Page 117 - Corporate Communication

Cornelissen-04.qxd 10/9/2004 9:04 AM Page 106

106 Corporate Communications in Practice

A SWOT analysis stands for an investigation of the strengths, weaknesses,
opportunities and threats.The first half of this analysis – strengths and weaknesses –
examines the company’s position, its capabilities, operations and products vis-à-vis
stakeholders,competitor activities,environmental trends and company resources.The
second half of the SWOT takes this review further to examine the opportunities and
threats identified within the environment, including, for instance, market opportuni-
ties, political regulation and shareholder activism.The result of the SWOT analysis
should be a thorough understanding of the organization’s status, of its standing with
important groups in its environment and of the factors in the environment that may
impinge upon it.A SWOT analysis should be carried out in an objective and detailed
manner, with evidence provided to support the points cited.
Together, these two analytical tools will provide managers with an understanding
of the organization – its capabilities and operations – and with a general overview of the
organization’s position within the environment.The whole purpose of organization-
environment analysis is not to generate long lists of factors and points, but to provide
a concise and to-the-point analysis of the organization and its current position
within the environment.

2. Market and competitive analysis. One part of the overall environment of an orga-
nization includes the markets or market environment in which the organization
operates.With market and competitive analyses, the aim is to identify what the com-
petitive position of the organization and its products is within the markets in which
it operates and whether the organization can target and serve those markets in a way
that at least rivals, if not exceeds, its nearest competitors. Analytical tools include
market analysis and competitive analysis.
A first step towards understanding the market environment is to analyse the structure
and customer requirements within a market or market segment, or market analysis.
An analysis of the structure of a market includes identifying the size of the market
and trends within it, and whether the market can be further partitioned into differ-
ent market segments.An analysis of the customers includes gathering data and draw-
ing up a detailed profile of customers within the market or market segments in terms
of their buying and consumer behaviour. Such customer analysis should also aim to
draw out whether customers appreciate and value the products and services, as well
as the entire corporate identity profile of the company behind it.
Most market environments of organizations are furthermore characterized by
competition (instead of a monopoly).Within this competitive environment, organi-
zations thus need to understand the nature of the competition they face.Who are
the main competitors? At which segments are they targeting their products and
services? Answering these questions allows managers to make decisions about the
most appropriate segments to target and the kind of competitive advantage to seek.
Michael Porter’s five-forces model is often used for this type of competitor analysis.
The five-forces model is a well-tested model that determines the intrinsic long-run
profit attractiveness of a market or market segment to an organization, taking account
19
of the competitive threats posed to it. The five forces – each with a different threat –
are industry competitors (threat of intense segment rivalry), potential entrants (threat
of new entrants), substitutes (threat of substitute products), buyers (threat of buyers’
growing bargaining power), and suppliers (threat of suppliers’ growing bargaining