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How to Use IBISWorld Research in a SWOT Analysis

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by Rebecca Simon
Dec 01 2018

A SWOT analysis, or SWOT matrix, is a technique used by businesses and individuals to understand the strengths, weaknesses, opportunities and threats a company faces within a particular industry. Insight into these key factors affecting a market can help a business strategise ways to best leverage its resources and find its niche within that market, while also mitigating any potential threats to its success. This not only maximises the company’s growth potential but also allows it to achieve its highest level of profitability. IBISWorld industry reports are a valuable all-in-one tool that can help businesses quickly and easily conduct SWOT analyses by clearly outlining all of the internal and external factors affecting a specific industry. Using IBISWorld’s SWOT in the Industry section, professionals can learn how to best navigate through all the ups and downs of their markets.

The SWOT in the Industry section of an IBISWorld report is your first port of call for learning how to apply a SWOT analysis to your industry or company. It is included in our Industry at a Glance chapter and draws various factors from our Industry Research Reports to determine an industry’s strengths, weaknesses, opportunities, and threats. This document explains which factors are taken into account in our SWOT in the Industry section and delves into how you can use this insight to improve your company’s performance.

 

Strengths and Weaknesses

The first step in conducting a SWOT analysis is identifying the internal factors that affect your business by understanding your company’s strengths and weaknesses. The most obvious way to ensure your company is living up to its full potential within an industry is to analyse industry best practices and align your own business practices with these standards.

Some questions you can ask to gain better insight into your company’s strengths are:

  • What advantages does my company have?
  • What are the best resources my company is able to leverage?
  • What does my company do better than other companies within my industry?

 

Similar questions that can help to identify your company’s weaknesses are:

  • What are other companies in my industry doing better than my company?
  • Where does my company struggle?
  • What resources does my company lack?

 

The below sections are all integrated into IBISWorld’s SWOT in the Industry section.

IBISWorld Chapter: Products & Markets

This chapter sheds light on the internal operations of an industry and provides a breakdown of the products and services it offers, the markets it sells those products to, international trade that occurs within the industry and a map of where businesses within the industry are located across the country.

Products & Markets subsections to consider:

Product & Services

Application in IBISWorld’s SWOT section: Product Concentration

This subsection segments all of the individual products and services offered by an industry into an average percentage of total industry offerings. In addition, each category is accompanied by an analysis of why this product or service segment is a particular size, citing market demand and operating conditions. When a company’s revenue is highly reliant on a single product/service, it is in a weaker position.

How to use this section in a SWOT analysis:

  • Understand how other companies in the industry are segmenting their offerings.
  • See how your company’s product segmentation compares with the industry average.
  • Gain knowledge on how your company can plan its strategy on how to best leverage its strongest product or service or improve the performance of its weakest product or service.

 

Major Markets

Application in IBISWorld’s SWOT section: Customer Concentration

This subsection includes a segmentation of all the markets to which the industry sells its products or provides its services. Additionally, each market segment contains a detailed description of why the industry’s products or services perform so well or poorly in that environment. When industry revenue is highly dependent on a single customer class, this is considered a weakness since there is significant concentration risk associated with demand from a single source.

How to use this section in a SWOT analysis:

  • See how your market segmentation compares with the industry average.
  • Analyse which are the strongest and weakest markets for your industry and how this compares with your company.
  • identify how to fully utilise your strongest market and better break into your weakest market.

 

International Trade

Application in IBISWorld’s SWOT section: Import Competition

This subsection provides analysis on the level of imports and exports in the industry and how this has changed over the past five years. The level of import competition faced by an industry can have a significant influence on its performance in the domestic market. A high level of import competition, represented by a high imports/domestic demand ratio, implies that the domestic industry is in a weak position relative to foreign counterparts.

How to use this section in a SWOT analysis:

  • Understand how much of the domestic market is satisfied by imports.
  • See which products face the highest level of import competition.
  • Assess what advantages are held by foreign competitors and how your company can best combat this to capture more demand in the domestic market.

 

IBISWorld Chapter: Competitive Landscape

This chapter evaluates the external environment of the industry by determining the scope of each major player’s presence in the industry, listing key success factors for businesses operating within the industry, breaking down the costs associated with running a business in the industry, specifying competition within the industry and assessing barriers that businesses face upon entering the industry.

Competitive Landscape subsections to consider:

Cost Structure Benchmarks

Application in IBISWorld’s SWOT section: Profit

This subsection contains a breakdown of all the average costs for businesses operating in this industry, including profit, wages, purchases, depreciation, marketing, rent and utilities. Profit margins above the sector average are considered a strength for industry. This implies that operators are capturing more value in the space and are in a stronger competitive position.

How to use this section in a SWOT analysis:

  • Benchmark your company’s costs against the sector average to determine how to best allocate your budget and maximise profit.
  • Identify which of your business costs are above or below the industry average to discern growth opportunities and evaluate threats.

 

 

Basis of Competition

Application in IBISWorld’s SWOT analysis section: Competition

This subsection analyses the level of competition in an industry and indicates whether competition is increasing, remaining steady, or decreasing. It also provides analysis on the main ways in which companies within an industry compete against each other. Common competitive factors include price, the quality of products or services offered and companies’ reputation. High competition presents a threat to industry companies, as this suggests that there is a large number of other operators or an intense pricing environment. When competition is low, operators are better able to capture more profit through their operations.

How to use this section in a SWOT analysis:

  • Understand what the most important competitive factors are for your industry.
  • See how your company’s competitiveness compares with other firms operating in your industry.
  • Assess how to better position your company to attract custom and draw demand away from other firms.

 

Barriers to Entry

Application in IBISWorld’s SWOT section: Barriers to Entry

This subsection considers how easy it is for a newly established company to enter the industry, looking at the main challenges that these firms are likely to face. High barriers to entry are considered a structural strength for the industry, as they can support stronger operating performance for incumbent operators. Conversely, low barriers to entry are considered a weakness, as industry operators are more likely to be exposed to new competitors, which can increase the difficulty of operating successfully.

How to use this section in a SWOT analysis:

  • Assess to what extent your company is likely to be affected by competition from new entrants.
  • Arm yourself with the knowledge required to strategise against the threat posed by newly established competitors.

 

IBISWorld Chapter: Operating Conditions

This chapter provides further insight into the external environment in which an industry operates, including detailed analysis on the amount of capital required, the use of and advancements in technology, external technology disrupting operations, regulations that companies must abide by and assistance provided to the industry.

Operating Conditions subsections to consider:

Revenue Volatility

Application in IBISWorld’s SWOT section: Volatility

This subsection analyses how stable or volatile an industry’s revenue has been over the past five years, including analysis on the main drivers of movements in revenue. Regardless of whether revenue tends to be high or low, large swings create structural issues for industry operators. A high level of revenue volatility is considered a threat to the industry. Low volatility is deemed a strength, since it implies companies have stable revenue streams and are better equipped to handle cost structure issues and invest in future capacity with relative confidence.

How to use this section in a SWOT analysis:

  • Benchmark your company’s level of volatility against the industry average to understand how well you manage volatility compared with your competitors.
  • Identify how to better manage external factors that influence your revenue performance.

 

 

Industry Assistance:

Application in IBISWorld’s SWOT section: Assistance

This subsection details any assistance, either from the UK government or other external sources such as industry associations, that companies operating within the industry are able to benefit from. A high level of industry assistance is a structural strength for incumbent operators and should support performance, whereas low assistance represents a threat.

How to use this section in a SWOT analysis:

  • See what financial or governmental assistance is available to your company.
  • Assess if your company is taking full advantage of funding opportunities, external support and other support.

 

Other subsections to consider:

Industry Life Cycle

Application in IBISWorld’s SWOT section: Life Cycle

This subsection identifies where an industry sits compared with the wider economy. It compares the industry’s growth with GDP growth over a 10-year period to determine how its share of the economy is expected to change. Other factors considered when determining an industry’s life cycle stage include trends in the number of industry establishments, the potential to introduce new products or services to market, and how technology is affecting the industry’s development. A ‘growth’ stage life cycle is a strength and a ‘decline’ stage life cycle is a threat. A ‘mature’ life cycle stage is neutral. The ‘growth’ stage implies existing operators have the potential to exhibit high revenue growth and strong profitability in the future.

How to use this section in a SWOT analysis:

  • See if your company’s life cycle stage is in line with the wider industry and understand the reasons why.
  • Assess if your company is fully capitalising on growth opportunities and how this can be improved.

 

Key Statistics

Application in IBISWorld’s SWOT section: Labour Efficiency

This chapter provides a wide range of financial information for an industry over a 20-year period, including five years of forecast data. Statistics provided include revenue, enterprise and establishment numbers, wages, imports, exports and domestic demand. This section also provides a Key Ratios table, which compares the industry’s key statistics in various combinations, allowing you to benchmark your company against industry averages.

How to use this section in a SWOT analysis:

  • Compare your company’s revenue per employee ratio with the industry average to see how labour efficient your operations are.
  • Assess how well your company utilises staff compared with its competitors and how this can be improved.

 

 

Opportunities and Threats

The second half of the SWOT matrix is distinguishing the external factors that affect your business by pinpointing your company’s opportunities and threats. While identifying opportunities within an industry and planning how to take advantage of them is an obvious way for a business to achieve growth, mitigating threats can be a crucial element in maintaining relevance within a market. Since threats to a business within an industry are often external and out of operators’ control, effective mitigation requires careful and detailed planning.

Some questions for a business to ask to determine opportunities within a market are:

  • What are some new trends within the industry?
  • What economic factors can my company take advantage of to improve its performance?
  • How does my company’s performance compare with industry and sector averages?

 

Similar questions for a business to diagnose threats are:

  • What external factors are affecting demand for my products or services?
  • How are changes in consumer attitude or lifestyle affecting my company’s offerings?
  • How does my company’s efficiency compare with its competitors?

 

IBISWorld Chapter: Industry Performance

This chapter provides a summary of how the overall industry has performed over the past five years, its forecast performance over the next five years, key external factors that influence industry performance and how the industry’s performance compares with that of the overall national economy.

Industry Performance subsections to consider:

Key External Drivers

Application in IBISWorld’s SWOT section: Opportunity/Threat Driver

This subsection contains four to six external factors that strongly influence industry performance. These range from the price of inputs to consumer sentiment, and their growth direction can be a good indicator of how the industry is likely to perform in the near future.

How to use this section in a SWOT analysis:

  • See which KEDs are expected to provide opportunities for your company in the current year.
  • See which KEDs are expected to threaten your company’s performance and how to mitigate this.
  • Understand how to take advantage of when KEDs are increasing and decreasing.

 

 

Current Performance

Application in IBISWorld’s SWOT section: Short-Term Growth and Outlier Growth

This subsection gives a detailed analysis of how the industry has been performing over the past five years. Within this section, KEDs are more thoroughly explained and their impact on the overall industry is discernible. It also includes a compound annual growth rate (CAGR) for industry revenue during the past five years, which is compared with the same measure across the sector to provide the short-term growth factor in the SWOT analysis section, and a forecast for industry revenue growth during the current year, which is compared with the average industry growth rate since 2005 to determine the Outlier Growth factor.

How to use this section in a SWOT analysis:

  • Gain an understanding into the historical trends of the industry to help your business better plan how to mitigate external threats.
  • Compare your company’s revenue growth rate with the past five-year CAGR for industry revenue, or Short-Term Growth, to see how well you perform against the industry average.
  • See how industry revenue is forecast to perform in the current year and assess how your company can take advantage of this.
  • Arm yourself with knowledge to effectively prepare for significant swings in revenue.

 

 

Industry Outlook

Application in IBISWorld’s SWOT section: Outlook Growth

This subsection gives a forecast of how the industry is slated to perform over the next five years. Within this section, metrics are given as to how specific external drivers will affect performance.

How to use this section in a SWOT analysis:

  • Use the forecast CAGR for industry revenue over the next five years to help determine what you expect for your company’s performance.
  • Easily identify both opportunities and threats to your company’s performance for the coming years.

 

IBISWorld chapter: Key Statistics

Application in IBISWorld’s SWOT section: Long-Term Growth

Using our Key Statistics chapter to assess the long-term performance of industry revenue can provide valuable insights for your company. In our SWOT analysis section, long-term growth tracks CAGR of industry revenue from 2005 to the report year. This measure is compared with the rate of GDP during the same period.

 How to use this section in a SWOT analysis:

  • Compare your company’s long-term growth rate with the industry’s growth to identify future growth prospects for your company.
  • Identify your industry’s potential to exceed growth in the rest of the economy.

 

In addition to industry research reports, IBISWorld provides several supplementary tools that can be useful when conducting SWOT analyses.

IBISWorld Risk Ratings Reports

These reports provide an analysis of the level of difficulty a business will face for the next 15 to 18 months by assessing structural risks, growth risks and sensitivity risks. Taking this information into account, analysts assign each industry a risk rating score based on short-term threats the industry will endure. Using these reports, you can quickly identify what threats your business will encounter in the near future and develop ways to best mitigate this risk.

IBISWorld Industry Wizard Tool

This online tool allows you to pull data from thousands of industry reports and risk rating reports and filter it into different focal points. By narrowing down the most important industry information into lists, this tool will enable you to discover other industries that have favourable operating environments for your business and identify opportunities for expansion into those other industries.

 

Applying a SWOT Analysis

If thoroughly conducted and strategically implemented, the SWOT analysis can help a business achieve its fullest potential while enhancing its market competitiveness. Using IBISWorld industry research and tools, companies can easily classify each of the internal and external factors affecting their performance and learn how to leverage their strengths, overcome their weaknesses and fully take advantage of the opportunities within their market, all while effectively mitigating threats to their overall success.