The SWOT analysis is a technique that can be used for the evaluation of the strategic position of your business. This article will help you to discover what SWOT Analysis is.
The SWOT analysis is designed for being used in the preliminary stages of decision-making processes and can be used for evaluating the strategic position of your business.
Find out what’s working well, and what’s not so good. Ask yourself: where you want to go? How you might get there? And what might get in your way?
The SWOT analysis is used to specify the objectives of the business venture or project and identify the internal and external factors that are favorable and unfavorable to achieving those objectives.
You can also use SWOT analysis to make the most of what you’ve got, to your organization’s best advantage.
And you can reduce the chances of failure, by understanding what you’re lacking, and eliminating hazards that would otherwise catch you unawares.
Definition of SWOT Analysis
The word SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
Once you have identified these four elements, you can strategically exploit them to achieve your goals.
In order to do this, it is necessary to distinguish two factors to which startups are exposed: internal factors, which are monitorable; and the external factors, which are uncontrollable.
Internal factors may include staff, finance, manufacturing capabilities, and all of the marketing mix’s 4Ps.
External factors include macroeconomics, technological change, legislation, and sociocultural changes, as well as changes in the marketplace.
How to Do a SWOT Analysis
To establish a SWOT analysis you have to use the brainstorming technique, in order to build with your staff a list of ideas about where your organization currently stands.
Create a grid with one square for each of the four aspects of SWOT. And every time you identify a strength, weakness, opportunity, or threat, write it down in the relevant part of the grid.
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Once finisched, take the SWOT matrix and examining one quadrant at a time.
Start a discussion on every aspect taken in consideration, and collect all the ideas that come to your mind. Only later they will be discredited.
Use SWOT analysis to assess your organization’s current position before you decide on any new strategy.
Let’s look at each area in more detail and consider what questions you could ask as part of your analysis.
Strengths
Strengths are things that your organization does particularly well, or in a way that distinguishes you from your competitors.
Think about the advantages your organization has over other companies. These might be the motivation of your staff, access to certain materials, or a strong set of manufacturing processes.
Ask yourself: what do you do better than anyone else? What values drive your business?
Identify and analyze your organization’s Unique Selling Proposition (USP), and add this to the strengths section.
Weaknesses
Weaknesses are inherent features of your organization, so focus on your people, resources, systems, and procedures. Think about what you could improve, and the sorts of practices you should avoid.
Imagine how other people in your market see you: do they notice weaknesses that you tend to be blind to?
Take time to examine how and why your competitors are doing better than you. What are you lacking?
Opportunities
Opportunities are openings or chances for something positive to happen.
They usually arise from situations outside your organization.
Being able to spot and exploit opportunities can make a huge difference to your organization’s ability to compete and take the lead in your market.
Think about good opportunities you can spot immediately: what interesting market trends are you aware of, large or small, which could have an impact?
Threats
Threats include anything that can negatively affect your business.
It’s vital to anticipate threats and to take action against them before you become a victim of them.
How to Use a SWOT Analysis
Once you’ve examined all four aspects of SWOT, you’ll likely be faced with a long list of potential actions to take.
Before you start acting, look for potential connections between the quadrants of your matrix.
For example, could you use some of your strengths to open up further opportunities? And, would even more opportunities become available by eliminating some of your weaknesses?
SWOT analysis helps you to build on what you do well, to address what you’re lacking, to minimize risks, and to take the greatest possible advantage of chances for success.
You can also use it to get an understanding of your competitors, which can give you the insights you need to craft a coherent and successful competitive position.
When carrying out your analysis, be realistic and rigorous. Apply it at the right level, and incorporate it with other option-generation tools where appropriate.
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