SWOT analysis is a strategic planning and management technique used to help a business identify strengths, weaknesses, opportunities, and threats related to their competition or project planning. It is sometimes called situational assessment or situational analysis. SWOT analysis works best when everyone in the business is free to provide realistic data points rather than prescribed messaging, and look at it as a guide rather than a “need and must”.
How to do a SWOT analysis
You look at doing a SWOT analysis when you are looking at assessing your company’s performance, your competition, any risk, and potential for business. You can also carry out a SWOT analysis for a part of your business such as a project line. It gives you insight into ways you can guide your business with strategies that are more likely to be successful, giving you and your business the best opportunity going forward. This is also the case when looking at competitors.
When you carry out a SWOT analysis you can look at external or internal factors. So, when you are carrying out an internal SWOT you look at your business and the services you have to offer for your workers, or yourself, and what operations are working efficiently.
In an external SWOT analysis you look at what is going on out of your business. What market changes are there, any policy updates you need to uphold. Both are just as important as the other to help you and your business grow and be successful.
Overview
When you look at a SWOT analysis you can very quickly see the main points of each section. Each letter has its own quadrant, in each of the quadrants you would have the significant points bullet pointed. Each segment represents key insights into the balance of opportunities and threats, advantages and disadvantages, and so forth. Once you have the initial points for each, you would be able to easily look back and expand on each and look at the different ways to help strengthen your approach, if at all needed.
Strength
Strengths describe what your business excels at and what separates you from the competition. It can look at everything from a strong brand, loyal customer base, your balance sheet, any unique technology, and so on. This is what you have over your competitors, qualities that set you apart. This also would be where you will make points and see if you have knowledgeable staff or tangible assets.
Weakness This section helps you to identify some things you could improve on as a business. Weaknesses stop a business from performing at its optimum level. They are areas where the business needs to analyse what they can do to remain competitive. Could it be a weak brand, higher-than-average turnover, high levels of debt, an inadequate supply chain, or lack of capital, this is where you can identify those issues and find the best way to combat them and turn them into strengths.
Opportunities Opportunities look at all the things out there that you could do that use to help excel you and your business forward resulting in an advantage over your competitors. This could be anything from having few competitors in your niche to even an increase in need for your products or services.
Threats
Threats refer to things that have the potential to harm your business. Some of the most common threats include things like rising costs for materials, increasing competition, and tight labour supply. As well as these, other potential threats include emerging competitors. This is why taking regular SWOT analysis will help you to keep on top of these threats and stay aware of what is available to you in the current market.
Questions to help you with your SWOT
Strengths
1. What is our competitive advantage?
2. What resources do we have?
3. What products are performing well?
Weaknesses
1. Where can we improve?
2. What products are underperforming?
3. Where are we lacking resources?
Opportunities
1. What technology can we use to improve operations?
2. Can we expand our core operations?
3. What new market segments can we explore?
Threats
1. What new regulations threaten operations?
2. What do our competitors do well?
3. What consumer trends threaten business?
A SWOT analysis is a great way to help guide your business-strategy meetings. It gives you the opportunity to look at and discuss the company's core strengths and weaknesses, define the opportunities and threats, and brainstorm any ideas that you may have. A business can use a SWOT for overall business strategy sessions or for a specific segment from within the business. Looking at specific departments such as marketing, production, or sales.
Although a useful planning tool, SWOT has limits. It is only one of several different business planning techniques that you could consider. Therefore, a deeper analysis is needed, using another planning technique to support what you have discovered by completing the SWOT.
These techniques may be life changing for you and your business, whereas for others they may find it easier to use another technique. You want to use the strategy that works best for you, your business and your business goals.