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Once you have identified your customers, competitors and the trends in the market, the next step would be to have an understanding of where your product has been recently, where it is now, where it is headed in terms of your plans and the external factors and trends affecting it.

You can develop this understanding by carrying out a SWOT analysis. A SWOT analysis is based on identifying your business' internal strengths and weaknesses and the external opportunities and threats.

It is important to remember that the goal is not simply to develop the SWOT analysis, but to transfer the result of the analysis into action in order to help your strategy grow and succeed. Therefore, the final goal of the SWOT would be to identify the critical factors affecting your organisation and then build on your strengths to reduce your weaknesses, exploit opportunities and avoid the potential threats.

As illustrated through this example, carrying out a SWOT may enable you to identify various factors influencing your business: 

Strengths

• Cost Advantages
• Financial Resources
• Customer Loyalty
• Wide recognition for social responsibility

Weaknesses

• Need for experienced managers to help growth
• Inadequate financing capabilities
• Weak market image

Opportunities

• Growing demand for quality
• Enter new markets
• Acquire firms with needed technology

Threats

• Changing buyer tastes
• Likely entry of new competitors
• Adverse government policies