Businesses often turn to a SWOT analysis to develop strategic planning and evaluate their competitive position in the marketplace. SWOT, which stands for strengths, weaknesses, opportunities, and threats, can be a valuable tool when project planning or determining where your business stands, both internally and externally. So, what is a SWOT analysis, exactly? It is a framework designed to help organizations develop a full awareness of all factors involved in the business decision-making process.
Benefits of a SWOT Analysis
A SWOT analysis can be conducted at little to no cost and can often be completed by anyone who has a solid understanding of how the business is run. It can also be useful if you are facing time constraints, as it does not take long to complete and can be used to develop fast and efficient solutions to common business problems. With a SWOT analysis, you can better understand your business, capitalize on opportunities, address weaknesses, avoid threats, take advantage of your company’s strengths, and work towards establishing and achieving important business objectives.
What makes a SWOT analysis so useful in any workplace is that it can be applied to any company and nearly any situation. In addition to being simple and versatile, this analysis provides comprehensive information on multiple areas of a business rather than focusing on a single area. There is no need for expensive software to perform a SWOT analysis, meaning costs are minimal while the rewards are huge. There is also no need for technical skills to complete the process, and staff members in all different positions of the company can contribute to the development of this analysis.
After starting the SWOT analysis process, you may find that it promotes discussion in the workplace. When everyone is able to contribute to the analysis, management and employees can get on the same page and work towards achieving the same goals. All employees, no matter their position, play a critical role in driving a company to success. When identifying a business’s strengths and weaknesses as a team, your organization can become more equipped to take on new opportunities and deter threats that could harm your company’s growth. A SWOT analysis can also provide you with valuable insight about the current market, giving you a better understanding of your competition.
How to Do a SWOT Analysis
Before starting a SWOT analysis, you will want to gather a team consisting of professionals in different departments of your company. These individuals should represent your business and have knowledge of how different areas operate. A SWOT analysis works similarly to a brainstorming session where everyone generates ideas and shares them with the group. These ideas should be written down and grouped together to determine what types of problems are seen as priorities. Once all the ideas are collected and organized, take the time to rank them, starting with the most important ideas that should be addressed first. Importantly, the team must strive to be objective in developing a SWOT analysis. A designated person can play the role of devil’s advocate to test statements and assumptions about inputs offered to this analysis.
It is important to look at each of the components within a SWOT analysis to ensure that all of your bases are covered. These include:
- Strengths – These are the internal, positive attributes that your company offers. Think about things that make your business successful, such as your solid reputation in the industry, your educated and knowledgeable staff, your unique technology, or your skills. Also consider what advantages you have over your competitors.
- Weaknesses – These are the negative factors that need to be improved upon. Consider what your competition offers that you do not, whether it is healthier cash flow, better customer service, or infrastructure. Consider a broad range of issues, such as whether your location is ideal or if there are talent gaps on your team.
- Opportunities – These are external factors that could contribute to your success. Consider new trends in the industry and how you could leverage these trends to help grow your business. Changes in the labor market or technology innovations can represent opportunities that can be leveraged.
- Threats – These are external factors that your company does not have control over, such as the price of raw materials from suppliers or changes in regulations. Also, think about how changes or trends in the future, such as new technology, could negatively impact your business. Look for “weak signals” that may indicate market changes that could negatively impact your business.
Once you have completed your SWOT analysis, you will need to put it into an actionable form. A solid SWOT analysis is an important input to developing a sound strategy and business plan. This means developing a strategy designed to address weaknesses and threats using your strengths and possible opportunities that arise. Start creating goals and objectives that have milestones and a strict date in which you want to meet these goals. Your objectives will not be completed overnight but by making a SWOT analysis, you have the tools and information needed to make them a priority.
Conduct Your SWOT Analysis
This analysis is a simple, yet powerful tool that can help develop and grow your business by helping you make good decisions and reach important goals. For more information about SWOT analysis or for assistance with conducting your own, contact The Eastham Group.