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SWOT is an acronym for Strengts (strengths), Weaknesses (weaknesses), Opportunities (opportunities) and Threats (threats). The internal situation of the company is reflected mainly in S and W, and the external environment in O and T. SWOT analysis is a stage in the development of a marketing strategy

The SWOT analysis methodology involves, firstly, identifying the internal strengths and weaknesses of the company, as well as external opportunities and threats, and, secondly, establishing links between them.

SWOT analysis helps answer the following questions:

Does the company use internal strengths or differentiating advantages in its strategy? If the company does not have distinctive advantages, what potential strengths could be?
- Are the weaknesses of the company its vulnerabilities in competition and / or they do not give the opportunity to use certain favorable circumstances? What weaknesses require adjustment based on strategic considerations?
- what are the opportunities that give the company a real chance of success when using its skills and access to resources? (opportunities without a way to implement them are an illusion, the strengths and weaknesses of the firm make it better or worse adapted to exploiting favorable opportunities than other firms).
- what threats should the manager be most concerned about and what strategic actions should he take for a good defense?

The table provides examples of the main factors that should be taken into account in a SWOT analysis.

Potential internal strengths (S):

Potential Internal Weaknesses (W):

Clearly demonstrated competence

Loss of some aspects of competence

Adequate financial sources

Unavailability of funds needed to change the strategy

high art competition

Market art is below average

Good understanding of consumers

Lack of analysis of consumer information

Recognized market leader

Weak market participant

Clearly articulated strategy

Lack of a clearly defined strategy, inconsistency in its implementation

Use of economies of scale in production, cost advantage

High cost of products in comparison with key competitors

Own unique technology, best production capacity

Outdated technology and equipment

Proven reliable management

Loss of depth and control flexibility

Reliable distribution network

Weak distribution network

High art R&D

Weak position in R&D

Weak promotion policy

Potential External Opportunities (O):

Potential external threats (T):

Ability to serve additional consumer groups

Weakening market growth, adverse demographic changes entering new market segments

Expanding the range of possible products

Increasing sales of replacement products, changing tastes and needs of customers

Complacency of competitors

Raging competition

Reduction of trade barriers in entering foreign markets

The emergence of foreign competitors with low-value goods

Favorable shift in exchange rates

Unfavorable shift in exchange rates

Greater availability of resources

Strengthening supplier requirements

Relaxation of restrictive legislation

Legislative price regulation

Easing business volatility

Sensitivity to the instability of external business conditions

The classic SWOT analysis involves identifying the strengths and weaknesses in the company's activities, potential external threats and favorable opportunities and scoring them relative to industry averages or in relation to data from strategically important competitors. The classic presentation of the information of such an analysis was the compilation of tables of strengths in the activities of the company (S), its weaknesses (W), potential favorable opportunities (O) and external threats (T).

The resulting SWOT matrix looks something like this:

At the intersection of SW with OT, an expert assessment of their mutual influence in points is put down. The total score for rows and columns shows the priority of taking into account one or another factor in the formation of a strategy.

Based on the results of the SWOT analysis, a matrix of strategic measures is compiled:

SO- activities that need to be carried out in order to use the strengths to increase the company's capabilities;
WO- activities that need to be carried out, overcoming weaknesses and using the opportunities presented;
ST— activities that use the strengths of the organization to avoid threats;
wt— activities that minimize weaknesses to avoid threats.

Rules for conducting a SWOT analysis

In order to avoid possible mistakes in practice and get the most out of a SWOT analysis, you need to follow a few rules.

If possible, specify the scope of the SWOT analysis as much as possible. When conducting a business-wide analysis, the results are likely to be too general and not useful for practical application. Focusing the SWOT analysis on the position of the company in the context of a specific market/segment will give much more useful results for practical application.
Be correct when assigning one or another factor to strengths/weaknesses or opportunities/threats. Strengths and weaknesses are internal features of the company. Opportunities and threats describe the situation on the market and are not subject to the direct influence of management.
SWOT analysis should show the real position and prospects of the company in the market, and not their internal perception, therefore, strengths and weaknesses can be considered as such only if they (or their result) are perceived in this way by external buyers and partners. They must correspond to objectively existing differences between the company's products and competitors. It is necessary to rank strengths and weaknesses in accordance with their importance (weight) for buyers and only the most important ones should be included in the SWOT analysis.
The quality of a SWOT analysis directly depends on objectivity and the use of diverse information. It is impossible to entrust its implementation to one person, because the information will be distorted by his subjective perception. When conducting a SWOT analysis, the points of view of all functional divisions of the company should be taken into account. In addition, all identified factors must be confirmed by objective facts and research results.
Long and ambiguous wording should be avoided. The more specific the wording, the clearer will be the impact of this factor on the company's business now and in the future, the more practical the results of the SWOT analysis will be.
SWOT Analysis Limitations

SWOT-analysis is only a tool for structuring the available information, it does not give clear and clearly formulated recommendations, specific answers. It only helps to visualize the main factors, as well as to evaluate, as a first approximation, the mathematical expectation of certain events. Formulating recommendations based on this information is the analyst's job.

The simplicity of the SWOT analysis is deceptive; its results are highly dependent on the completeness and quality of the source information. SWOT analysis requires either experts with a very deep understanding of the current state and trends of the market, or a very large amount of work in collecting and analyzing primary information to achieve this understanding. Mistakes made during the formation of the table (inclusion of unnecessary factors or loss of important ones, incorrect assessment of weight coefficients and mutual influence) cannot be identified in the process of further analysis (except for very obvious ones) - they will lead to incorrect conclusions and erroneous strategic decisions. In addition, the interpretation of the resulting model, and therefore the quality of the conclusions and recommendations, is highly dependent on the qualifications of the experts conducting the SWOT analysis.

History of SWOT Analysis

The pioneer of the direction strategic analysis, aimed at finding a balance between the resources and capabilities of the company with factors and environmental conditions, is considered Kenneth Andrews (. He developed a model that became the prototype of the SWOT analysis. This model is based on four questions:

What can we do (strengths and weaknesses)?
What would we like to do (corporate and personal values)?
What could we do (opportunities and threats of external environmental conditions)?
What do others expect of us (intermediary expectations)?

The answers to these four questions served as the starting point for the formation of the strategy.

SWOT analysis in his modern form appeared thanks to the work of a group of scientists from the Stanford Research Institute (SRI): R. Stewart (research leader), Marion Dosher, Otis Benepe and Albert Humphrey (Robert Stewart, Marion Dosher, Dr Otis Benepe, Birger Lie, Albert Humphrey). Exploring the organization strategic planning in Fortune's 500 companies (the study was conducted from 1960 to 1969), they eventually came up with a system they called SOFT: Satisfactory, Opportunity, Fault, Threat. Subsequently, the moddel was modified and renamed to the SWOT presented above.

Product (What do we sell?)
Processes (how do we sell?)
Buyers (to whom do we sell?)
Distribution (how does it reach customers?)
Finance (what are the prices, costs and investments?)
Administration (how do we manage it all?)

Based on the factors identified during the analysis, strategic decisions were further made.

Currently, domestic business, having gone through all stages of development, from birth to the present, is entering a state of less rapid development. It is also developing trying to catch up with the West. This process is natural - in the time that has passed since the collapse of the Russian merchant class, the commercial science of Europe and America has managed to go far ahead. However, if Western business has developed steadily in all directions, then the precocious business of modern Russia has serious gaps in many industries and a clear confirmation of this is the relatively low level of domestic advertising. The fact that advertising is the engine of trade is clear to every businessman. But if Russian business In general, today it is able to compete with the West, the majority of domestic advertising products do not have the same high level of development and are often criticized. So, advertising is a commercial mass media created in order to stimulate the sale of a product or service, or an information message from an institution, organization or candidate for any political post. The purpose of advertising is to convey information from the advertiser to the target audience. The advertising market in Russia has existed for no more than twenty years, and during this time it has gone through significant and numerous stages of development. From the point of view of those who use the services of advertising agencies, as well as those who provide these services, the situation has changed very significantly during this time. Early development market activity advertising was not particularly difficult, since almost any advertising effort had a good effect. This is explained by the fact that the market was not yet filled, and both enterprises and individual citizens sought to satisfy their needs that had accumulated during the collapse of developed socialism. At the same time, any product, both high-quality and not too good, sold well. The advertising market at this time looked similar. Prices for advertising in the media were unstable, deadlines shifted, there were significantly fewer advertising channels themselves, and if an advertising manager had connections among journalists and editorial offices, then he could provide almost any placement conditions for his company, except, perhaps, quite free. The main business of advertising agencies in this case was the resale of advertising space. Requests for creative and research work in the field of advertising (generation of advertising ideas, creation of layouts, video and radio commercials, marketing research, etc.) was significantly less. One of the reasons for this is the generally low level advertising products in Russia at a time when customers simply did not need novelties and frills in promotional products. On the other hand, advertising professionals were formed along with the entire advertising market, and even six years ago it was difficult to find a good performer for such types of work. As mentioned earlier, Russian advertising originates in the 90s of the last century. Liberal economic market reforms "released the genie from the bottle." "Russia is now ahead of the West in terms of growth in advertising spending. According to some data, in 1992, 60-80 million dollars were spent on it, in 1996 this figure approached 1.5 billion." There were hundreds of advertising agencies in Moscow, St. Petersburg, in every major regional and industrial center. In Russia, by the mid-90s, the number of people involved in the advertising business approached 50 thousand and the annual increase was 5 thousand people. The number of employees in the advertising industry has exceeded 200 thousand people. Advertising works have appeared that have won international recognition on the most authoritative international competitions advertising. The works of Russian advertising artists Y. Grymov, T. Bekmambetov, V. Akopov and others were appreciated at their true worth. Often, decisions are first made on what kind of advertising to be, and only then, after a long time, after obvious failures in the market, adjustments are made to advertising campaigns. Preliminary marketing research features of the market, goods, consumers (situational analysis), and even more so the analysis of the effectiveness of finished advertising products, is not funded by most domestic leaders. This comes from an underestimation of the role and functions of advertising as a tool for modeling public opinion and consumer preferences. It is often given only to inform potential consumers. The position of Western manufacturers is different. European and American business is carrying out a large-scale product expansion in Russian market, which is supported by well-thought-out corporate advertising campaigns. A wide "advertising umbrella" has been opened over Russia. Despite the difficult socio-economic situation in the country, which is characterized by a monstrously low standard of living for millions of Russians, and the continuing danger of a social explosion, Western manufacturers spend huge amounts of money on transforming the consumer interests and preferences of Russians, often imposing on them other consumer standards and image that were previously alien to Russian culture. life. The reputation of the still fragile advertising business has suffered significantly from the long absence of regulatory legislation in the country. Only on July 14, 1995, the State Duma of the Russian Federation adopted the Federal Law "On Advertising". Currently, relations in the advertising market are regulated federal law dated March 13, 2006 No. 38-FZ "On Advertising". According to the head of the world's largest advertising and information holding "Double UPP", in the near future promotional activities Russia should take the third place in the world - after the USA and China. At this stage of its development, Russian advertising is faced with the need for a sharp qualitative growth; First of all, we are talking about a large staffing shortage. The market lacks qualified specialists in various areas of advertising. The main reason for this situation is the lack of a domestic advertising school and systematic education in the field of advertising. Further development of advertising as a social, cultural, economic phenomenon will help the domestic economy to solve very ambitious tasks of innovative development. The Russian advertising market will have to create effective mechanisms for regulation and self-regulation. Russian advertising can play an important role in the formation of a socially oriented information environment, which can become an element of a new ideology of activation social factors economic growth. Since 1992, the year of the emergence of the economic concept of the advertising market, according to most experts, there have been a number of changes associated with the growth of the Russian advertising business. The Russian advertising market has grown more than 50 times - from $50 million to $2.7 billion. Thus, in the first half of 2007 the market grew by 30%. According to ACAR, the volume of the media market in 2007 increased by 37% against 54% in 2006 (about $1.99 billion) and amounted to $2.72 billion. The share of the advertising market in Russia's GDP is approximately 0.7-0.8%, as its world norm is 1% of GDP (in Europe from 0.8 to 1.2% of GDP). In 2008, when the level of the advertising market with production exceeds 4 billion, the percentage of the share of advertising in GDP is likely to add to the European level. Even after a slowdown in growth, the advertising market is the vanguard market in terms of growth rate, outpacing the country's GDP growth rate by 5 times. In 2007 the market grew mostly extensively. With price increases, especially for central TV, many medium-sized advertisers have switched to regional TV channels or reallocated their budgets to other media channels. Large advertisers increased their budgets on TV in order to be visible on TV. The share of TV continued to steadily increase and in 2008 it occupied half of the advertising media market in Russia. This happened against the backdrop of a decrease in the share of the press (especially newspapers) and outdoor advertising, although these media, like radio, are growing in absolute terms, but more slowly than the entire market as a whole. As the volume of the advertising market continued to grow, its growth rates slowed down, so by 2009 ACAR determined that the market growth was slowing down to 10% per year (see Table 1 A and B).

These figures for the turnover of the national advertising market, when recalculated for the entire population of Russia (145 million people), turn into approximately $ 20 per person (or $ 25-26 per inhabitant of Russian cities), including even babies. In the United States, as the most highly developed advertising market, in 2006 advertising costs per capita amounted to about $1,000. in the form of advertising (first); the growth of the purchasing power of the population (second) and the intensity of competition in consumer markets (third). In 2008, the third factor acted to a greater extent and, in part, in the second half of the year, political stability began to return with a gradual decrease in the growth rate of purchasing power. television advertising between the leading campaigns in the first half of 2007 (see Chart 1).

Diagram 1. The share of advertising budgets of the largest agencies on TV channels Channel 1, Russia, NTV, STS, RenTV and TNT in the first half of 2007 according to VI. (The dashed lines indicate the agencies included in the advertising groups listed in front of them, the percentage of these agencies is taken into account in the total percentage of the advertising group)

About 20% of all money circulating in the Russian advertising market falls on outdoor advertising. Compared to other countries, such as Poland, where its share is 6%, France (11%) and Romania (only 3%), this is a large percentage. In 2006, the outdoor advertising market amounted to $400 million, and in 2007 about $520 million, Managing Director of NewsOutdoor, finds several reasons for the greater importance of outdoor advertising in Russia. Firstly, Russian cities are more suitable for outdoor advertising than European cities due to the specifics of architecture. The second reason is the fairly liberal policy of the municipal authorities in relation to outdoor advertising. In Russia, operators were able to install advertising media in extremely effective places, next to the road, facing the roadway, etc. And the third reason is the underdevelopment of local media - the main competitors of outdoor advertising, such as cable TV and radio. The outdoor advertising market, as well as advertising on central TV, is oversaturated (demand outstrips supply), which affects efficiency. Only in 2005 prices have reached the pre-crisis level of 1997-1998. Therefore, there was a further increase in advertising rates. During 2006, in Moscow, the price of renting a side of a 6x3 m billboard increased from $700 to $750-800 per month. As the research company, ESPAR-Analyst, predicted, the cost in Moscow of one side by the end of 2007 will increase to 900-1000 dollars, and it happened. The number of advertisers who spend about $100,000 a year on outdoor advertising is approaching three hundred. At the same time, the fastest growth rates in expenses are shown by large advertisers, whose budgets are about one million dollars. This category of advertisers advertises on approximately 100 sides per month. There are about thirty such advertisers in Moscow. The greatest demand for outdoor advertising is observed among shopping centers and networks, manufacturers of tobacco and electronics, operators cellular communication. The top five outdoor advertisers include tobacco firms (JTI, BAT and Philip Morris) as well as Samsung and LG. The entire volume of the Moscow market, according to the research company "ESPAR-Analyst", in 2006 amounted to 220 million dollars. However, the Moscow authorities plan to reduce the number of billboards, especially in the city center. Thus, according to "ESPAR-Analyst", in Moscow there are about 19.7 thousand 6x3 billboards and 32.5 thousand advertising surfaces (as of June 2007). Market participants expect that the city government will certainly want to tie the fees of advertisers to the city to the increase in prices for placement. Based on the foregoing, the level of domestic advertising is uncertain and unstable. After all, we see a very high rate of development of advertising at the beginning of the 21st century. Since the turn of the century advertising agencies greatly improved the quality of work and their number. The relatively low level of media advertising in Russia compensates outdoor advertising, as mentioned earlier, "Russian cities are more suitable for outdoor advertising than European cities due to the specifics of architecture", and besides, outdoor advertising is very popular in Russia and in many cases is indicative for the consumer. In the field of advertising, Russia is a lagging country, but as many experts, advertisers and marketers think, in the same way, this backwardness is only a consequence of the late start of the development of the advertising market. After all, he, as a concept, is not even 20 years old.