days, tying up your cash and also making it difficult to pay your own suppliers.

When weaknesses are not addressed at the root cause you could find yourself working to solve the wrong problems. Remember weaknesses are primarily internal to the company operations. So be sure you are looking inward to shore up or eliminate these weaknesses.

O is for Opportunities:

• The quality of 3D printed products has improved to the point where it is cost-effective for you to offer customized versions of your product.
• The owner of a competitive company has decided to retire. There is a chance that you may be able to pick up his customer accounts.
• With the rise of AI, there are a number of areas in your business that you believe could become more efficient.

Remember that opportunities are not a given, just because they have been identified. In order to make good on suspected opportunities, it will usually require an investment of time to define the nature of the opportunity along with the resources needed to take advantage of the opportunity.

T is for Threats:

• It appears that one of your competitors has just launched a price war.
• The price of raw materials looks like they are poised for a 30% increase in price due to an announced interruption in the supply chain.
• Changes in regulations will require additional inspection and testing and you don’t have room to add any more people.

Threats, by definition, are external events that generally effect your whole industry. The sooner you can respond, usually the better the outcome.

SWOT -type analyses originated in the 1960’s and evolved over the years to the point that the SWOT standard format was well entrenched in the early 1990’s as a strategic tool. To be effective it is important that the elements that make up the SWOT are reviewed periodically and adjusted. There should be at least one high priority project in each of the four areas that is active. The objective and the person who is responsible for reaching that objective should be known in the organization so that they can get the support they need to be effective. Regular reporting is required to keep the projects moving forward. A good cadence for reporting is quarterly – often enough for some progress to be made and to assess if the SWOT elements under review are still valid. Pay attention to these four elements, make them part of your strategic planning, and you will be able to consistently out-perform your competition.

Small Business Resources welcomes questions from inquiring minds looking to improve their business outcomes through best business practices combined with available technologies. Submit any questions you would like us to explore on your behalf to contact@sbresources.com.