Are you a businessman wanting to evaluate your company’s performance? Or are you a project manager, planning out what needs to be done to meet deadlines? Whatever the case, you will have to do one thing—a SWOT Analysis.
You’ve probably been around in the corporate world long enough to hear about this, but this time, let’s go in-depth. We’ll not just talk about what a SWOT Analysis is, but also talk about how you could use the information you gather for your project planning and company evaluation.
Whether you’re a company of 2 to 500 employees, or just working on a project all by yourself, SWOT Analysis can do much to help you assess where you currently stand in the industry and then make assessments objectively. When done correctly, the data you gather from a SWOT Analysis can greatly help you improve your internal organizational processes and come up with different solutions for potential issues and concerns.
But first, let’s define the process and the elements involved.
What is SWOT Analysis?
A SWOT Analysis defines a company or a project based on each of these four elements: Strengths, Weaknesses, Opportunities, and Threats. Thus the acronym, SWOT. This process is commonly done by huge corporations, but even small companies and individually-backed projects can benefit much from carrying out this comprehensive evaluation.
A SWOT Analysis is most commonly used as a method for assessing company performance in terms of its success benchmarks and growth projections. It can also be used to evaluate the success of a more specific campaign—a marketing campaign, for instance.
Why Do a SWOT Analysis?
Some small companies feel that a SWOT Analysis is only practical for those who have quite a huge organization. However, the benefits that companies can get from doing a SWOT analysis.
First, companies who conduct a SWOT Analysis have a better understanding and perspective of how a company is performing and what weaknesses need to be improved before it could turn damaging.
Second, a SWOT Analysis can benefit even those who are not business owners. This detailed planning tool is ideal for determining what possible challenges can be encountered and how to best overcome each. That means the Swot Analysis is a great way to improve your company’s strategic planning.
How is a SWOT Analysis Done?
Data is usually presented in a grid-like format. Putting the data in a quadrant allows you to easily present a company’s strengths, weaknesses, opportunities, and threats in a format that is easy to read.
Let’s now look at the four key elements—Strengths, Weakness, Opportunities, and Threats, and see how you can do a comprehensive SWOT Analysis yourself.
Look at Your Company’s Strengths
The first part of the SWOT Analysis is identifying what your company or project’s strengths are. To help you determine what to write under this category, ask these questions:
- What do clients love about your company?
- What qualities make you stand out from your competitors?
- What resources do you have that your competitors do not?
- What is your Unique Selling Proposition (USP)?
- What are your positive attributes as a brand?
As you can see, strengths are not limited to tangible things only. Sure, a state-of-the-art facility, for example, is a great strength, but so are positive brand attributes such as reliability. So keep in mind that even intangible attributes such as your company’s USP or great leadership can be considered part of your company’s strengths.
Assess Your Company’s Weaknesses
This is where you need to view things objectively. It’s generally very easy to think of where your company is good at in comparison to the competition, but it can be very difficult to identify its weaknesses. However, you must do a critical assessment of your company. Take a look at what is holding your company back from making needed progress. A lot of things can fall under this category.
- To identify what your company’s weaknesses are, ask the following:
- What does your company lack that your competitors have?
- What are your competitors doing better than you?
- What negative reviews do you usually get from your customers?
- What obstacles to growth are you currently facing?
- What can you do better?
Look for Opportunities
Are you always running out of inventory because of high market demand? That’s an opportunity for you to expand. Are you currently developing a new idea that you think will open up a new market for your business? Then that’s also an opportunity. Anything that you think you could take advantage of to increase your revenues or advance your company’s vision, mission, and goals, are all opportunities.
Identifying opportunities requires more work than identifying your company’s strengths, simply because you would first need to take into consideration factors that are outside of your organization. For example, you need to consider how the industry as a whole is performing, and if there are opportunities for growth.
Here are examples of opportunities:
- Conditions that allow for expansion (e.g. High market demand but low product supply)
- Absence or lack of competition
- Rising demand for your products and services
- Opportunities for media publicity
When determining opportunities, you can ask the following:
- What advertising campaigns are resonating well with the target market?
- What resources do we have at our disposal that we can still leverage?
- What can we do to increase positive publicity?
- What opportunities are there for improving your customer support and relationship?
Identify the Threats
The last thing you have to identify for your SWOT Analysis is the threats that your company is facing. Threats are the exact opposite of opportunities. Anything that you think is holding the company back from growing or succeeding is considered a threat.
Here are some examples of threats:
- New competition
- Negative media publicity (e.g. Negative reviews on social media)
- Decreasing customer satisfaction
- Changes in regulatory law
- Financial risks affecting the company
Taking Note of External and Internal Factors
Aside from identifying the strengths, weaknesses, opportunities, and threats, many companies further categorize these four elements into two groups: External and Internal. This is why SWOT Analyses are also sometimes referred to as Internal-External Analyses or IE Matrices.
External factors are those elements that a company has little or no control over. For example, changes in regulatory laws are outside a company’s jurisdiction, so that can be considered an external factor. Emerging competitors are also an external factor since a company can do little to stop this.
Internal factors, on the other hand, are those that a company can do something about. For example, a company can change an unclear USP to improve sales or provide further training to improve personnel performance.
Categorizing the four elements of the SWOT Analysis into External and Internal factors is not required, but it can prove helpful in determining the best ways to address each element are. It can also help you determine how much control you have over certain factors.
SWOT Analysis vs PEST Analysis
Another type of analysis that is closely similar to the SWOT Analysis is the PEST (Political, Economic, Social, and Technological) Analysis. This is a more comprehensive take on the key elements that are identified during a SWOT Analysis. It takes into consideration the different aspects that play a role in determining the strengths, weaknesses, opportunities, and threats for a certain company.
Often, the threats and opportunities identified during the SWOT Analysis are a result of a more complex chain of factors. For example, what political factors affect the changes in the regulatory laws that are binding to your organization? What economic situations determine the levels of product supply and demand? What cultural aspects play a role in determining the success of a marketing campaign? What technological advancements have been introduced into the market in recent years?
Conducting a PEST Analysis, therefore, provides a more detailed view of your company, concerning your market and the industry as a whole. Understanding the underlying causes for the different factors that your company may face helps you to come up with the right strategies to convert opportunities to sales and to minimize the damage a potential threat can cause.
Because the PEST Analysis is more concerned about the broader scale and takes more time to complete than a SWOT Analysis, a lot of companies prefer conducting the latter to determine company performance within a relatively short time.
Using SWOT Analysis for Strategic Planning
Information is only as good as the strategies that are developed based on it. A company that conducts a SWOT Analysis, therefore, should not only expend its resources in gathering this powerful data but also makes sure to come up with strategies to address key obstacles and opportunities that have been identified during the analysis.
Here are four things that companies can do with the information presented in a SWOT Analysis:
- Play to their strengths
Identifying what they’re especially good at in comparison to their competition helps companies to further work on their strengths—to continue to better their best.
- Work on their weaknesses
Companies can come up with practical ways to shore up weaknesses and keep them from causing further damage than they already are. Also, companies can work on key aspects that need improvement, for example when it comes to maximizing the use of present resources.
- Seize opportunities
Of all four elements that are covered by a SWOT Analysis, the opportunities identified are the most actionable. And since the company’s strengths and weaknesses are already outlined, it is now easier for a company to come up with a plan to take advantage of an opportunity without going beyond its capacity.
- Mitigate threats
While it is true that a company can do little about the external threats that it faces, understanding what these threats are is key to being prepared to handle the effects of such external factors. Most importantly, it can help company executives determine the right course of action to take to minimize the extent of damage these threats may cause.
Taking action on the data is just as important as correctly identifying the different elements that affect the growth and success of a company. So whether your company is doing just a SWOT Analyses or doing a PEST Analysis as well, what matters is how the data is then used by the company to come up with new ways to improve and grow.