SWOT Analysis is a tool that can assist you in analyzing what your organization does best right now and developing a successful future strategy. SWOT can also reveal aspects of your business that are holding you back or that your competitors could take advantage of if you don’t protect yourself.
A SWOT analysis is an essential two-by-two grid that puts your top strengths, weaknesses, opportunities, and threats into an ordered list. A SWOT analysis is a primary yet effective method for developing your business strategy, whether you’re starting a business or leading an established one.
What is a SWOT Analysis and examples?
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
Internal corporate strengths and weaknesses are things you can influence and modify. Who is on your staff, patents, intellectual property, and location are all examples.
External opportunities and risks occur outside of your firm in the bigger market. You can seize chances and defend against threats, but you can’t change the situation. Competitors, raw material pricing, and client shopping tendencies are all examples.
A SWOT analysis is an essential two-by-two grid that puts your top strengths, weaknesses, opportunities, and threats into an ordered list.
Why do a SWOT Analysis?
You’ll have a promising approach for prioritizing the tasks you need to perform to build your business if you take the time to do a SWOT analysis.
You may believe you already know everything you need to succeed, but a SWOT analysis will drive you to look at your company in fresh ways and from new perspectives. You’ll examine your strengths and limitations, as well as how you may use them to take advantage of market opportunities and threats.
When should you perform a SWOT analysis?
You can use a SWOT analysis before committing to any athletic activity, whether you’re considering new projects, overhauling internal policies, pivoting, or changing a strategy in the middle of its execution. It’s sometimes a good idea to conduct a comprehensive SWOT analysis only to check on your company’s present state and make necessary improvements. The research can reveal the critical areas in which your company is working at its best, as well as where operations need to be tweaked.
Don’t mistake thinking about your company’s operations informally, hoping that everything will fall into place. You can see the big picture of your company if you make an effort to create a comprehensive SWOT analysis. You can then figure out how to improve or eliminate your company’s problems while focusing on its strengths.
While the business owner should be involved in creating a SWOT analysis, it is generally beneficial to include additional team members. Obtain feedback from a range of team members and debate any contributions offered openly. The team’s combined knowledge will enable you to assess your business from all angles thoroughly.
Characteristics of a SWOT analysis
Companies can use a SWOT analysis to discover the forces driving a strategy, action, or initiative by focusing on the four aspects of the acronym. Companies can communicate more effectively what portions of a plan need to be recognized if they know these excellent and negative characteristics.
Individuals often build a table divided into four columns to list each influential element side by side for comparison when producing a SWOT analysis. Strengths and weaknesses won’t always match identified opportunities and threats exactly, but they should correlate because they’re all connected in the end.
Billy Bauer, managing director of Royce Leather, noted that pairing external threats with internal weaknesses can highlight the most severe issues a company faces.
“Once you’ve identified your risks, you can then decide whether it is most appropriate to eliminate the internal weakness by assigning company resources to fix the problems, or to reduce the external threat by abandoning the threatened area of business and meeting it after strengthening your business,” said Bauer.
Internal elements, such as the resources and expertise readily available to you, are strengths (S) and weaknesses (W).
The following are some of the most widely considered internal factors:
- Monetary resources (funding, sources of income, and investment opportunities)
- Physical resources are limited (location, facilities, and equipment)
- Human resources are essential (employees, volunteers, and target audiences)
- Natural resources, trademarks, patents, and copyrights are all things that need to be protected.
- Currently in use procedures (employee programs, department hierarchies, and software systems – like CRM Software and Accounting Software.)
External pressures have an impact on every business, organization, and people. It is critical to identify and document these characteristics, whether directly or indirectly linked to an opportunity (O) or a danger (T).
External factors are things that you or your firm have no control over, such as:
- Market developments (new products, technology advancements, and shifts in audience needs)
- Current economic conditions (local, national and international financial trends)
- Investing (donations, legislature, and other sources)
- Suppliers and partners’ relationships
- Regulations in politics, the environment, and the economy
After you’ve completed your SWOT analysis and created your SWOT framework, you’ll need to make some recommendations and strategies based on the findings. According to Linda Pophal, owner and CEO of Strategic Communications, these strategies should focus on exploiting strengths and opportunities to overcome weaknesses and threats.
“This is actually the area of strategy development where organizations have an opportunity to be most creative and where innovative ideas can emerge, but only if the analysis has been appropriately prepared in the first place,” said Pophal.
Who should do a SWOT Analysis?
The founders and leaders of a company must be deeply involved in a SWOT analysis to be effective. This isn’t a job that can be handed off to someone else.
On the other hand, company leaders should not undertake the work on their own. To get the most significant outcomes, bring together a group of people with various opinions on the firm. Choose individuals who can represent multiple business areas, such as sales, customer service, marketing, and product development. At the table, everyone should have a place to sit.
When performing a SWOT analysis, innovative firms even go outside their internal ranks for input from customers to add their unique voice to the mix.
You can still undertake a SWOT analysis if you’re beginning or running a firm independently. Obtain additional perspectives from friends familiar with your industry, your accountant, or even vendors and suppliers. The trick is to have a variety of viewpoints.
Existing firms can use a SWOT analysis to examine their current status and develop a strategy for moving forward. But keep in mind that things change all the time, so you’ll need to rethink your plan every six to twelve months, starting with a new SWOT analysis.
A SWOT analysis is an essential aspect of the business planning process for startups. It will assist you in codifying a strategy to get off on the proper foot and know where you want to go.
How to do a SWOT analysis the right way?
As mentioned above, you want to gather a team of people to work on a SWOT analysis. You don’t need an all-day retreat to get it done, though. One or two hours should be more than plenty.
- Gather the right people
Make a list of people from various parts of your firm and ensure that each department and team is represented. Different groups inside your firm will have completely different perspectives, which will be essential to the success of your SWOT study.
- Throw your ideas at the wall
There are good and bad ways to do a SWOT analysis, just as there are right and wrong ways to conduct brainstorming meetings. First, I recommend giving everyone a pad of sticky notes and having them silently produce ideas on their own. This avoids groupthink and guarantees that everyone’s voice is heard.
Place all sticky notes on the wall and arrange related ideas together after five to ten minutes of quiet brainstorming. If someone else’s proposal generates a fresh concept, let anyone contribute additional notes at this point.
- Rank the ideas
After you’ve sorted all of your ideas, it’s time to rank them. I prefer a voting system in which everyone is given five or ten “votes” to distribute as they see fit. This part of the exercise can be done with different colored sticky dots.
You should have a prioritized list of suggestions based on the voting process. Naturally, the list is now open to debate and discussion, and someone in the room should make the final decision on priority. The CEO is generally in charge of this. However, it could be someone else in order of corporate strategy.
You’ll want to repeat this procedure of producing ideas for each of your SWOT analysis’ four quadrants.
Importance of SWOT Analysis
A SWOT analysis can be used to determine where a firm is in a competitive market and what steps need to be taken for future strategic planning, assisting decision-makers in developing a company’s future roadmap.
Here are some key points that make it especially useful for companies:
- A SWOT analysis allows businesses to get visibility into their current situation, allowing them to understand better and analyze overall business performance.
- It will enable a company to assess its strengths, which can assist them in better penetrating the market and achieving its goals.
- It will enable businesses to see their flaws and potential areas for improvement. This knowledge assists them in anticipating and mitigating potential barriers, ensuring long-term corporate success.
- A company can establish a strategic plan to fulfill its goals and react to changing market conditions using its SWOT analysis.
- It enables firms to understand better and recognize internal and external elements, as well as their positive and negative effects on their operations. This data can assist firms in becoming more proactive by helping them take appropriate steps in a dynamic market to maintain momentum.
SWOT analysis of a company
A SWOT analysis is a tool for identifying internal strengths (S) and weaknesses (W) as well as external opportunities (O) and threats (T) for your firm (T). This information can be used in your business planning to help you achieve your goals. Consider whether an issue would exist even if your firm didn’t live to evaluate whether it is an internal or external issue. If it does, it’s because of an external factor (e.g., new technology).
Use the following eight steps to conduct a SWOT analysis.
- Decide on the objective of your SWOT analysis
Start with a question or goal in mind to get the most out of your SWOT analysis. For example, a SWOT analysis could be used to assess whether you should launch a new product or service or improve your current operations.
- Research your business, industry, and market
Before commencing the SWOT analysis, you should do some preliminary research to understand your firm, industry, and market better. To gain a diversity of perspectives, talk to your employees, business partners, and clients. Conduct market research and learn about your competitors.
- List your business’s strengths
The first step is to determine and list the attributes you believe your business possesses. Employees, financial resources, the location of your firm, cost advantages, and competitiveness are all examples of strengths.
At this stage of the SWOT analysis, the list does not need to be exhaustive. Any and all thoughts and comments are welcome. In step seven, the list is prioritized.
- List your business’s weaknesses
Make a list of the aspects of your company that you consider to be weaknesses (i.e., that put your business at a disadvantage to others). Potential drawbacks include a lack of new products or clients, staff absenteeism, a lack of intellectual property, shrinking market share, and a long distance to market.
Ensure that the flaws that your SWOT analysis showed are addressed. The list of problems may reveal how your business has changed over time. After a year, you may find that your SWOT analysis has addressed your vulnerabilities. While you may find new flaws, the fact that the old ones are no longer there indicates that you have made progress.
- List potential opportunities for your business
Consider the options for your company’s foreign expansion. These aren’t the same as your internal strengths, and they’re not necessarily guaranteed – an opportunity for one element of your business could be a threat to another (e.g., you may consider introducing a new product to keep up with consumer trends, but your competitors may already have a similar effect). Keep in mind that the same object should not be designated as an opportunity and a threat in a SWOT analysis.
All of these things, new technologies, training programs, partnerships, a more diverse marketplace, and a change of administration, are all possible.
- List potential threats to your business
Make a list of external factors that could endanger your business or cause a problem. Potential dangers include rising unemployment, increasing competition, higher interest rates, and global market volatility.
- Establish priorities from the SWOT
You’ll have four separate lists once you’ve completed the instructions above. These lists should ideally be displayed side by side to see how your company is doing and what issues need to be solved. You can then decide which issues are most important and which can wait (i.e., develop four prioritized lists).
- Develop a strategy to address issues in the SWOT
As you go over your four priority lists, ask yourself these questions.
- “How can we put our skills to work to take advantage of the opportunities that have been identified?” How can we use these resources to combat the risks we’ve identified?
- What do we need to do to overcome the flaws identified to take advantage of the opportunities?
- How will we mitigate our shortcomings to overcome the identified risks?
Once you’ve answered these questions and completed your lists, you may use the SWOT analysis to develop strategies for achieving your business objectives.
- Learn how a business mentor can help you solve problems that your SWOT analysis has revealed.
- Discover how to create a risk management strategy for your business.
- Please find out how benchmarking your business can help you compare your business to its competitors.
- You can discover how to address your vulnerabilities by training your personnel.
- Discover what other resources and tools are available to help your business.
Personal SWOT analysis to assess and improve yourself
Personal SWOT analysis is a great technique for self-evaluation and career planning. Confucius once said, “Do a profession you love, and you will never have to work a day in your life.” The tricky aspect is finding a job that you enjoy that matches your skill set while also paying well. In this case, a personal SWOT analysis comes in handy.
SWOT analysis of a person
- List down the “strengths”
The first step is to make a list of your assets. Knowing these will give you more confidence in an interview or when seeking a promotion. You will have an easier time recalling things because you have made a list beforehand. Here are some questions to consider as you fill out this section.
- What professional skills or certifications do you have that set you apart from the competition?
- Is it possible that your skills in a particular area will benefit the company?
- What projects/campaigns have you completed?
- Do you have a strong network of industry contacts? Advertising, marketing, and insurance are all sectors where this is particularly valuable.
- What other qualities distinguish you from the competition? Things like leadership and work ethic, for example.
- What do other people think of your abilities?
Important: In SWOT, the “stand out from the crowd” aspect is crucial. A degree in software engineering, for example, is not a strength at a software firm because everyone else has one. A master’s degree in mathematics, on the other hand, could be a different story.
2. Know your “weaknesses”
The second stage is to recognize your flaws. Individuals employ SWOT analysis to examine and improve themselves, as I previously stated. The easiest method to fix your weaknesses is to identify them.
This also prepares you to respond to or contradict them if they arise during an interview or performance evaluation. When filling out this form, ask yourself these questions.
- Do you have the abilities and qualifications you’ll need to succeed in your current or future roles?
- Do you have any negative habits that you’d like to get rid of? For example, frequent tardiness, poor communication skills, and inaccurate time reporting, to name a few.
- What other qualities can you work on to make yourself more efficient?
- What do other people think of your flaws? Even if you don’t think of it as a flaw.
When answering, be truthful and realistic.
3. Find matching “opportunities”
We often miss opportunity because it’s dressed in overalls and looks like work – Thomas A. Edison.
Chances come in a variety of shapes and sizes. Sometimes opportunities pass you by without your knowledge. So, here are a few things to keep an eye on.
- Are there any significant changes or improvements in your sector that you may benefit from?
- Is there a new technology or industry trend that you might be able to use in the future?
- Is your firm advertising a new position that matches your skillset? Is it possible that a position has become vacant?
- Is there a new initiative in your company that you may participate in to enhance your career?
- Is it possible to get a competitive advantage by learning new skills? For example, in the airline sector, learning a language different from your mother tongue is advantageous.
The list of inquiries is endless. The most important thing is to keep your eyes peeled for new opportunities.
Important: It’s fantastic if a job opportunity complements your skills. However, excellent chances can occasionally come in areas where your skill set does not fit. Consider the advantages and disadvantages before dismissing them.
4. Be aware of “threats”
When conducting a personal SWOT analysis, see yourself as a firm or a product, and compare yourself to others. It’ll be easier for you to see hazards this way. So, here’s how to spot potential dangers.
- Is one of your coworkers performing better in a similar position than you? Are you both vying for the same position?
- Is your job being jeopardized by the rise of new technology or the decline of existing ones? For example, it’s not uncommon for software developers’ jobs to get stale due to a lack of time spent learning new technologies.
- Are your characteristics preventing you from progressing in your career?
- What are the roadblocks in your way of reaching your goals? It might be at work or home.
How do you write a good SWOT analysis?
A SWOT analysis entails identifying and analyzing a company’s strengths, weaknesses, opportunities, and threats. It’s good to make a list of questions to answer for each element first. The questions will help you complete your SWOT analysis and make a balanced list. The SWOT framework can be written as a list, plain text, or four-cell table, with quadrants dedicated to each aspect. Opportunities and dangers are listed after the strengths and weaknesses.
The bottom line
A SWOT analysis is an excellent tool for guiding company strategy sessions. Having everyone in the room talk about the company’s fundamental strengths and shortcomings, outline opportunities, and threats, and develop ideas is highly effective. The SWOT analysis you picture before the session frequently alters to reflect variables you were unaware of and would never have caught if the group’s participation had not been included.