Business Commentary

SWOT Analysis Framework

A key element of understanding wine regions at WSET Level 4 is being able to appraise the relative strengths, weaknesses, opportunities, and threats they may hold.

The SWOT analysis is a relatively well-known evaluation tool used in many business circumstances and beyond. Too often though, the tool is used in an over simplistic and generic way which renders the analysis pretty unhelpful and fairly basic.  A powerful SWOT analysis on the other hand combines useful, personalised insights that are quantified in some way, and then evaluated against the wider operating environment.

Here’s some top tips around how to undertake a really good SWOT

Keep the discipline of recognising that strengths and weaknesses are internal factors, whilst opportunities and threats are external. Do not get them confused or overlapped.

Strengths and weaknesses should be quantified relative to competitors operating in the same environment. For example, if every wine region has a good climate for growing grapes, it is not a strength, its just a fact of life!  How much better is it in terms of yield potential or price per kilo of grapes?  If a wine region is susceptible to hail, how often in the last decade and what is the financial impact on the year’s crop?

Opportunities and threats are external factors which need researching to understand their potential. Opportunities are only opportunities if they can be grasped by the business and are not financially or for any other reason out of reach.  They should be realistically achievable, specific, and quantified by return on investment.  Weaknesses are only weaknesses if they are holding back the businesses’ potential over and above that of competitors.  The lost potential should be quantified and explained.

Strengths should highlight genuine competitive advantage.

Weaknesses should highlight key areas of underperformance relative to the market set.

Threats should show the potential to change the businesses performance in a negative trend.

Opportunities should show business potential that it is realistic to acquire.

The SWOT analysis considers these points in the context of the supply chain and how the business is affected by both it’s suppliers and customers and their markets.  Whilst detailed and insightful, they are also very easy to understand and draw conclusions from.

Over the next few weeks I will be producing my own set of SWOTs for every wine region covered in the WSET Diploma

Here’s my first one, it’s on Burgundy!

 

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One Comment

  • Kathy on Mar 24, 2022 Reply

    For the external factors I find a PESTLE analysis (Political, Economic, Social-economic, Technological, Legal & Environmental) is usually helpful. Climate change is usually a good one to include.

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