One of the basic marketing tools to measure the performance of a company regarding its products and markets is the SWOT analyses.
The SWOT analyses evaluates a company’s strengths and weaknesses matched to opportunities and threats using planning models integrated into the marketing information system.
It tries to integrate different internal positive and negative resources along with their external counterparts to reach a fundamental assessment of the overall performance of the company.
Applying the tool of the SWOT analyses in the rug business can work well both for a manufacturer and a distributor (wholesaler or retailer).
An example of how this tool works can be as follows:
Strengths: Those are the company’s resources and capabilities that can be used to build a competitive advantage for the company. Because they are internal affairs, strengths are factors that are mostly controlled by the company. The strengths can include patents, strong brand names, cost advantages, and strong human resources. For a rug manufacturer, strengths could be high level of innovation to create unique designs & colors; excellent post-sales follow-up; superior know-how of the manufacturing process; strong brand name; and highly-trained technical and sales personnel. For a rug wholesaler or retailer, strengths could be highly selective products that constitute a unique product portfolio; satisfactory service offered to clients; ability to have extra cash flow to use in other marketing purposes, like offering clients in-store giveaways; and owning more than one location for distributing the rugs to have better coverage of the selling city or area.
Weaknesses: Those are the internal tools inside the company that should be used as strengths but they are actually not. They can be studied and transformed into strengths. The weaknesses can include weak brand name, lack of patent protection, high costs, lack of access to distribution channels, and bad reputation. For a rug manufacturer, weaknesses could be outdated designs & colors; inability to have right pricing policy; semi-skilled or unskilled personnel; longevity of decision-making process; and having a lot of production waste that could increase cost of production. For a rug wholesaler or retailer, weaknesses could include having unskilled sales staff that wouldn’t give the customers the right service; improper settings of the store and rug displays; having the selling stores at inaccessible locations to customers; and wrong pricing of exhibited rugs that would drive customers to other stores.
Opportunities: Those are external factors, out of the control of the company that could create opportunities for growth or profit for the company. The opportunities could include an unfilled customer need, arrival of new technologies, change of political system, and international trade negotiations. For a rug manufacturer, opportunities might be the bankruptcy of a strong competitor thus creating a gap in the market; invention of a new loom that increases productivity; removing trade barriers between the manufacturer’s country and other countries; dynamic actions by the government to reduce taxes and tariffs on imported raw materials; and reduction of world prices of raw materials. For a rug wholesaler or retailer, opportunities might be operating new transportation schemes that would make the access to the store easier; establishment of new residential complexes in the area so more homes will need more rugs; and the bankruptcy of competitor store.
Threats: These are external factors, out of the control of the company, that could have detrimental effects to the company and harm growth, profits, and overall performance. The threats could include shifts in consumers’ tastes away from the company’s products, emergence of substitute products, new regulations, and increased trade barriers. For a rug manufacturer, threats might be the removal of custom duties on imported rugs; deterioration of diplomatic relations between the manufacturer’s country and countries considered as major export markets; acute fluctuations of raw materials’ prices; increased competition; and increasing price quotations of shipping lines.For a rug wholesaler or retailer, threats might be shifting of customers’ tastes from rugs to hard flooring or other type of floor coverings; increase of VAT tax on such items as rugs; and blocking of the store path by a major construction site as a bridge, tunnel, or highway. One of the best models to implement the SWOT analyses is The GE Strategic Planning Grid. The grid provides a framework for analyzing a prospective new product or business opportunity in terms of the attractiveness of a prospective market and the business strengths of the firm assessing the opportunity. The more attractive the market is and the stronger the business strengths of the company are, the better the prospects of success in entering this market. GE Strategic Planning GridGreen light opportunities indicate an invest and grow planning strategy; full marketing resources are appropriate, and the profit ability is expected to be high. Yellow light opportunities indicate a cautious planning strategy; a product might have a strong position in a weak industry, a moderate position in an attractive industry, or a weak position in an attractive industry. Thus, weaknesses should be strengthened before the new product is launched; otherwise, with an existing product, no additional resources should be committed. Red light opportunities indicate no-go strategies and no new product launches; they indicate the need to harvest or divest existing products. Industry attractiveness here denotes market size, market growth rate, profit margin potential, strength of potential competition, economic constraints, and the role of technology in making and marketing the products.
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