A SWOT analysis is a planning method used to evaluate projects and business ventures. SWOT’s are used to support strategic decisions by gathering strategic information about said business/project. The SWOT analysis is credited to Albert Humphrey at Stanford research institution in the 60’s and 70’s. A SWOT analysis is a 2 x 2 matrix comprising of Strengths, Weaknesses, Opportunities, Threats . That is either an internal or external influence to the business/project.
A Strength is an internal benefit to the business/project.
A Weakness is an internal detriment to the business/project.
A Opportunity is an external benefit to the business/project.
A Threat is an external weakness to the business/project.
This is the SWOT matrix.
Before we start it is good to make a note that sometime each of the item in each may sometime need to be very descriptive and other time may only need to be hyperbole. If you’re looking for specific information for your strategic plan then you may need to be more descriptive.
Strengths are the positive factors of your business/project. Really anything that you have control over that means you are above your competition. One such item could be that your prices are lower than the competition, or that you have patents on your products.
Getting this section done seem easily enough but that might not be the case as we are usually pessimistic people. So what some people may see as a good reason why they come to your business is something you could take for granted so may not realize at the first point. There are some good questions you can ask about your strengths to help you get started.
- A sample is here:
• Advantages of proposition?
• Competitive advantages?
• USP’s (unique selling points)?
• Resources, Assets, People?
• Experience, knowledge, data?
• Financial reserves, likely returns?
• Marketing – reach, distribution, awareness?
• Innovative aspects?
• Location and geographical?
• Price, value, quality?
• Cultural, attitudinal, behavioral?
• Philosophy and values?
The answers to these questions are usually strengths but this is not always the case so they can be used in the others as well.
Weaknesses are within your control that has a detrimental effect over your competitive advantage. Weaknesses can be lack of competitive advantage, limited resources, and lack of skills. Anything really that people could see you as weaker than your competition and as such reduce sales.
If you think your business is doing well or that the project idea is too good then you could be blind to your own weaknesses and you could have a real problem completing this section. Doing this section is important though. It helps you strengthen your business to be able to view it objectively. You may also have an idea about what your weaknesses are; this is place to put them. A few questions have been complied to help you start off.
- A sample list:
• Disadvantages of proposition?
• Gaps in capabilities?
• Lack of competitive strength?
• Reputation, presence and reach?
• Timescales, deadlines and pressures?
• Cash flow?
• Supply chain robustness?
• Morale, commitment, leadership?
• Processes and systems?
Again some of these answers may appear in other sections and it is O.K to put them in the right section.
Opportunities are the external factor which if capitalized may improve and strengthen the business/project. They also represent a reason for your business to keep existing and growing, a good firm understanding of opportunities will definitely help you increase your business size and will continue to aid in the development of your goals. Opportunities are external to your business/project, so if there are any opportunities that are internal you want to class them in your strengths.
Developing this section is crucial to the future strategies of your business/project and this section should defiantly be properly researched. Trends in markets are an example of a question you should ask yourself. If you are in the position to capitalize on new market trends then highlighting them here in this section could defiantly help with your strategies. A quick list of question you could ask is below.
- A sample list:
• Market developments?
• Competitors’ vulnerabilities?
• Industry or lifestyle trends?
• Technology development and innovation?
• Global influences?
• New markets, vertical, horizontal?
• Niche target markets?
• Geographical, export, import?
• New USP’s?
• Tactics: e.g., surprise, major contracts?
• Business and product development?
• Information and research?
• Partnerships, agencies, distribution?
• Volumes, production, economies?
• Seasonal, weather, fashion influences?
Most of these should appear in this section but again if you see a one that should be in another put it there. But be careful a weakness here should probably go into the threats section which we will be discussing next.
Threats are external factor which are out of your control that could potentially harm your business/project. The idea from this section is to be able to plan for them. The idea is that if you can understand potential risk to your business/project to can have contingency plans in place to minimise the effect to your business/project. It may also be useful to categorize these threats in how probable they are and how serious they could be.
- A sample list;
• Political effects?
• Legislative effects?
• Environmental effects?
• IT developments?
• Competitor intentions?
• Market demand?
• New technologies, services, ideas?
• Vital contracts and partners?
• Obstacles faced?
• Loss of key staff?
• Sustainable financial backing?
• Global economy?
• Seasonality, weather effects?
Again some of this list could appear anywhere in the SWOT but take in ensuring that they are in the right section.
Matching & Converting
Matching and converting are techniques that can be used to form a strategic plan for your business/project. The first ‘matching’ is when you use your strength to capitalize on possible opportunities identified in your SWOT analysis. Converting is quite the opposite. It is the method of using your strengths to help to combat the weaknesses and threats your business/project.
Matching you could visual represent on your SWOT, by drawing lines from your strengths to the opportunities they could open up for your business/project, then by labelling the relationship between them. You could do the same for converting but make sure there is some detail to inform the plan you would be putting in place to combat them.
Although good on its own a SWOT should really be done within a set of strategic planning tools. We will be looking at PEST/PESTLE analyses in later post. A SWOT could also be used towards risk planning as well (and should be). Being able to plan for risk is a major factor in project success, using this tool will help to be able to objectively see weaknesses and threats to your project and business.
If you have any questions about this post please comment.