SWOT analysis is a strategic planning method, used by companies, to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in the business or potential venture.
A SWOT specifies the objectives of the business venture or project and identifying the internal and external factors that are favourable and unfavourable to achieve that objective.
- Strengths: characteristics of the business, or venture that give it an advantage over others
- Weaknesses: are characteristics or limitations that place the business at a disadvantage relative to others
- Opportunities: chances to improve performance (e.g. make greater sales) in the operating environment
- Threats: elements in the operating environment that could cause trouble for the business
Look at Both Sides: Internal and External Forces
To get a better look at the big picture, consider both internal and external forces when uncovering opportunities and threats.
- Examine the capabilities of your organization. This can be done by analyzing your organization’s strengths and weaknesses.
- Look at the main points in the operating environmental analysis, and identify those points that pose opportunities for your organization, and those that pose threats or obstacles to performance.
The SWOT analysis is a four-part approach to analyzing a Company’s overall strategy or the strategy of its business units. All four aspects must be considered to implement a long-range plan of action.
It cannot find the solution for you, but it will ensure that issues are: identified, classified and prioritized clearly, showing the problem in terms of key underlying issues. Decision makers can then determine the focus and direction.
Why use a SWOT Analysis?
In any business, it is imperative that the business be its own worst critic. A SWOT analysis forces an objective analysis of a Company’s position versus its competitors and the marketplace. Simultaneously, an effective SWOT analysis will help determine in which areas a company is succeeding, allowing it to allocate resources in such a way as to maintain any dominant positions it may have.
SWOT Analysis is a very effective way of identifying your Strengths and Weaknesses, and of examining the Opportunities and Threats you face. Carrying out an analysis using the SWOT framework will help you to focus your activities into areas where you are strong, and where the greatest opportunities lie.
Using a SWOT analysis in your organization will help you and your team reach the best solution by:
- Helping decision makers share and compare ideas
- Bringing about a clearer common purpose and understanding of factors for success
- Organizing the important factors linked to success and failure in the business world.
- Analyzing issues that have led to failure in the past
- Providing linearity to the decision making process allowing complex ideas to be presented systematically.
When Your Done – Identify and Take Action
Once the SWOT analysis has been completed, mark each point with the following:
- Things that MUST be addressed immediately.
- Things that can be handled now.
- Things that should be researched further.
- Things that should be planned for the future.
Now that each point has been prioritized, set an action plan for each and assign it to a person, add a deadline.
Although the SWOT analysis will assist in identifying issues, the action plan will ensure that something is done about each one. With complicated issues, a further brainstorming session might be done to analyze it further and decide what action to take.