The SWOT analysis technique is used to summarize your strategic analysis that includes both your internal and external analysis. This summary is classified into four categories. These four categories are Strengths, Weaknesses, Opportunities, and Threats.
Today, we will clarify the strength category for you and also provide you with a list of common strengths that you may encounter in your business.
The golden rule of Strengths: Strengths are characteristics of your business, they can only be identified in your internal analysis, since your internal analysis is the only type of strategic analysis that evaluates the characteristics of your business.
Now, let’s define strengths and take a look at the typical business characteristics that are commonly classified as strengths.
Defined force: Strengths are the core capabilities of your business. These are areas where your business has an advantage over your competitors that your customers value.
In other words, strengths are characteristics of your business that pass the tests of your competitors.
Key Point Summary: You will only find strengths by completing your internal analysis, a strength must be characteristics of your business.
Understand strengths
Upon completing your internal analysis, you will find that your strengths will generally fall into two categories, tangible and intangible strengths. Let’s look at both
- Tangible strengths: A tangible strength is a characteristic of your business that can be accurately identified, measured, or realized.
- Intangible Strengths: An intangible strength is a characteristic of your business that cannot be physically touched or measured.
Now, we will look at examples of common tangible and intangible strengths that may be found in your business.
Examples of tangible strengths
Your tangible strengths will tend to include characteristics of your business, such as
- Your physical assets, including the plant, equipment buildings, and infrastructure.
- Long-term rental contracts in good locations
- Unique or market leading products
- Access to sufficient financial resources to finance any strategic changes you would like to make.
- Cost advantages over your competitors (this relates to your ability to provide the goods or services at a lower cost than your competitors. It does not refer to the selling price)
- Volume, a high volume can be a strong point
- Ability to scale volume up or down relatively easily
Examples of intangible strengths
Your tangible strengths will tend to include characteristics of your business, such as
- The strength of your brand (s), such as having easily recognizable strong brands
- Your reputation in the market, including the market perception that you are a market leader or an expert in your field.
- The strength of your relationship with key clients, a strong relationship represents goodwill, and is often viewed as a strength.
- The strength of your relationship with your suppliers, once again a strong relationship can be seen as a strength.
- The nature of the relationship you have with your employees.
- Any unique alliances you may have with other companies that complement your company’s products or services in a way that is valued by your customers.
- Ownership of patents or patented technology can be a strength
- A proven advertising process that works well
- Have more experience in the industry in a field that requires some technical expertise, including the skill of your managers, your collective experience in the industry, and your profile in industry associations.
Where do people often go wrong?
The first area in which it is common to see strengths recorded incorrectly is in the language used to describe them. It is an easy mistake to write macroenvironmental observation as strengths rather than opportunities; however, this trend should be avoided. For example, “One of our strengths is a strong economy”, this is really an opportunity and can be rephrased as “Economic outlook supports growth.”
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Typically, your company leaders conduct a SWOT analysis. Upon completion of their analysis, they are likely to rank their leadership capabilities with the other strengths. Of course, it is not realistic that all leaders of all companies can pass the test better than our competitors. When faced with this self-assessment, it’s best to look for indicators like higher engagement scores, lower churn, and higher customer satisfaction to validate where you place leadership in your business’s SWOT.
Summary of SWOT strengths
Your SWOT analysis summarizes the three strategic environments in which your company operates, they are your macro environment, your industrial environment and your internal environment. You will only identify strengths during your analysis of the internal environment, this is because your internal analysis is the only area where you will identify the characteristics of your business that pass the test of your competition better. Strengths can also fall into two categories: they can be tangible, like plant and equipment, or intangible, like patents.
You now have a solid understanding of strengths and how to identify them in your business.
