SWOT analysis is a strategic planning tool which is used in helping an organization to identify Strengths, Weaknesses, Opportunities, and Threats related to competition and in strategic planning. SWOT helps in situational assessment or situational analysis.

Like the 4 Ps of marketing (Product, Price, Place and Promotion) there are 5 Cs of marketing.   The 5 C’s stand for Company, Collaborators, Customers, Competitors, and Climate. These five elements help in performing situational analysis which is strategic process that helps in identifying opportunities and threats both internal and external to an organization. The 5 Cs also help product positioning which helps in reaching the target segment. 

Company

Strengths and weaknesses are internal factors. They are the areas on which organizations have some control over; they can be changed or modified little easily as they are internal. For examples weaker employees can be trained, can be mentored, if organization has patents and intellectual properties it enjoys an upper hand over competitors.  Location advantage is big strength of an organization.  However, opportunities and threats are external in nature. Companies can take advantage of opportunities and protect against threats, but they can’t change them. Examples include competitors’ pricing, prices of raw materials which depend largely on supplier cartel, and buyer behaviour trends.

Before analysing external factors, organizations need to look at internal factors. They need to look at areas in which they enjoy competitive edge over their competitors. If an organization maintains innovative company culture for example Apple whose success largely comes from their approach to innovation. The company continuously improve their existing products which eventually leads to ‘Creative Destruction’. The iPhone which is Apple’s most successful product came from mixing their existing products the iPod and iTunes and combining them with a phone and camera which resulted in a product unlike any other at the time. Apple’s iPhone created huge market disruption. Apple enjoys unique product knowledge, excellent efficiency and productivity among employees and it is too good in giving customer service that creates fantastic sales and happy customers.

Customer

Happy customers build the company brand. Positive brand reputation leads to higher growth. Reputation goes a long way in a business. It attracts customers, investors, partnerships, and employees. While seeking to improve reputation organizations must start with excellent customer service. Keeping current customers happy results in more stable revenue and more accurate predictions. Exceptional customer service is the unconditional commitment to giving the highest level of product or service to every person, regardless of the circumstances.

Today’s digital age is compelling organizations to relook at their customer-centricity promises. Companies struggle to get customer insights from other industries to match their offering. Organizations cannot rely on benchmarking from the industry they exist. For example, HDFC Bank mobile banking app was compared with the Ola app in terms of simplicity. Consumers are now accustomed to best-in-class user experiences both online and offline. A customer-centric organisational culture is no longer just a good thing rather it is a necessity for survival.

With Taj hotels is the best known for its customer service. Customer delight is present in every interaction with guests. The staff whether in housekeeping, at the restaurants, or room service all are very kind and at the service of their customers. Taj employees go out of their way to give the best hotel stay experience to their customers. So, rather than a customer service process, the customer service culture shines through.

Climate

The climate in the 5 Cs of marketing approach stands for external factors opportunities and threats of SWOT. It refers to the attitude of government and lending institutions towards business activity. It also includes the tax rate, inflation and attitude of labour unions towards the employers. Favourable business climates lower risks, reduce costs and connect companies to customers and quality workers. There is no one-size-fits-all approach to business climate change. Each company’s approach depends on its particular business model. Energy, Commodity, Financial, Technology sectors are most volatile industries.

Since past 2 years, sports utility vehicles (SUV) sector is performing well. India’s major automobile manufacturing companies includes Tata Motors, Ashok Leyland, Mahindra & Mahindra, Force Motors, Maruti, Toyota, Hyundai, Kia etc. The craze for SUVs is increasing day by day. At present that waiting periods for some of the most popular models are stretching to over two years, and fresh orders are still flowing in. Car buyers are now willing to spend more on their personal mode of travel and are preferring top-end cars. The SUV segment is enjoying a healthy business climate in India. The SUV segment’s contribution, which was around 19 per cent of the industry, has now gone up to 40 per cent in 2021-22.

Collaborators

In today’s business world, companies are usually deeply tangled, providing each other with services that are vital for day-to-day operations. Collaboration is when a group of people come together and contribute their expertise for the benefit of a shared objective, project, or mission. For example, if an organization needs to control its marketing efforts, it needs to map out entire supply chain, listing all of the third-party distributors, suppliers, partners and contractors. The reason collaborators must be a part of the 5 C analysis is that collaborations create synergy.

Last year Sabyasachi the famous women designer Indian clothing collaborated with H&M global brand. For Sabyasachi Mukherjee also it is a first with a high-street retailer. He has collaborated successfully before with French Shoe Designer Christian Louboutin and New York-based luxury department store, Bergdorf Goodman. Sabyasachi has dedicated a lot of attention to online interactions with consumers and is aware that online interaction with consumers can increase the position of the brand in the market. #SabyasachiSaree is a trend that never goes out of fashion in India. This, he has used to an advantage. It is for the first time that H&M have had a saree in their collection. Being the second largest clothing retailer in the world, it is present in 74 countries with over 5,000 stores under the various company brands, and the saree has never before featured as fast fashion. Imagine, if the trend takes off, this would be what saree enthusiasts only dream of. Sabyasachi’s collaboration with H&M has deepened Sabyasachi’s global market share.

Collaboration leads to more innovation, efficient processes, increased success, and improved communication. Collaboration helps in increasing strengths of a company.

Competitors

No business operates in a vacuum. Whether its sole proprietor shop or a or a large company, a product is always being judged in comparison that provides the same value. Healthy market competition is fundamental to a well-functioning economy. Basic economic theory says that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation. Competition is critical not only in product markets, but also in labour markets. When firms compete to attract good employees, they must increase compensation and improve working conditions.  Firms grow when they are grounded and they spend sufficiently on market intelligence. Competition is an important C in the 5 Cs model. 

The detergent market in India can be divided into premium (Surf, Ariel), mid-price (Rin, Henko, Tide) and popular segments (Ghadi, Wheel, Nirma, Mr. White). Regional and small unorganized players still account for the 40% market. Per-capita consumption of detergent in India at 2.7 kg is the lowest in the world.

In 1987, Ghadi was launched by RSPL (Rohit Surfactancts Pvt. Ltd.), the product was also less priced and targeted at the rural customers, middle class and lower-middle class customers. It also had more or less the same positioning strategy as Nirma. In 1988, HUL launched Wheel to take on Nirma. In early 2000’s Wheel beats Nirma and takes the No.1 spot. In late 2011 and early 2012, Ghari beats Wheel and takes the number one spot in Indian detergent industry. These detergent brands fought with each other on the basis of price.  Competition reduces prices which helps people from lower income strata to buy products.

The Coca Cola Company, Airbus and the biggest clothing company in world Zara have something in common – these companies have used SWOT analysis for their benefit. Strengths, weaknesses, opportunities and threats (SWOT) study helps an organization to be aware of all the factors involved in making strategic decisions. Strengths and weaknesses belong to internal environment and organizations have some control to change them. Examples include employees, values, culture, intellectual property, location advantage etc.  Opportunities and threats belong to external environment; things that are going on outside the company, in the larger market. Organizations can take advantage of opportunities and protect themselves against threats, but they can seldom change them. Examples include competitors, prices of raw materials, legal environment, taxation policies and customer behaviour.

A SWOT analysis arranges company’s top strengths, weaknesses, opportunities, and threats into an organized list and is generally presented in a simple two-by-two grid. When organizations take the time to do a SWOT analysis, they are armed with a solid strategy for prioritizing the pending work list necessary to grow their business.

Writing your own SWOT once a year is very helpful. You may think that you already know everything that you need to succeed, but a SWOT analysis helps you looking at yourself with a difference, giving you new directions.

SWOT Analysis is a proven management framework which enables a brand like ITC Limited to benchmark its business and performance as compared to the competitors in industry. As of 2020, ITC Limited is one of the leading brands in the FMCG sector with a diversified product and services SBUs which includes FMCG, Hotel chains, paper and packaging and agri-business. It also has over 6500 E-Choupal CSR activities and sustainability initiatives which has enhanced ITC’s brand image reaching over 4 million farmers. One of its weaknesses is that it’s diversification in hotel business has not been able to create a huge market share.

Who should do a SWOT analysis? For an effective SWOT analysis, company founders and top management team need to be deeply involved. This is not a task that can be delegated to others. They can do analysis with a group of people who have different perspectives on the company. Innovative companies even look outside their own internal ranks when they perform a SWOT analysis and get input from customers, suppliers, competitors, industry analysts for getting candid views. There is one truth attached to SWOT analysis that is things are constantly changing and therefore organizations constantly need to reassess their strategies.

TOWS Analysis is an extension of the SWOT Analysis framework that identifies organization’s Strengths, Weaknesses, Opportunities and Threats but then goes further in looking to match up the Strengths with Opportunities and the Threats with Weaknesses. In SWOT we identify all the Strengths, Weaknesses, Opportunities, and Threats in point form, from a singular perspective. But, in TOWS matrix we identify the relationships between these factors and selecting strategies on their bases. In TOWS Matrix we create a chart to compare internal (Strengths and Weaknesses) intersecting with the external aspects (Opportunities and Threats).

Strengths and Opportunities (SO): allows firms to analyse how they can use their strengths to take advantage of the opportunities. ITC has a large and competent management team. Clear brand image, outstanding goods, diversified range of products and services, including FMCG, hotel chains, paper and packaging, and agribusiness.

Strengths and Threats (ST): allows firms to take advantage of their strengths to avoid real and potential threats. ITC has made continuous efforts to separate the FMCG sector from over-dependence on tobacco products and has been successful in doing so to some degree. Nonetheless, tobacco products remain the biggest source of revenue contributing more than 60 per cent to ITC’s overall revenue.

Weaknesses and Opportunities (WO): allows using opportunities to overcome the weaknesses an organization is experiencing. Tobacco Products Association has an impact on the cigarettes brands: ITC has made a great deal of effort to enhance its corporate image, but the fact that ITC has many tobacco products in its portfolio has an impact on its corporate image. The increase in the Tobacco Tax has an effect on its revenue. Due to the rise in the tax on tobacco products, cigarettes rates and, subsequently, profits are affected. There has been an increase in health awareness, which has resulted in a decrease in the demand for tobacco products in India. Anti-smoking programs throughout the country also has an effect on cigarette sales. However, the distribution channel created due to cigarettes is being used for other FMCG products by ITC.

Weaknesses and Threats (WT): helps to minimize weaknesses and avoid threats. ITC hotels have not been able to build an enormous market share. However, increased people’s buying power has allowed ITC to further investments in its hotel chains to increase market share. Every year ITC invests around 6 per cent of its operating profit and 9 per cent of its profit after tax in hotels. Unlike its peer competitors Indian Hotels and Leela Ventures, ITC has an advantage. It does not have to borrow funds and relies on the cigarette business to generate the cash needed for investment. The fact that this is a loss to shareholders who would have otherwise received bigger dividends instead of poor returns from investment in a struggling hospitality industry has somehow not been acknowledged. It is time for the ITC management to take call on the hotels business.

Both SWOT and TOWS helps organization to improved focus; this analysis puts everyone on the same page. It helps in identifying what core areas should an organization should be working towards in a given financial year. It helps in strategic alignment. With everyone working on the same goals, managers and employees can build better strategies together. And, it helps in identifying unknown aspects. Top management always wants to discover aspects of business they ignored or were not aware of. From unknown strengths to hidden threats, uncovering this information helps them move forward.

Combining a SWOT analysis with TOWS strategies gives small and large businesses the foundation they need to build their companies and move frontward.