What is a SWOT Analysis

SWOT stands for Strengths, Weaknesses, Opportunities and Threats.  It’s a very pragmatic tool designed to help leaders, business owners and managers optimize performance, maximize potential, manage competition, and minimize risk. When properly completed, a SWOT analysis can assist in making better decisions, at all levels, personally or corporately, big or small.  

Performing a SWOT analysis will help you take stock of the internal factors (strengths and weaknesses) and the external factors (opportunities and threats) affecting your business. Whatever your specific reason for doing a SWOT, you’ll follow several steps to help clarify and ultimately come up with the appropriate plan to fulfill your objectives.  

When conducting a SWOT analysis it’s essential to consider both inside and outside factors to clarify the world in which your business operates. Here is an example of a SWOT analysis in practice

• Prepare for strategic planning. Many companies use a SWOT analysis to formulate or rethink strategy by better understanding their organization, market, and competitors.

• Improve one or all parts of your business. It can help you understand where your organization is most effective and identify areas of weakness.

• Assess the feasibility of a new initiative. You can use the analysis to determine if you should pursue a new product or project

• Make a specific decision. It can help you decide whether to take advantage of a new business opportunity, restructure your team, or implement a new technology.

• Set goals. It can provide the background information you need to develop organizational, unit-specific, or team goals.

• Plan your succession. Some individuals even use the analysis to assess and plan their succession and the transition of their business.  

The SWOT analysis starts with your company’s internal strengths (these are the things in your control) whereas the external issues are things that would exist even if your business didn’t. Note that these are not all of your companies’ strengths but those that are most relevant to the question that you are trying to answer. 

 Look Inside: Strengths and Weaknesses

Strengths include:

•         Capabilities and resources that enable your company to perform well

•         Things, which are both tangible (assets like patents or superior financial standing) and intangible

(innovation capability or a strong brand)

•         “Core competencies”—those things, which your company is exceptionally good at and that your customers value

Weaknesses include:

•         Disadvantages compared to competitors

•         Something you lack or do poorly

•         Things, which are both tangible and intangible

•         The flip side of strengths, such as weak leadership abilities, poor customer service, or lack of technology 

Look Outside; Opportunities and Threats

Once you’ve looked inward to evaluate your strengths and weaknesses, you then scan the outer world for opportunities and threats.

 Opportunities include:

•         Trends, forces, and events that your company can capitalize on

•         Broad-reaching trends (such as demographic shifts, regulatory issues (unions), removal of trade barriers) and more-narrow forces (such as the identification of an unmet customer need or loosening of a regulation) that affect your industry or niche market

Threats include:

•         Events or forces outside of your control that may negatively affect your company

•         Broad-reaching changes (such as shifts in demographics) and more-narrow events (such as the entrance of a new competitor)

If you and or your team need to analyze a “Big Question” in your business, I’m confident a SWOT analysis will assist you in getting to the “Big Answer”