SWOT analysis for new venture opportunities

SWOT Analysis
Description of New Venture
The new venture being proposed will be a company seeks to develop an app that will determine optimal weather days in different locations. The tool will take a massive data set of historical data for all the geographies available – in the US and throughout the world’s major tourist areas to begin with. The user will enter the location, their desired activity and a span of time, and will receive as an output the optimal days, based on historical patterns. The current landscape for someone planning a trip might have generic information (i.e. golfers should visit Arizona in the winter when it’s not 120F outside), but that is often not granular enough. For example, someone thinking of visiting Bora Bora in 2020 can easily find out when rainy season is, but more refined data might help them to choose a specific week during shoulder season that is least likely to have rain. Organizers of outdoor events might also benefit from this application, as it will allow people to find the absolute sweet spots for climate, where there are observable patterns. In many parts of the world, weather can be changeable, but there should be a sweet spot of perfect weather for a given activity. For example, if one wishes to go heli-skiing in British Columbia, they might want to find a weekend when it is most likely to be both sunny but not too cold – an expensive activity like that you want to maximize the chances of perfect weather.
The product name has not yet been determined but will play on the perfect weather theme, to effectively communicate what the app delivers. The team that builds the app can be fairly lean – front end, back end, UX/UI, maybe a writer or designer, and someone to handle the algorithm that will parse the data. The time to develop an app is around 18 weeks, and requires at least the above-mentioned specialist roles, along with project management, product marketing and a number of other roles that might provide greater expertise to the project (Haselmayr, 2013).
The ideal vision might be someone who is looking at a fairly broad spectrum of options – like if they have vacation time in the first week of October and want to know where the weather is most likely to be perfect for hiking, the app might provide a dozen recommendations all around the world. The target market is really anybody who is planning a trip, or an outdoor event of any type. This can be professional planners, or even just someone who wants to organize a family reunion. There are ample articles and blogs about who to find the perfect weather at any time of year, but most of these are backed only by basic statistics and anecdotal evidence, rather than professional statistical analysis of a massive dataset (Taylor, 2016).
The product will make its money by partnering with travel applications. These partnerships are common in that industry – if our users are referred to a major travel website, we will make a cut of whatever they buy. Thus, people using our app for vacation planning will be guided to buy tickets, and then our company will get a percentage of those tickets. We also will want to develop stickiness attributes to our site in order to garner a high degree of target market participation that will help build an audience, leveraging the first mover advantage to create a barrier to entry.
SWOT Analysis
There are really only two strengths that we have at present. In a perfect world, we would have more but any startup business can only say with confidence what they have in terms of the idea, and the internal team. We believe that we have a blue ocean idea, one that is not available anywhere. Where climate data is available for any one region, this level of detail is not generally available for the entire world, and is not generally translated into actionable recommendations by an algorithm built by a professional statistician. Blue ocean businesses have first mover advantage, and can win substantial market share before competitors are even able to enter the space (Denning, 2017). So the idea itself is a major source of strength, and the team building the idea is also a source of strength. We believe that we have the right blend of math, engineering and marketing to make this application a success.
There are several weaknesses, or potential weaknesses, that could prove costly. First, while we have what we believe is a high quality team, the team has never worked together before. There are many interpersonal issues that could theoretically arise and challenge the success of the project. Another weakness is that we are building this on a shoestring budget, meaning that the key people are being paid in equity. For the project, this is a weakness because we only have so much time before we have to start earning money and paying people, and it means that we don’t have any money should we need to hire a staff or if we run into any unexpected expenses.
Another potential weakness is that we don’t yet have a product, just an idea for one. As such, we really don’t yet have proof of concept – either that it can be built as we envision it, or that the market actually exists. We think that the market exists based on our research, but the money-making part of the business depends on getting companies to work with us, and on our ability to generate the traffic and marketing data for our users from which our partners will benefit.
There are, of course, some interesting opportunities, which is why we are building this app. We believe that while the data that goes into the app has been recorded over long stretches of time, it was never all that easy to compile, and the AI technology did not exist to parse this data on the fly the way that an app does. As such, we are leveraging emerging technologies to take advantage of the massive data sets that exist in this world on weather and climate data. We feel that people want to know this information, which provides an opportunity to the extent that we can create something that converts massive data sets into meaningful information for the average user.
Furthermore, the travel industry is highly competitive, which has implications for further opportunities. The primary revenue driver will be the partnerships with the major travel companies, and we feel that the size of the travel industry is huge, the intensity of rivalry between the major players is substantial, and that there is opportunity for anybody who can build an audience.
There are definitely threats. The first one is competition. While we are aiming for a blue ocean product, there is probably little in the way of sustainable competitive advantage, unless we are able to build a large and loyal user base in a short period of time. Any potential competitor has access to the same datasets that we are using, and otherwise can build an app that performs much the same function. Thus, we are better off having a strategy where we integrate with travel partners than to give them the opportunity to build this functionality for themselves, thereby reducing our business prospects significantly.
Another threat is the overall health of the travel industry, which is tied to the health of the economy. Such a threat can reduce the overall demand for travel services, or reduce the risk that consumers are willing to take in terms of their travel – opting for known quantities rather than exploring new options. Such an occurrence might reduce potential revenues, and this reduction could be substantial.
A third threat that exists with our business model is the risks posed by external actors, such as regulators, or hackers. Hackers obviously represent a risk in their ability to steal critical information about our customers. Such hacking incidents do a certain amount of damage in terms of direct costs like lawsuits, but the risk to the brand is often much bigger than the direct risk (Whitler & Farris, 2017).
All told, the SWOT analysis reveals a situation that is fairly typical of a start-up operation. Founders have to be realistic about what their strengths actually are, and how well those strengths will hold up in the face of the intense threats that most new businesses face. Any start-up claiming that they have a product that can’t be built by competitors, or a brand that has value, or any of that, is fooling themselves. A realistic assessment via SWOT analysis tells us that we believe we have a good idea, and the team to bring that idea to market. What we do not know at this point will be how well the idea will actually be received, how any potential partners or competitors might respond to our product, and whether we will be able to exploit the market opportunities that we have identified.
The best role for a SWOT analysis is therefore to understand where you are, at this stage of the business, and what steps you can take in order to use your strengths to leverage the opportunities in the market, or how to use them to counteract some of the threats that you have identified. We believe that critical to success will be building the market rapidly in order to dissuade potential competitors from entering the market, and quickly enough to entice the best business partnerships in order to generate revenue relatively quickly, to counter our weakness of not having much money.
Evaluation
At this point, we will be pursuing this venture. The key here is that the right people are willing to donate their labor in order to explore the concept. If we can build the product, attract an audience and start to generate revenue quickly, there is certainly potential here. That said, we have to take a realistic view of our cash flow situation. If we are not able to generate sufficient revenue to sustain operations, or attract angel financing, then we have to establish a point in time when we will determine that our idea was indeed not a huge success.
We feel that we will be able to tell fairly soon after launch whether this is a success. Our marketing team member will be working on building the partnerships, and our marketing plan, during this period, in order to ensure that we can start earning revenue as quickly as possible once the app is ready to be launched. We feel that launching with a product that we can sell not just to the general consumer but to partners in the travel industry, is an essential component of success – we will not be able to sell something that is not professional in terms of its functionality, usability and its security.
All told, we do feel that there is enough of an opportunity here. We are unsure of the exact potential, but know that we are providing people with information that is both valuable and is otherwise difficult to acquire. In that sense, we are part of the information that they need in order to aid their decision-making, and because we intend to be able to provide it on demand, that this will be successful.
The SWOT analysis can be a powerful exercise because of the way in which it forces management to understand the situation that the company is in. The core strategy might not change, but there can be changes to some of the tactical approaches that the company undertakes, in response to the information that is gleaned from conducting a realistic and honest SWOT analysis.
References

Denning, S. (2017) Moving to blue ocean strategy: A five-step process to make the shift. Forbes. Retrieved April 21, 2019 from https://www.forbes.com/sites/stevedenning/2017/09/24/moving-to-blue-ocean-strategy-a-five-step-process-to-make-the-shift/#278ac42c7f11

Haselmayr, M. (2013) How to build your first mobile app in 12 steps. Forbes. Retrieved April 21, 2019 from https://www.forbes.com/sites/allbusiness/2013/11/14/how-to-build-your-first-mobile-app-in-12-steps-part-2/#6d854e571ba2

Taylor, P. (2016) 5 places where the weather is 75 degrees and sunny all year long. Forbes. Retrieved April 21, 2019 from https://www.forbes.com/sites/petertaylor/2016/10/31/winteriscoming-guess-where-the-weather-is-75-degrees-and-sunny-all-year-long/#5a9f9eb34c96

Whitler, K. & Farris, P. (2017) The impact of cyberattacks on brand image: Why proactive marketing expertise is needed for managing data breaches. Journal of Advertising Research. Vol. 57 (1) 3-9.