In this article, we answer the following question. What is SWOT analysis?. SWOT stands for Strengths. Weaknesses, Opportunities and Threats.
Before conducting a SWOT analysis, it is wise to undertake an external environment looking PEST analysis. The straightforward idea of SWOT is to isolate the strengths to maintain and enhance them. And weaknesses to take action to correct them. And then minimise any risks that come from both.
Not surprising, SWOT identifies any external opportunities and threats which could affect your company – Those Strengths and Weaknesses you have isolated. Yes, you will find plenty of options in your weaknesses. If nothing else correcting deficiencies could isolate new marketing opportunities.
These Strengths and weakness. Need to take into account all aspects of your business. From marketing to finance. Distribution to sales and culture to recruitment. All relative to the market you operate in, previous, current and projected performances. Being complacent with your strengths is also a threat.
The easy way to approach a SWOT exercise is to develop a list of all your businesses Strengths. Weaknesses, Opportunities and Threats.
Leave nothing off the table, no matter how silly, or crazy some of the items on the list may be:
- Check that non of your isolated weaknesses cancel out your strengths
- Isolate the potential threats to your company strengths;
- Look for opportunities that could come from correcting weaknesses.
- List the main areas that concern you and require urgent action.
To improve the accuracy of your impact assessment from SWOT analysis exercise, you need to also take into account the likelihood of factors. How about adding numerical values to add a weighting to your lists? Explore the probability of the situation taking place. Then provide a written explanation and give the reasonings in explaining your decisions. Something like this. How important is this to your market?
- 1 – Has a minimal effect
- 5 – Vitally important
With your strengths, ask yourself how important is each one?
- 1 – This is done but could do it a lot better
- 3 – We excellent at this, it’s our niche
The same with weakness
- 1 – We don’t focus on this aspect, but we are not to bad at it
- 3 – We do this badly
Now look at the likelihood of its to happen
- 1 – It is probably not going to happen
- 3 – It could happen
And don’t forget to add and agree on the reasons to explain the numerical weightings, offering detailed explanations of your analysis. Not only will be you have a better understanding of your Strengths, Weaknesses. Opportunities and Threats, doing this exercise allows you to collaborate with your team. It also provides you with a simple way of presenting the situation you are facing and enable to you develop new strategies to make the most of the situation.
What is SWOT analysis?. It is a deceptively simple analytical tool, often misused and wasted. But very powerful when used its maximum potential. List the Strengths. Weaknesses, Opportunities and Threats. Then give each one a likelihood weighting and explain your reasons will offer excellent insight.