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A strengths, weaknesses, opportunities and threats (SWOT) analysis of competitors can be conducted by anyone with access to the appropriate business research. To conduct the analysis, research is complied detailing the conditions of the business industry, the market and your competitors to determine where a competitor's business and products fit in the marketplace. The data collected enables you to make a strategic assessment of future business prospects.
Business success depends upon management's ability to make profitable decisions. SWOT analysis is an exercise that reveals a company's strategic position and allows managers to adjust the direction of the business in the future. This type of exercise can be conducted from a variety of perspectives, including a business assessing its own position in the marketplace or conducting a SWOT analysis of competitors for purposes of comparison.
SWOT analysis is typically separated into internal and external inputs that drive the data-gathering. When compiling a SWOT analysis of competitors, you assess the competitor's strengths and weaknesses, or the internal factors that determine the company's success. Opportunities and threats are evaluated using external factors, including threats that your business might pose to the competitor or the threats and opportunities inherent in the marketplace.
The procedure for conducting a SWOT analysis of competitors consists of research and assessment activities. When a company does a SWOT analysis of its own business operations, it has access to the raw data needed to identify strengths and weaknesses. Evaluating a competitor is more complicated. You have to rely on information that is part of the public domain, including media articles, regulatory filings, industry analysis by financial experts and general business knowledge gleaned from operating alongside the competitor in the marketplace. This same sort of research should be conducted to collect data on opportunities and threats.
Once you have completed the research, it is used to complete an assessment of each of the SWOT components. Generally, this assessment takes the form of a series of questions under each topic that serves to clarify the competitor's position in that area. For example, you would take the research on the competitor's business practices, customer service standards and pricing and answer questions under the strengths category, such as “What are the unique aspects of the competitor's brand?” The answers to the questions form a list of strengths than can be analyzed and compared.
There is a wealth of SWOT-based tools available for free over the Internet. These tools include lists of questions for each SWOT category that can drive your assessment and templates that enable you to layout the information for analysis. A popular way of looking at data from a SWOT analysis of competitors is to create a two-by-two chart, with strengths and weakness as the column headings, and opportunities and threats as the row headings. This correlates strengths with opportunities for strategic planning purposes, while correlating weaknesses and threats together so the business can take corrective action on those issues.