It’s Time to Wake Up Your Strategy With a SWOT
While scanning through my inbox today I see several merger and acquisition announcements –Ryder acquires MXD Group, Knight buys Abilene Motor Express, Belmont Express joins Daeske. Despite the current market environment, firms are hitting financial difficulties everyday (the new management team at Roadrunner says it’s going to take time to “right this ship”). Everyday our industry landscape changes from these consolidations and changes. Those 35 to 50 truck, family run firms that used to be your direct competitors might now be part of a much larger operation. How do you compete? What part of the market do you target? Which part of your “lunch” is that “bigger dog” staring at, waiting for you to turn your head so he/she can swoop in and take it?
No general leads his/her army into war without knowing both the terrain he/she will face and what the strengths and weaknesses of the enemy they will face. In today’s competitive environment each business needs to understand what they are facing and where they fit. An excellent way to get you started is with a SWOT analysis.
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses are internal factors while Opportunities and Threats are external. There are several different templates out there that can be found with a quick Google search and each organization will have their preferences. However, the physical form is not as important as actually doing the exercise.
This analysis is not just for use at the enterprise level. It is equally powerful when done at the division, department or even product line/customer account level. You are probably already doing a similar analysis on all your top accounts but possibly not in as formal a framework. By using this method in conjunction with being closely integrated with your large account you should be able to foresee any threats to that client and be prepared to fend off any attempts by other carriers to take over some or all of the business.
Look at factors such as:
• What are the organization’s advantages?
• What do you do better than others?
• What unique resources can you offer (ideally ones that a customer will pay for)?
• What does the marketplace see as your strengths?
• What is your unique selling proposition?
When looking at your strengths, also look at where you are in relation to your competition. If all your competitors are achieving 98% on-time deliveries then you achieving that is not a strength, it’s a market necessity (a table stake). Also take the viewpoint of the customer as they are the ones making the buying decision!
• What could you improve on?
• What should you avoid or eliminate?
• What does the marketplace see as your weaknesses?
• What does your competition do better than you do?
• What causes you to lose sales?
• Are their perceived weaknesses that you could easily overcome?
Be honest in this step as downplaying weaknesses will not allow you to move forward and address them.
• What are emerging trends?
• What changes in technology are coming in the near, medium and long terms that you are posed to exploit?
• What competitors are family owned and are showing signs of cash flow issues?
• What new developments are your current customers working on?
• What new businesses are coming to your marketplace?
One approach to take is to look at your strengths and ask if they open any opportunities. At the same time ask yourself if the elimination of any weaknesses could also create an opportunity.
• What obstacles do you face?
• What are your competitors doing?
• What technological game changers are coming that you are not ready to exploit?
• What is your financial position – any cash flow or debt problems?
• Are quality standards or specifications for your product or service changing?
• Are there any weaknesses that could seriously threaten your business?
• Are there any Political, Economic, Socio-Cultural or Technological (PEST) factors to consider?
Once you have made an exhaustive list for each category, it is now time to pare down the list and prioritize each item. Where possible ensure that all statements are precise and verifiable – for example you want “a cost advantage of $0.05 per mile on the Chicago to Des Moines lane” instead of “competitive pricing”. Finally make sure that any options generated are carried through to later stages in the strategy formation process. Make certain that you follow through and create a strategy once the analysis has been done.
An important task is to measure the gap between where you are and where you want to be. This helps you create goals that can be measured and verified. It’s much better to say “achieve a 5% increase in miles per gallon” than it is to say “improve fuel efficiency”. Understanding what these gaps are will guide both you and your staff towards implementing an effective strategy to get to where you want to be.
Finally, be prepared to revisit this analysis on a periodic basis – possibly yearly for the entire enterprise, more often at the product or customer level. Look at what has changed. Did you improve or eliminate any of your weaknesses? Did your competitor find a way to close the gap on your price advantage? Did something new that has the potential to be a game changer come on the market recently? This should not be a static document and it should be one of the first things you turn to when a new threat or opportunity comes on the horizon. By understanding what is happening on the playing field means that you can make the proactive moves of a market leader instead of reacting like a follower.