SWOT-analysis as a tool for determining a small entrepreneurship structure development strategy

Formulation of the problem

In today's market development, small businesses that are rooted in it, and those that are just entering the market, have to face problems associated with high levels of fierce competition, excess of such goods and services, oversaturation of advertising and information flows, growing demands consumers to product quality, with constant changes in market conditions and market capacity, as well as innovations that seek to gain increasing shares. Therefore, for the successful survival and operation of cute businesses, improving the quality and competitiveness of their products, you need to be able to anticipate the difficulties they may face in the future and new opportunities that may open up for them. That is, companies need to identify priority areas for development, develop business plans, adapt to changes in the external environment, use new technologies to organize management processes, change business strategies, and therefore, carry out strategic management.

One of the main tools of strategic management, assessing the complexity of internal and external factors that affect the development of small businesses, is the SWOT-analysis.

SWOT-analysis is a process of establishing links between the most characteristic opportunities for an enterprise, threats, strengths (advantages), weaknesses, the results of which can be further used to formulate and select strategies for a small enterprise.

Analysis of recent research and publications. Many companies choose SWOT analysis as one of the main methods of strategic analysis to determine their financial and economic condition. The general method of SWOT analysis is widely covered by many scientists, in particular, such as Brol R., Sztando A. [1], Brooks G., Heffner A, Henderson D. [2], Chermack T., Kasshanna B. [3], Gudanowska A. [4], Gupta G., Mishra R. [5], Helms M., Nixon J. [6], K^dzior Z. [7], Mirzakhan M., Parsammal E., Golzar A. [8], Nazarko J., Glinska U., Kononiuk A., Nazarko L. [9], Ommani A. [10], Shkulipa L.V. [11], Vlados C. [12], Zhurovskyi M.Z., Perevezra K.V. [13].

However, insufficient attention is paid to the peculiarities of the application of this method for small businesses engaged in the retail sale of medical and orthopedic products in specialty stores. We believe that existing research needs further development in terms of adapting this method to the specifics of a particular enterprise or aimed at improving the methodology of SWOT analysis to determine the level of competitiveness of enterprises in modern business conditions.

Setting objectives. The purpose of the article is a strategic analysis of the state of development of LLC “GALYCHMED”, identification of positive and negative trends and changes, identification, and awareness of factors that cause inhibition of its development, search for priority ways and directions of development of the analyzed enterprise.

Presentation of the main research material

To determine the main opportunities and threats, as well as the strengths and weaknesses of the researched company (LLC “GALYCHMED”) we use SWOT-analysis, which is conducted to identify areas of marketing efforts in which the company can achieve competitive advantage. The effective functioning of any enterprise requires a comprehensive assessment of both the external and internal environment. Therefore, to assess the factors of the macro-and meso-environment of the enterprise, the method of determining the profile of the external environment is used (Table 1, Table 2).

Table 1

The main factors of the macroenvironment that affect the financial and economic condition of LLC“GALYCHMED”

Source: generated by the authors

Table 2

Assessment of opportunities and threats to the external environment of LLC “GALYCHMED”

Source: generated by the authors

The analysis of the external environment of LLC “GALYCHMED” shows that the influence of the macroenvironment is negative, and the mesoenvironment is positive. The most important factors of positive influence are the attitude of the buyer to the product, the population, the attitude of people to work, and so on.

Among the most negative factors are inflation, the social situation in the country and the world in general (COVID-19), financial crisis, slowing economic growth, the purchasing power of the population, industry competitors, potential competitors, and more. At the second stage of SWOT analysis, we carry out strategic diagnostics of the internal environment of LLC “GALYCHMED”. To do this, we form a list of factors of the internal environment, which are divided into two groups: strengths and weaknesses. The list of components and corresponding factors of the internal environment is given in Table 3 and Table 4.

Table 3

The main factors of the internal business environment that affect the financial and economic condition of LLC "GALYCHMED"

Source: generated by the authors

Table 4

Assessment of the strengths and weaknesses of the company LLC "GALYCHMED"

Source: generated by the authors

The data in Tables 3-4 demonstrate the importance of factors of the internal environment of the enterprise, which in most cases have a positive effect on the results of their activities.

After analyzing the opportunities and threats, strengths and weaknesses of LLC "GALYCHMED", we will establish relationships between them and build an appropriate matrix (Fig. 1).

positive negative strategic factor galichmed

Fig. 1. Results of the SWOT analysis of LLC "GALYCHMED"

Source: generated by the authors

At the final stage, four potential development scenarios of LLC "GALYCHMED" were analyzed, their advantages and disadvantages were identified, and a preliminary conclusion was made regarding a possible strategy for its development.

SO:

1. Expanding the range of consumers of medical and orthopedic products by increasing the volume of advertising, focusing on expanding market share. Maintaining and improving the company's image and corporate social responsibility.

2. Increasing sales by selling products targeted at consumer groups with different income levels. That is, to enable both high and middle-class consumers to meet their needs for medical and orthopedic products.

3. Search for new financial instruments for asset placement. In particular, the use of possible investment projects by the company, which would bring high income for the placement of free cash.

ST:

1. Retention of buyers from the transition to competing companies through the use of flexible pricing policy and increase the quality of medical and orthopedic products. Also reducing prices for the offered goods, holding promotional days, developing a system of discounts and bonuses for customers ("Premium Class", "Mass Segment", etc.), and establishing cooperation with new more technologically advanced enterprises (companies).

2. Development of anti-crisis management system in an unstable economic situation in the country.

3. Customer segmentation: individual approach to each consumer, division of customers according to their priorities and values.

WO:

1. Reorganization strategy: expansion of retail trade in medical and orthopedic goods in regions with greater financial and economic potential.

2. Bonus system for customers: providing preferential terms for regular customers, as well as additional discounts on the system of recommendations.

3. Development of new types of goods: it is necessary to develop a strategy for the development of new products and areas of trade. In the beginning, this activity may be unprofitable, but the market share will be significant. If the economic situation in the country improves, the company will receive extra profits in the future.

4. Cost reduction policy: formation of a bonus system, a system of goals for employees; increase the cost of improving their professional skills through systematic training; search for unproductive costs of the enterprise in previous years, provided that the quality of services will not decrease, the reputation will not deteriorate, and profits will increase.

WT:

1. The cost of products may increase due to the cost of transportation. It is advisable to establish contracts on favorable terms with carriers.

2. Profit planning based on the experience of foreign companies.

Conclusions from the study

We believe that the matrix method of strategic analysis - SWOT analysis is a universal analytical tool that can be used by small businesses to select development strategies and market analysis and study competitiveness, but each time it must be adapted to the specifics of the enterprise.

When conducting a SWOT analysis, it is necessary to clearly define the period of research, and be sure to take into account the period for which the analysis is conducted, as those positions that are currently a "weakness" of a small business may later become advantages, and vice versa.

This article uses the SWOT-analysis method to determine the development strategy of LLC "GALYCHMED". The selection of internal factors (strengths and weaknesses of a small enterprise) and environmental factors (opportunities and threats) made it possible to determine the main development strategy of LLC "GALYCHMED" and outline measures to strengthen its position.

It is proved that the unstable financial market due to the pandemic, the devaluation of the national currency, the situation in the banking sector, losses in the area of environmental protection in eastern Ukraine, as well as other factors negatively affected the trading activities of LLC "GALYCHMED". In most retailers, costs have risen and profits have fallen, prompting more conservative pricing and spending cuts.

These proposals can be used as a basis for further research on the analysis of small businesses and determine the strategic prospects for its development.

Literature

1. Brol R., Sztando A. Dlaczego i jak nalezy wzbogacac procedure SWOT w procesie terytorialnego planowania strategicznego. Problemy zarzgdzania w dziatalnosci samorzgdu terytorialnego: materiaty konferencyjne. Uniwersytet Opolski, 2009. Р. 55-82.

2. Brooks G., Heffner A., Henderson D.A SWOT Analysis Of Competitive Knowledge From Social Media For A Small Start-Up Business. Review of Business Information Systems (RBIs). 2014. № 18(1). Р. 23-34.

3. Chermack T.J., Kasshanna B.K. The Use and Misuse of SWOT Analysis and Implications for HRD Professionals. Human Resource Development International. 2007. № 4(10). Р. 383-399.

4. Gudanowska A.E. Technology mapping as a method of technical analysis in the light of selected foreign experiences. Ekonomia i Zarzqdzanie. 2014. №6(1). Р. 265-281.

5. Gupta G., Mishra R.P.A SWOT analysis of reliability centered maintenance framework. Journal of Quality in Maintenance Engineering. 2016. Vol. 22. №2. Р. 130-145.

6. Helms M.M., Nixon J. Exploring SWOT analysis - where are we now? A review of academic research from the last decade. Journal of Strategy and Management. 2010. Vol. 3. №3. Р. 215-251.

7. Kedzior Z., Nazarko J. Uwarunkowania rozwoju nanotechnologii w wojewodztwie podlaskim. Wyniki analizy STEEPVL i SWOT. Bialystok: Oficyna Wydawnicza Politechniki Bialostockiej, 2010.

8. Mirzakhan M., Parsammal E., Golzar A. Strategy Formulation with SWOT Matrix: A case study of an Iranian company. Global Business and Management Research: An International Journal. 2014. Р. 165.

9. Nazarko J., Glinska U., Kononiuk А., Nazarko L. Sectoral foresight in Poland: thematic and methodological analysis”. International Journal of Foresight and Innovation Policy. 2013. №9(1). Р. 19-38.

10.Ommani A.R. Strengths, Weaknesses, Opportunities, And Threats (SWOT) Analysis For Farming System Businesses Management: Case of wheat farmers of Shadervan District, Shoushtar Township, Iran. African Journal of Business Management. 2011. Vol. 5(22). P. 9452.

11. Шкуліпа Л.В. Застосування SWOT-аналізу для оцінки доцільності проведення реструктуризації на залізничному транспорті України. Вісник соціально-економічних досліджень. 2013. Вип. 1(48). C. 168-175.

12. Vlados C. On a correlative and evolutionary SWOT analysis. Journal of Strategy and Management. 2019. Vol. 12. №3. Р. 347-363.

13. Згуровський М.З., Перевезра К.В. Методика побудови сценаріїв розвитку України з використанням SWOT-аналізу. Системні дослідження та інформаційні технології. 2009. №2. C. 7-17.

References

1. Brol, R. oraz Sztando, A. (2009), “Dlaczego i jak nalezy wzbogacac procedure SWOT w procesie terytorialnego planowania strategicznego”, Problemy zarzadzania w dziaialnosci samorzadu terytorialnego : materialy konferencyjne, Uniwersytet Opolski, Polska, рр. 55-82.

2. Brooks, G., Heffner, A. and Henderson, D. (2014), “A SWOT Analysis Of Competitive Knowledge From Social Media For A Small Start-Up Business”, Review of Business Information Systems (RBIs), no. 18(1), рр. 23-34.

3. Chermack, T.J. and Kasshanna, B.K. (2007), “The Use and Misuse of SWOT Analysis and Implications for HRD Professionals”, Human Resource Development International, no. 4(10), рр. 383-399.

4. Gudanowska, A.E. (2014), “Technology mapping as a method of technical analysis in the light of selected foreign experiences”, Ekonomia i Zarzqdzanie, no. 6(1), рр. 265-281.

5. Gupta, G. and Mishra, R. (2016), “A SWOT analysis of reliability centered maintenance framework”, Journal of Quality in Maintenance Engineering, Vol. 22, no. 2, рр. 130-145.

6. Helms, M. and Nixon, J. (2010), “Exploring SWOT analysis - where are we now? A review of academic research from the last decade”, Journal of Strategy and Management, Vol. 3, no. 3, рр. 215-251.

7. Kedzior, Z. oraz Nazarko, J. (Eds.) (2010), Uwarunkowania rozwoju nanotechnologii w wojewodztwie podlaskim. Wyniki analizy STEEPVL i SWOT [Conditions for the development of nanotechnology in the Podlaskie Voivodeship. STEEPVL and SWOT analysis results], Oficyna Wydawnicza Politechniki Bialostockiej, Bialystok, Polska.

8. Mirzakhan, M., Parsammal, E. and Golzar, A. (2014), “Strategy Formulation with SWOT Matrix: A case study of an Iranian company”, Global Business and Management Research: An International Journal, pp. 165.

9. Nazarko, J., Glinska, U., Kononiuk, А. and Nazarko, L. (2013), “Sectoral foresight in Poland: thematic and methodological analysis”, International Journal of Foresight and Innovation Policy, no. 9(1), рр. 19-38.

10. Ommani, A.R. (2011), “Strengths, Weaknesses, Opportunities, And Threats (SWOT) Analysis For Farming System Businesses Management: Case of wheat farmers of Shadervan District, Shoushtar Township, Iran”, African Journal of Business Management, Vol. 5(22), рр. 9452.

11. Shkulipa, L.V. (2013), “Application of SWOT-analysis to assess the feasibility of restructuring in the railway transport of Ukraine”, Visnyk sotsialno-ekonomichnykh doslidzhen, Iss. 1(48), рр. 168-175.

12. Vlados, C. (2019), “On a correlative and evolutionary SWOT analysis”, Journal of Strategy and Management, Vol. 12, no. 3, рр. 347-363.

13. Zhurovskyi, M.Z. and Perevezra, K.V. (2009), “Methods of building scenarios for the development of Ukraine using SWOT-analysis”, Systemni doslidzhennia ta informatsiini tekhnolohii, no. 2, pp. 7-17.

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