A SWOT analysis can be made more effective by realistic application of numbers to Opportunities, comparison of Strengths & Weaknesses with available competition, and risk management of Threats.
Opportunity measurement within a major customer
The Ansoff Matrix can be used to calculate how much of a supplier’s current products can be sold to current shoppers within a current retail customer. This is obviously based on a combination of historical sales, sensitivity to promotional activity, extent of above-the-line spend, and relative competitive appeal (see Buying Mix Analysis). The sales of new products to current shoppers in the first instance should be based upon marketing colleagues’ estimates, at least until product experience in the market provides a more accurate indicator.
Next an estimate needs to be made of the numbers of new shoppers of similar profile that can be attracted into branches of the current customer, to purchase the supplier’s current products. Finally, an estimate has to be made of the number of new shoppers that can be attracted into the current customer’s stores, and induced to purchase the supplier’s new products.
Whilst the above approach can be difficult to implement, the quantification of four separate options for each product can be more accurate than a calculation of a global number for all business with that customer, with the added benefit that no business possibilities exist ‘outside the box’, i.e. these four options.
Threats
Threats are in fact outside obstacles to growth, and should be seen in terms of the degree to which they are manageable by the supplier. In practice this means identifying those obstacles such as Regulatory/Legal/Political developments, Cultural/Social change, Technological change, Trade concentration/power/internationalisation, and Competition in terms of innovation/substitution/wealth/risk-policy. It is then necessary to label each of these as A, B, C or D as per the diagram below:
Here the supplier examines the extent to which each threat can be influenced, and thus limited in terms of their potential impact upon the offering. Assessing the Impact and Chance or likelihood of each threat will then help to quantify the effect of each threat to the business.
Strengths & Weaknesses
Given that a supplier’s strengths and weaknesses are relative to opportunities and the extent to which they appeal to the customer compared with available competition, it follows that using them to populate a Buying Mix Analysis matrix will allow the supplier to quantify strengths and assess the impact of weaknesses on the supplier-retailer relationship. In other words, the supplier will then be in a position to evaluate the extent to which it is possible to capitalise on opportunities to grow the business with this customer, while others await a return to normal…
