How to Conduct a SWOT Analysis
One of the most useful techniques to help you articulate your organisational strengths and weaknesses, identify opportunities, and assess threats, is SWOT Analysis. SWOT Analysis in a business context will assist you to carve a sustainable niche in the market. In a personal context, it will help you to develop your career in such a way so that you can utilise your talents, abilities, and opportunities in the best possible way.
SWOT Analysis in a Business Context
In a business context, SWOT Analysis is a powerful tool. With a little research, it can reveal incredible business opportunities. If you can understand the weaknesses that lie within your business, you will be able to manage and eliminate the threats which would have otherwise caught you by surprise. Apart from all this, the SWOT framework will help you to devise a strategy to distinguish yourself from your competitors and enable you to compete successfully.
How to use SWOT Analysis
SWOT Analysis was invented by Albert S. Humphrey in 1960. The tool is as useful in today’s context as it was then. Strengths and weaknesses are mostly related to internal factors that belong to your organisation, while opportunities and threats usually relate to external factors. Owing to this factor, SWOT Analysis is sometimes referred to as an Internal-External Analysis, and the SWOT Matrix is referred to as IE Matrix.
Let’s analyse each of these factors one by one with a series of questions you can ask.
- What are the conditions that make you more prominent in the market?
- What is the organisation’s market share?
- What is the financial state of the organisation?
- What are the advantages available that do not exist for your competitors?
- What are the strong product brands?
- How innovative is the company culture?
- What is the capability to be flexible and accept changes?
- What are the competitive advantages that you think your organisation has?
- What is that you do better than your competitors?
- What are some of the supplier cost savings you have access to?
- What do others in the market perceive as your strengths?
- What are the operational factors that enable you to ‘close the sale’?
- What do you think is your organisation’s Unique Selling Proposition (USP)?
You need to consider your strengths both from an internal perspective as well external, i.e., your customers perspective and other people in the market. If you’re having difficulty identifying your strengths, try to jot down a list of your organisation’s characteristics or product features. These could end up being your strengths.
When looking at strengths, think of them in context of your competitors. For instance, if all your competitors offer high-quality service, then, a high-quality service is no longer considered as strength, it is, in fact, more of a necessity allowing you entry into the market
- Is the organisation concentrating on achieving its objectives?
- What are the areas in which the competitors possess a competitive advantage?
- What are the essential human resources limiting factors?
- Are funds available when required?
- What are some of the things that you can improve upon?
- Are their problems related to flow of capital?
- Do clients pay on time?
- Can the organisation respond to challenges from competitors promptly?
- What are the largest expense items?
- What are the brands that are considered weak in the market?
- What is the state of customer experience?
- Are employees engaged?
- Is the management considered trustworthy by the employees?
- What according to you people in the market are likely to perceive as your weaknesses?
- What factors may contribute towards making you lose a sale?
Here as well, you need to consider these factors from both an internal and external perspective. It is always better to be realistic at this juncture itself and face any kind of brutal truths.
- Are there any indicators to be beneficial for the industry?
- What are the market trends of the product?
- What are the emerging market trends that are strengths?
- Are there products or services that have not yet been provided by the competitors?
- Can the organisation make the best use of the modern technology?
- Are there new markets that can be explored?
- What are the national and international changes that are favourable for the organisation?
- What are the social and economic conditions?
- What are the vulnerabilities of the opponents?
- What are the industry best practices?
- What are sources available for research and development?
- What are some of the interesting trends that you are aware of?
Opportunities that are useful may emerge from:
- Any kind of changes either in technology or the market or both at a broad and narrow scale.
- Any kind of changes in the government policy relating to your respective field.
- Any kind of changes in population profiles, social patterns, lifestyle changes, etc.
- Any kind of local events
While you are looking at opportunities, it is a good idea to take a look at your strengths and ask yourself if these are likely to open any opportunities. You can also alternatively take a look at your weaknesses and ask yourself if you can open up opportunities by removing these weaknesses.
- What are the obstacles that you are encountering?
- What are critical actions being taken by the competitors, and evaluate their potential threats?
- Are funds readily available to the opponents?
- Is the brand of competitors too popular in the market?
- Do the opponents enjoy a better reputation in the market?
- Does the skilled workforce prefer to be employed in other organisations?
- Is better technology being utilised by others?
- Can you keep pace with the change in technology too frequent?
- Will the emerging product trends affect the organisation weaknesses?
- Are there any other external threats that may have an impact on the organisation?
- Are there serious internal financial, human resources, or technological threats?
- Does the market favour your products?
- Do the industry policies affect the organisation?
- Are the achievements aligned with the objectives?
- Are the user requirements being met?
- What are the obstacles to growth?
- Are partnerships functioning properly?
- What are the potential obstacles to achieve the objectives?
- Are the company products changing due to other innovative emerging solutions?
- What advantage do your competitors have over you?
- Do you notice any changes in quality standards or specifications regarding your products, job, or services?
- Do you feel your position being threatened with the changing technology?
- Do you have a scenario of cash flow issues or into bad debt?
- Do you feel that any of your weaknesses can seriously threaten your business?
While you are looking at opportunities or threats, PEST Analysis can prove to be helpful to ensure that you do not overlook other external factors such as technological changes or any new government regulations in your industry.
SWOT Analysis Tips
If you’re using SWOT Analysis as a strategic tool, ensure that you apply it in a disciplined & thorough manner:
- Keep your SWOT short and simple, but remember to include important details.
- Use verifiable statements.
- When you finish your SWOT analysis, prioritise the results by listing them in order of the most significant factors that affect your business to the least.
- Get multiple perspectives on your business for your SWOT analysis.
- Apply your SWOT analysis to specific goals and objectives, rather than to your entire business.
- Look at where your business is now and think about where it might be in the future, as well as where you would like to be.
- Consider your competitors and be realistic about how your business compares to them.
- Consider the factors that are critical to your business success.
- Use goals and objectives from your overall business plan in your SWOT analysis.
- Ensure that the options that you generate are easily transferable.
- Use SWOT alongside other strategy tools such as Core Competence Analysis or USP Analysis to get a more holistic picture of the issue that you are dealing with.
Key Take Aways
SWOT Analysis is a simple yet powerful tool analysing your organisation’s underlying strengths, weaknesses, opportunities, as well as threats that you may be facing. It can also assist you to focus on your strengths, reducing risks, and take the biggest possible advantage of opportunities that are at your disposal.
You can use SWOT Analysis as kick-off strategy as well, or you may use it in an even more sophisticated manner as a deeper analysis tool. You can also utilise the tool to gain an insight into your competitors so that you can create a coherent and successful competitive position for your organisation. However, it is significant that you need to be completely realistic and rigorous while carrying out SWOT analysis. You should apply it at the right level and complement it with other option generating tools wherever you feel it is appropriate.