What Is A SWOT Analysis?
Every company, business, corporation, wants one thing above all else; to be the best. And doing a SWOT Analysis is extremely useful in accomplishing this. Doing a SWOT analysis enables a business to evaluate their competitive position and develop a strategic marketing plan. For example, a SWOT analysis can help impact the direction taken for SEO, growth planning, profit loss analysis and much more. The acronym SWOT stands for strengths, weaknesses, opportunities, and threats. It is a type of analysis that serves to identify these attributes. As a result, it helps define a company’s current and future potential.
Through the examination of both internal and external factors a fact-based SWOT analysis can bring about fresh perspectives and new ideas. It is a management tool that identifies various strategies for success. It can guide individual thinking, lead group discussion, and provide structure as part of the process for developing a formal marketing plan. The bottom line is, a SWOT is extremely useful and should be an integral part of the strategic planning process for both large and small companies.
Internal and External Factors In SWOT Analysis
The going-ons within a company have as much to do with its success as those factors outside of it. Known as internal factors, these aspects are identified as a companies strengths and weaknesses, within the analysis. For example, location of business, prices of products, and brand awareness all qualify as internal factors.
Companies should also identify external factors, known as opportunities and threats, within the analysis. These factors are those outside the company, such as competitors or the economy.
SWOT Analysis: How To Do It
First, lets once again review what the point or purpose of this analysis is. By definition, it is to asses the performance, competition, risk, and potential of a business or part of a business. This could include something such as a product line or division. Through utilization of internal and external data, businesses are able to create more successful strategies for their company. As a corporation, you must be willing to take a page from the book of self-reflection and ask whether your company is strong or weak, and why?
- What is our competitive advantage as a business?
- What resources do we have?
- Are there products performing particularly well?
This particular aspect of the SWOT Analysis asks a company to reflect on what it excels at. What separates it from the competition. For instance, this could include attributes such as a strong brand, a loyal customer base, a strong balance sheet, or unique technology.
- Where can improvement be made?
- What products are underperforming?
- Where are we lacking resources?
This step in the SWOT Analysis requires a company to look at what might be stopping them from performing at their optimum level. For example, some weakenesses could be a weak brand, higher than average turnover, increased debt, an inadequate supply chain, or a lack of capital.
- What technology can improve operations?
- Can core operations be expanded?
- Are there new market segments to be explored?
This is simply favorable external factors that have the ability to give a company a competitive advantage.
- What new regulations could threaten operations?
- What do competitors do well?
This aspect pertains to factors with potential to harm a business. An example of this could be a drought to a wheat-producing company. Other examples could include an increased cost of materials or increasing competition within the field.
SWOT Analysis: How To Use It
In order to properly utilize this analysis, employees and CEO’s alike must be willing to sit down and have an honest, fact-based discussion. Known as the Analytical Phase, those within the business or company identify each SWOT topic and analyze it in depth. Here you’ll look at internal factors such as financial and human resources, tangible and intangible assets, as well as operational efficiencies. It is good to ask what the company might be doing well (Strength) or what it’s strongest asset might be (Strength). Alternatively, it is also advantageous to ask what detractors of the business may exist (Weakness) or what the lowest performing product lines may be (Weakness).
Additionally, you’ll want to discuss and identify your external factors as well. Examples of this might be monetary policies, alterations to the market, or change in access to suppliers. You’ll want to identify what trends may be evident in the marketplace (Opportunity) or what demographics the company might not be targeting (Opportunity). However, as a company it is also good to know how many competitors you may have and their market share (Threat). Also, any new regulations that could harm operations or products (Threat) is beneficial to be aware of as well.
After all attributes are put on the table from a company’s SWOT Analysis, it is time for solutions. In other words, the Creative Discussion phase. Here, those within the company will brainstorm how to take greater advantage of its Strengths/Opportunities. Furthermore, how to minimize a company’s Weaknesses/Threats will also be discussed.
In the end, a SWOT analysis is possible useful in identifying challenges affecting a business and various opportunities to enhance it. It is the outline and building block of a company’s marketing plan. It requires honesty and self-reflection. Also, it can lead to inspirational discussions that result in new ideas or reinforce existing ones.