SWOT Analysis
A successful company is built on a succession of wise choices, so how you assess events and decide how to respond is crucial. The SWOT analysis is one of the most helpful techniques when attempting to gauge the situation. The SWOT analysis, which stands for strengths, weaknesses, opportunities, and threats, is a planning procedure that enables your business to overcome obstacles and choose which fresh leads to explore.
A SWOT analysis’ main goal is to assist companies in fully understanding all the variables that influence a decision.
According to Bonnie Taylor, chief marketing strategist of CCS Innovations, “it is hard to effectively map out a small business’s future without first examining it from all perspectives, which involves an extensive look at all internal and external resources and risks.” A SWOT analysis does this in four simple phases that even inexperienced company leaders may comprehend and use.
SWOT may be used before you decide to take any kind of firm action, whether you’re looking into new projects, updating internal policies, looking into possibilities to pivot, or changing a plan midstream. Sometimes it is sense to do a broad SWOT analysis to assess the environment in which your company is currently operating. According to Andrew Schrage, partner and editor-in-chief of Money Crashers, doing a SWOT analysis is another excellent technique to enhance corporate operations.
Schrage elaborated on his ideas on corporate decision-making in a blog post. “It enabled me to identify the important areas where my company was working at a high level, as well as areas that required development,” he said. Some small business owners make the mistake of considering these issues informally, but by taking the time to create a thorough SWOT analysis, you may come up with solutions to better capitalise on your company’s strengths and enhance or remove weaknesses.
While the company owner should undoubtedly be included in the SWOT analysis process, other team members may be far more beneficial. The management team of Paradigm Computer Consulting, founded and led by Shawn Walsh, does a quarterly SWOT analysis.
According to Walsh, “the collective knowledge eliminates blind spots that, if left undetected, may be harmful to our firm or our connection with our customers.”
Using a SWOT analysis, businesses may determine the factors impacting a strategy, activity, or project by focusing on the four components of the acronym. Knowing these advantages and disadvantages may help businesses explain more clearly what aspects of a strategy need to be acknowledged.
When doing a SWOT analysis, people often make a table with four columns and list each aspect that will have an influence side by side for comparison. Although they shouldn’t exactly match the opportunities and dangers indicated, strengths and weaknesses should at least slightly correlate as they are connected in some manner. According to Billy Bauer, managing director of Royce Leather, a company’s most significant problems may be revealed by comparing external threats with internal deficiencies.
Once your risks have been discovered, Bauer advised you to choose between reducing the external danger by giving up on the threatened sector of business and dealing with it after strengthening your own, or eliminating the internal weakness by allocating firm resources to address the issues.
Internal factors
The first two letters in the acronym, S (strengths) and W (weaknesses), refer to internal factors, which means the resources and experience readily available to you. Examples of areas typically considered include:
- Financial resources (funding, sources of income, investment opportunities)
- Physical resources (location, facilities, equipment)
- Human resources (employees, volunteers, target audiences)
- Access to natural resources, trademarks, patents and copyrights
- Current processes (employee programs, department hierarchies, software systems)
External factors
External forces influence and affect every company, organization and individual. Whether these factors are connected directly or indirectly to an opportunity or threat, it is important to take note of and document each one. External factors typically reference things you or your company do not control, such as:
- Market trends (new products and technology, shifts in audience needs)
- Economic trends (local, national and international financial trends)
- Funding (donations, legislature and other sources)
- Demographics
- Relationships with suppliers and partners
- Political, environmental and economic regulations
The SWOT analysis is a simple, albeit comprehensive strategy for identifying not only the weaknesses and threats of a plan but also the strengths and opportunities it makes possible. However, a SWOT analysis is just one tool in the strategy toolbox. Additional analytic tools to consider include PEST (political, economic, social and technological), MOST (mission, objective, strategies and tactics) and SCRS (strategy, current state, requirements and solution) analyses.
SWOT can also prompt businesses to examine and execute strategies in a more balanced, in-depth way.