Those of you who work in the business world are probably already aware of the phrase SWOT Analysis. SWOT is a way of evaluating four factors: strengths, weaknesses, opportunities, and threats. Company management frequently uses this approach to attain certain targets, such as growing and developing a business.
Based on the company’s internal and external change levels, SWOT should be performed every 6 to 12 months. As a result, comprehending the SWOT approach is critical for any business. Learn more about SWOT analysis by reading the following Clockster review.
What is a SWOT Analysis?
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. The SWOT approach, according to experts, is an attempt to shape commercial prediction. Albert Humphrey pioneered this approach at Stanford University in the 1960s and 1970s, using data from numerous Fortune 500 companies.
4 Point of SWOT?
The strength component of the analysis of SWOT is an advantage that distinguishes the corporation from its rivals. Strengths might range from brand appeal to branch locations, and equipment completeness. Here are some SWOT questions to assist you in determining your business strengths.
- What successes has the company achieved?
- What non-physical assets does the company have? (education, knowledge, connections, reputation, skills)
- What physical assets does the company have? (equipment, technology, finance, patents, customers)
- What are the company’s strengths over competitors
- What makes the company successful in making sales?
- What are the advantages that the consumers get from the company?
- What are the company’s unique points?
Weaknesses in the SWOT are factors that have a negative impact on the business. In order to be competitive in business rivalry, this list of weaknesses must be addressed or enhanced by the company. Here are some questions to raise to identify areas of weakness of the company.
- Which business processes need to be improved and enhanced?
- What kinds of non-physical assets that the company needs? (education, knowledge, connections, reputation, skills)
- What physical assets are required by the company? (equipment, technology, finance, patents, customers)
- Are there gaps between the planning and implementing teams?
- What are the things needed to make the business more competitive?
- What things that the company should avoid?
- What are the weaknesses of the company from the consumers’ point of view?
Opportunities to improve corporate success are the next component of the SWOT. The businessperson must keep an eye on opportunities in order to forecast future changes. Here are some questions about opportunities using the SWOT method.
- What are the emerging business markets?
- What are the trends that will drive more customers in the future?
- What kinds of events can be used for business development?
- Are there policy changes that will have a positive impact on business?
Threats are factors that the company will encounter and have the ability to hinder the growth of a project or business, such as the possibility of new rivals, regulatory changes, political situations, and so on. Identify these threats through the SWOT approach by raising these questions.
- Who are the potential competitors who might enter your market of business?
- Will there be a price change from the raw material supplier?
- Are there any technological changes that pose the employment performance?
- Are there changes in consumer behavior that could negatively affect the business?
- Are there changes in market trends that negatively affect the business?
The Purpose of SWOT Analysis
The main goal of the analysis of SWOT is to identify significant characteristics of a company’s strengths, weaknesses, opportunities, and threats. As a result, a business should maximize its strengths while minimizing their weaknesses.
Meanwhile, improvements and future developments are predicted using opportunities and threats.
Why is a SWOT Analysis Important?
The advantage of a SWOT is that it can be used to assess the company’s current and future position. Even so, a SWOT is not a solution for all company issues. This technique assists businesses in determining which tasks should be prioritized initially. Here are some examples of SWOT’s advantages.
- Recognize internal and external issues or obstacles that the company will face.
- Possibility to create constant improvement and innovation.
- Avoid losing profits as a result of poor decision-making.
- Do business evaluation based on the data obtained.
SWOT Analysis Factors
Internal and external factors are included in the SWOT approach. Internal elements are components of the SWOT that can be controlled by the internal team. External factors, on the other hand, are external aspects that affect the company and cannot be controlled by the company.
Internal factors in SWOT are strengths and weaknesses. If the strengths outweigh the weaknesses, the prediction of the project tends to be positive, and vice versa.
The internal factors included in the analysis of SWOT are resources, financial conditions, internal strengths and weaknesses, and previous experiences (failure and success).
Opportunities and threats are external elements in the SWOT approach. Both of these factors should be taken seriously when implementing project strategies or development activities.
These factors can be the solutions for any development issues. Sources of capital, government policies, socio-political situations, cultural trends, and advancement of technologies are all examples of external elements in the analysis of SWOT.
How to do SWOT Analysis?
Making a SWOT analysis is not something that can be done on the spur of the moment. The required aspects must be identified by a qualified team. It is also impossible to execute the analysis of SWOT in a short period of time.
This is because the higher the quality of the project execution strategy guide, the more precise and comprehensive the analysis results are. Whereas, obtaining the data takes a long time.
Assemble a team dedicated to SWOT analysis.
Assemble a team with people from various divisions to see different perspectives towards the company’s state (4 major components of SWOT). Let’s say one team includes people from marketing, finance, production, and human resources division. Don’t forget to involve founders and company executives in the analysis process as well.
Customers’ viewpoints might also be obtained as direct feedback for your company. Furthermore, the company may also employ an independent expert consultant to conduct the evaluation.
The combined strategy of the analysis of SWOT is combining two aspects to determine the direction of the business implementation. There are 4 most used strategies, namely:
Strategy combination of Strengths – Opportunities
The goal is to grow the business by maximizing internal strengths and external opportunities.
Combination strategy of Strengths – Threats
By relying on personal strength, it aims to counteract the negative effects of external forces.
Strategy combination of Weaknesses – Opportunities
Attempts to compensate for internal flaws by utilizing external advantages or external potentials.
Combination strategy of Weaknesses – Threats
Attempts to find alternate ways to survive in the midst of internal and external threats.
Examples of the Company’s Analysis of SWOT
1. Example of a Service Company’s SWOT Analysis
You already know how to make a SWOT analysis,now get a clearer picture about this topic through the following example. This is an example of a service company’s analysis of SWOT.
- Good reputation in focusd area.
- Flexibility in responding to customer requests.
- Low overhead costs, so service costs are better than competitors.
- Quick response without long and complicated bureaucracy.
Non-strategic location. – Limited capital. – Low human resource skills. – The cash flow is unstable.
- Increased consumer interest in the service sector.
- Launch of payment and transaction management software.
- Government support for local entrepreneurs.
- Banks’ low interest in investing in the company’s core business.
- Technological changes that are beyond the company’s current resource capacity.
- Changes in competitors’ strategies that threaten the company’s market position.
2. Example of a Goods Company’s SWOT Analysis
Here is an example of the analysis of SWOT for an online products business.
- Human resources have a passion for learning.
- Competitive product prices.
- Excellent product quality.
- Brand is not widely known.
- Non-efficient promotion.
- Reach of the outside market.
- There is an opportunity to build wider marketing connections.
- Many new competitors are offering interesting concepts.
- Marketing tools from third parties are not optimal.
That is all about SWOT analysis. As previously said, the analysis of SWOT is a critical procedure to measure the success of a company’s strategy. Hopefully this insight would be beneficial for you and the company.