1C Việt Nam

(04.10.2024)

What is SWOT model? SWOT analysis guide from AZ

The SWOT model is an important strategic analysis tool that helps businesses identify internal and external factors that affect their development. From there, businesses can exploit strengths, overcome weaknesses, seize opportunities and deal with challenges. In this article, 1C Vietnam will guide you through the detailed SWOT analysis from A-Z, providing a solid foundation for making informed business decisions.

1. What is SWOT?

SWOT is an important strategic tool, consisting of four basic elements: Strengths, Weaknesses, Opportunities and Threats. This model supports businesses in comprehensively analyzing the operating context, thereby building development strategies and improving business performance.

SWOT model — *SWOT is an important strategic tool.*

Strengths and weaknesses represent the internal resources of the enterprise, while opportunities and threats come from the external environment. By accurately assessing these factors, enterprises can optimize their competitive advantages and deal with potential risks.

2. What is SWOT analysis?

SWOT analysis is an important method in business planning and management, helping organizations or individuals have a comprehensive view of the current situation. This method helps identify internal factors (Strengths and Weaknesses) and external factors (Opportunities and Threats) affecting a specific project, product, organization or decision.

Strengths: These are factors that give a business an outstanding advantage, helping to create a difference and stand out from competitors, such as a loyal customer base, advanced technology, reputable brand, or unique products.
Weaknesses: Factors that prevent a business from achieving its best performance. These are aspects that need to be improved to increase competitiveness, such as higher prices than competitors, an unpopular brand, or an unfinished product.
Opportunities: External factors that facilitate business growth and market expansion. For example, the growth of online sales platforms like Tiktok, or increasing customer demand.
Threats: Refers to factors that have the potential to negatively affect the business in the present and future. Typically, increased raw material costs, fierce competition from competitors or constant changes in consumer shopping trends.

3. Advantages and disadvantages of SWOT model

Like any method, SWOT has its own advantages and disadvantages:

Advantages of SWOT

SWOT is an effective method of analyzing plans and projects without cost, which saves a budget for the business.
Help businesses provide accurate results to improve products/services and enhance brand position in the market.
Make complex problems more manageable, by listing important items.
SWOT analysis can be applied to almost any business activity or field.

Disadvantages of SWOT

The SWOT model is quite simple, the results sometimes do not reflect deeper aspects of the business.
SWOT only focuses on 4 main factors: strengths, weaknesses, opportunities and challenges, without analyzing in detail other factors such as culture, psychology, environment, etc.
SWOT depends on the analyst's perspective and judgment, so different analyses may lead to different results.
It is difficult to determine the level of priority and importance among factors in SWOT.

4. The significance of the SWOT model for businesses

The use of SWOT model has many important implications in business planning management, helping to improve strategic decisions and organizational management, helping to take advantage of opportunities, deal with risks and optimize business strengths.

Overview: SWOT helps organizations or individuals have an overview of the actual situation, helping to consider internal and external factors that influence.
Identify strengths and weaknesses: SWOT helps identify an organization's internal strengths and weaknesses, its position in the market, and what the business can leverage or improve.
Taking advantage of opportunities: By identifying and evaluating opportunities in the environment, SWOT helps an organization or individual find ways to grow and expand.
Coping with risks: SWOT helps to identify and assess potential risks, plan to deal with challenges and minimize negative impacts.
Strategic planning: Based on information from SWOT analysis, managers can determine strategies to take advantage of strengths and opportunities and deal with weaknesses and risks.
Decision support: SWOT provides useful information for decision making , helping to make informed and data-driven choices, rather than relying on decisions based purely on intuition.
Monitoring and Evaluation: SWOT is not only useful in planning, but also effective in monitoring and evaluating performance after the strategy has been implemented.

5. Detailed SWOT analysis guide

SWOT analysis is an important step to understand the business situation and create a solid foundation for business strategies. Below is a detailed step-by-step guide to help businesses perform SWOT analysis effectively, quickly and accurately.

5.1 Identify desired goals

Depending on the specific department or plan, SWOT analysis will aim at different goals. For example, the goal may be to expand the market to increase revenue, launch new products to capture consumer trends, solve communication crisis problems, or improve product quality when receiving negative feedback from customers. These goals not only help businesses clearly define their course of action but also create a solid foundation for collecting accurate SWOT analysis data.

5.2 Questionnaire to help build a scientific and effective SWOT model

To build a SWOT model scientifically and effectively, it is necessary to use a suitable set of questions. These questions will help guide the analysis process, ensuring that all important aspects are considered thoroughly and comprehensively.

Element	Question
Strengths - Strengths	What factors make customers love and be loyal to a business? What makes your business better than its competitors? What unique resources, skills, or products are the business's strengths? Which brand features attract customers the most? What management or organizational aspects help the business outperform its competitors?
Weaknesses – Weaknesses	What factors make customers dissatisfied with a business's products or services? What issues have customers reported in social media reviews about your business? What unique resources or products does the competitor have that the business does not possess? Are competitors developing products or services that are superior to yours?
Opportunities – Opportunities	How to improve product/service quality to attract and retain customers for the long term? What potential communication channels can help increase customer conversion? What industry or market trends can businesses leverage to drive growth?
Threats – Challenges	What weaknesses in your product/service could competitors exploit to increase market share? What gaps in production, management, or finance could potentially pose a threat to the sustainability of the business?

5.3 Develop appropriate strategies

Combining strengths with opportunities helps optimize growth potential. In the following steps, 1C Vietnam will guide you on how to build a strategy based on SWOT analysis results, helping businesses develop sustainably and surpass competitors in the market.

Strategy	Content	For example
SO Strategy	This strategy combines the two strongest elements in the SWOT matrix, helping businesses exploit internal strengths and market opportunities.	A seaside restaurant known for its gourmet cuisine and attentive service has leveraged its location and reputation to expand into tourism services.
ST Strategy	This strategy combines strengths and challenges, focusing on maximizing the business's advantages to deal with market challenges and minimizing negative impacts.	Despite the fierce competition in the English learning app market, the Virtual Exam Room app has maintained its market share by leveraging artificial intelligence and machine learning technology, providing unique, personalized features for users.
WO Strategy	This strategy combines weaknesses and opportunities, aiming to take advantage of opportunities to overcome weaknesses.	A new startup with limited resources and management experience raised capital from an experienced investment fund in the industry. The fund not only provided financial capital but also operational advice, helping to compensate for the company's shortcomings.
WT Strategy	This strategy combines the two weakest elements in the SWOT model: weaknesses and threats, focusing on defense. The goal is to improve weaknesses and minimize risks, often applied when a business is in recession.	A traditional electronics manufacturing company is struggling due to rapidly changing technology trends. To compete, the company needs to improve its old products and expand its product or service lines to new ones.

6. When should businesses use SWOT?

Businesses do not necessarily need to use the SWOT matrix in every situation, but should only apply it at the appropriate time. Here are some specific examples:

When building a business plan: SWOT helps identify internal and external factors that affect the business, making planning easier and more effective.
When planning strategy: SWOT helps identify opportunities for businesses to exploit and avoid potential risks.
Before making important decisions: Before investing, expanding the market or merging, SWOT provides a comprehensive view of the current situation and strategic direction.
When facing fierce competition: SWOT analysis helps to understand the strengths and weaknesses of the business compared to competitors, thereby building an effective competitive strategy.
When assessing the business environment: SWOT allows for a clear understanding of the business environment and influencing factors such as laws or market trends.
When internal management has problems: SWOT helps evaluate and improve processes, personnel and corporate culture.

swot matrix of a business — *Businesses should only apply the SWOT model at the appropriate time.*

7. Compare SWOT model and BCG matrix

Comparison and distinction table between SWOT and BCG (Boston Consulting Group matrix):

Criteria	SWOT Matrix	BCG Matrix
Purpose	Assess internal and external situations	Brand product/service position ranking
Analysis	Internal and external environment, strengths and weaknesses	Market growth rate, market share
Scope	Company, organization, project management	Products, product lines, business units
Structure	Includes 4 boxes (2 rows 2 columns): Strengths, Weaknesses, Opportunities, Threats	Includes 4 boxes: Star, Question mark, Cash cow, Dog
Target	Optimizing environmental fit	Get the best return
Evaluation parameters	Importance, processing ability	Growth rate, market share
Measurability	Qualitative	Quantitative
Range of change	Varies depending on environment	Varies depending on market

8. Example of SWOT analysis of Vinamilk

Vinamilk is famous for its fresh milk, powdered milk, yogurt and high-quality dairy products. The company has a wide distribution network in the country and has expanded into the international market.

Strengths

Prestigious brand in Vietnam.
Distribution network throughout the country.
Modern quality control process.

Weaknesses

Depends entirely on the domestic market.
High infrastructure investment costs.

Opportunity

Expand the market internationally.
Enhance product innovation and product development.

Challenge

Fierce competition from domestic and foreign brands.
Fluctuations in raw material prices and production costs.

swot of vinamilk — *Vinamilk has the strength of being a prestigious and beloved brand in Vietnam.*

From analyzing the above 4 factors, Vinamilk can develop a strategy based on the extended SWOT model called SO, WO, ST and WT. In which:

SO Strategy:
- Leverage strong brand and extensive distribution network to expand market share in emerging markets in Southeast Asia and the Middle East.
- Develop and launch organic and clean product lines, utilizing modern production technology as well as brand reputation to meet new consumer trends.
WO Strategy:
- Expand product portfolio by developing new products that suit international market needs, reducing dependence on the domestic market.
- Increase investment in research and development to create unique products that can compete with international competitors in new segments.
ST Strategy:
- Leverage brand reputation and product quality to strengthen customer loyalty and cope with increased competition.
- Use advanced manufacturing technology to optimize processes, reduce production costs and manage raw material price fluctuations.
WT Strategy:
- Diversify raw material supply sources to minimize risks from price fluctuations and maintain stable product quality.
- Develop alternative products, such as plant-based milk, to meet new consumer trends and reduce dependence on traditional milk.

By applying these strategies, Vinamilk can maximize its strengths, overcome weaknesses, exploit opportunities and handle challenges in the current and future business context.

9. Combining 1C:ERP solution supports business management and strategic planning

1C:ERP solution is not only a comprehensive business management tool but also helps businesses maximize their strengths and overcome their weaknesses through SWOT analysis. Below are details on how 1C:ERP supports businesses in each aspect of the SWOT model , along with the outstanding benefits of the solution:

Internal Analysis (Strengths and Weaknesses)

Identify strengths: 1C:ERP provides detailed reporting and analysis tools that help businesses identify strengths such as efficient manufacturing processes, optimized distribution systems, and solid financial management.
Overcoming weaknesses: 1C:ERP helps optimize internal processes, from warehouse management, purchasing to asset management, helping to eliminate manual work and minimize weaknesses in business operations.

External Environment Analysis (Opportunities and Threats)

Seize opportunities: 1C:ERP helps businesses quickly adjust business strategies based on market data, taking advantage of opportunities to expand into new markets, develop new products or optimize services.
Responding to challenges: The solution helps businesses identify and respond promptly to market challenges, such as fluctuations in raw material prices or changes in consumer trends, thanks to accurate analysis and prediction capabilities.

10. Frequently asked questions about the SWOT matrix model

Below are some questions to help businesses better understand the SWOT matrix and how to apply it in practice:

10.1 How is a SWOT matrix formed?

The SWOT model, developed by Albert Humphrey in the 1960s and 1970s in a research project at Stanford University, was originally called SOFT. SOFT consists of the following elements: Satisfactory, Opportunity, Fault, and Threat.

In 1964, when the model was introduced in Switzerland, Albert Humphrey collaborated with Urick and Orr to change the F factor to W (Weakness), leading to the birth of the SWOT model. By early 2004, SWOT had been completed and widely applied in business projects.

Vinamilk SWOT Analysis — *By early 2004, SWOT had been perfected and widely applied in business projects.*

10.2 Can SWOT be applied to personal development?

Yes, SWOT analysis can absolutely be applied to personal development. In this context, individuals can use the analysis of their personal strengths, weaknesses, opportunities and threats to:

Identify your strengths and weaknesses
Identify career opportunities and potential challenges
Build a personal and career development plan
Preparing for interviews or personal performance reviews helps increase self-awareness and direction for future growth.

10.3 How is SWOT different from other business models?

The SWOT model stands out for its ability to simultaneously analyze both the internal and external factors of a business. Unlike other analysis models such as PESTLE, Porter's Five Competitive Forces or VRIO, SWOT provides a comprehensive view by combining strengths, weaknesses, opportunities and threats. The table below will clarify the above contents:

Criteria	SWOT	PESTEL	Porter's Five Competitive Forces	VRIO
Purpose	Analyze the strengths, weaknesses, opportunities and challenges of the business.	Evaluate macro factors (Political, Economic, Social, Technological, Legal, Environmental) affecting the business.	Assessing industry competitive intensity and attractiveness	Assess the value, rarity, imitableness, and organization of a firm's resources.
Analysis	Focus on the internal and environmental aspects of the business	Focus on external macro factors	Focus on competitive forces within the industry.	Focus on business resources and capabilities
Scope	Comprehensive including both internal and external environmental factors	Includes only external macro factors	Include only factors relevant to industry competition	Focus only on the resources and capabilities of the business
Structure	Four parts: Strengths, Weaknesses, Opportunities, Threats	Six parts: Politics, Economics, Society, Technology, Law, Environment	Five Forces: Threat of Entry, Bargaining Power of Suppliers, Bargaining Power of Buyers, Threat of Substitutes, Industry Rivalry	Four parts: Value, Rarity, Imitability, Organization.
Target	Identify internal and external factors to build strategy.	Provides insight into macro factors affecting the business.	Provides insight into the industry's competitive structure and determines competitive strategy.	Evaluate and optimize resources to create competitive advantage.
Evaluation parameters	Internal and external factors.	Macro factors affecting business	Competitive factors in the industry	Business resources and capabilities
Measurability	Subjective analysis, few specific data	Based on macro data and observational factors	Quantitative and qualitative assessment of industry competitiveness	Based on qualitative and quantitative analysis of business resources
Range of change	May be adjusted and supplemented over time	Analysis of changes in current and future macro factors	Ratings may vary based on industry and competitive fluctuations.	Analysis may change with development and resource availability.

SWOT analysis is a powerful and useful tool in comprehensively assessing the current situation of a business, product or project. Businesses can integrate additional professional support tools with rich data sources such as 1C:ERP to optimize the effectiveness of the model. Hopefully, businesses have mastered how to apply the SWOT model to achieve sustainable and long-term success in the future.

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