What is a SWOT Analysis?
SWOT analysis is a tool used to scrutinize an individual, team or organization and the environment. In order to define SWOT analysis, the elements that make up a SWOT must be understood. Strengths are positive traits and resources that contribute to success. Weaknesses are internal factors that limit your ability to achieve your goal. Opportunities are the external factors that you can use to thrive.Threats represent factors that are beyond your control that can cause harm and jeopardize the business.
Investopedia defines SWOT analysis as “a basic, analytical framework that assesses what an entity can and cannot do, for factors both internal (the strengths and weaknesses) as well as external (the potential opportunities and threats).”
SWOT Analysis Example
Here is an example of a general SWOT analysis. The headings given in this example can be used as a swot analysis template. This can serve as a starting point to implement strategic thinking. You gain a better understanding of the present state, thus aiding in strategic planning and decision making.
- To determine the feasibility of introducing a new product.
- Sales staff with extensive product knowledge.
- Established communication systems.
- Great rapport with customers.
- Marketing strategies that lead to success.
- High operating costs.
- Unscientific inventory management.
- Lapsed deadlines.
- High demand for similar products.
- High customer loyalty.
- Similar products are expensive.
- Intense competition in similar product space.
- Recession in the economy.
Importance of SWOT
SWOT helps understand both internal and external factors that contribute to success. It unearths opportunities that you can exploit based on your strengths and exposes your weaknesses so that any threats can be neutralized. The SWOT analysis chart can improve operations by helping decision makers focus on areas that are in need of an overhaul. Besides finding new opportunities those in the distant future can also be forecasted. A company can also devise strategic plans based on competitor’s vulnerabilities.
How to do a SWOT Analysis
1. The SWOT team
Identify the right people and conduct a brainstorming session. Select an able facilitator and also assign a person to capture notes from the session.
2. Define SWOT objective
SWOT analysis is used in different scenarios, such as checking viability of a new idea or arriving at a specific business decision. Defining the objective helps in efficient use of SWOT.
Gather relevant data that will aid in decision making. Swot analysis has to be based on facts and numbers for it to yield the right results.
Conducting SWOT Analysis
1. Record Strengths and Weaknesses
Analyze the internal factors that affect your business. List strengths and weaknesses and ask the team to reach a consensus on how to rank them, prioritizing the strongest strength and most dangerous weakness.
2. Record Opportunities and Threats
In SWOT analysis opportunities that can be exploited are obtained from an environmental scan. This involves understanding economic factors, customer preferences and performing competitor analysis. The opportunities and threats should be ranked according to importance.
3. Considerations and Planning
Analyze S-W-O-T and develop strategies to drive business. Determine what problems need attention and what needs to be changed. Then formulate plans to address these problems. Review goals to check if they are still on track.
Mistakes to Avoid While Performing a SWOT Analysis
1. Ambiguous SWOT Objective
People tend to list many points under each head if the objective of the swot analysis is not clearly defined. Long lists also make it difficult to prioritize and address issues that need the most attention.
2. Subjective Strengths and Weaknesses
Strengths and weaknesses that are generic and are not quantifiable deter the development of precise action plans.
3. Biased Estimation of Strengths and Weaknesses
Strengths are often overestimated and weaknesses are brushed under the carpet. This can negatively impact the success of the business.
MeetNotes provides a SWOT analysis template that allows you to align your strengths and weaknesses with opportunities and threats. You can prioritize issues and derive solutions. You can understand where you stand and create action plans based on the analysis.