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SWOT analysis - Strengths, Weaknesses, Opportunities and Threats

Thu, 12 September 2002

How to carry out a SWOT analysis for business planning.
What is a SWOT analysis?
  • SWOT stands for strengths, weaknesses, opportunities, and threats.
  • SWOT analysis involves identifying your business’s strengths and weaknesses, and examining the opportunities and threats which may affect you.
  • SWOT analysis can be used to analyse your organisation and its environment.
  • Carrying out a SWOT analysis can help you identify changes that can be made to improve your business.

Carrying out a SWOT analysis

To carry out a SWOT analysis effectively, it’s a good idea to get a team together, drawn from across the business, for a brain-storming session. Consider each of the four SWOT areas in turn, and make note of all the ideas, suggestions and comments which are made. These can be reviewed and edited after the brain-storming session.
 

Brain-storming session

A good method to use is to take a large sheet of paper, or a whiteboard, and split it into four sections, as demonstrated in the following table.
 
Strengths
 
Weaknesses
 
Opportunities
 
Threats
 
 
Now you need to fill the four sections with your ideas. See below for guidance:
 

Strengths

Strengths are those features of the business which allow you to operate more effectively than your competitors. For example, a strength could be your specialist technical knowledge. You need to consider your strengths from your own point of view and from that of your customers' and clients'. You must be realistic and honest.
 
Try answering the following questions:
  • What is it that you do well?
  • What advantages do you have over your competitors?
  • What makes you different from your competitors?

Weaknesses

Weaknesses are areas capable of improvement. Are you lacking skills or new products? Do you have a higher cost base or lower productivity than your competitors? You must face any unpleasant truths about your business and be realistic.
  • Can you do anything better?
  • Do you do anything badly?
  • What should be avoided?
  • What causes problems or complaints?

 

Opportunities

Can you identify any new opportunities for your business? Are there any interesting trends which you can take advantage of?
Examples of opportunities include:
  • Changes in technology and markets, eg the Internet
  • Changes in government policy or regulations / legislation
  • Local and global events
  • Potential new uses of products and / or services
  • Use of marketing or promotional techniques to boost the business
  • Social factors, eg population fluctuation, lifestyle changes, etc.

 

Threats

Threats can be external or internal, and are anything which can adversely affect your business. External threats could be inflation, new legislation, or a new competitor in your market. Internal threats could include a skill or staff shortage within your organisation.
 
Try answering the following questions:
  • What obstacles face your business?
  • What are your competitors doing?
  • Are there any changes in products, services or technology which could threaten your business?
  • Do you have any financial problems such as bad debt or cash-flow difficulties?

 

After SWOT analysis is complete

Once you have completed your SWOT analysis, it is essential that you make note of the following:
  • What must you address immediately?
  • What can be handled now?
  • What needs researching further?
  • What needs to be planned for the future?
Once these have been identified, you should create an action plan to ensure that something is done! Assign someone to each point and set deadlines. Review the results of your analysis regularly to determine if anything has changed and what has been achieved.
 

Points to remember

Use SWOT analysis as a guide, but remember that it can be very subjective. Be aware that two different people might come up with two very differing analyses – so don’t rely on SWOT analysis too much.
SWOT analysis can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porter's Five-Forces analysis.

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