A SWOT analysis is a strategic planning tool used to evaluate a business or a business venture or any other situation that requires a decision. A SWOT analysis evaluates the Strengths, Weaknesses, Opportunities, and Threats of the project (in this article we will look at evaluating a business).
Performing SWOT
Once you have completed the analysis you want to be in a position where you can determine a strategy for the future to improve your company's overall performance (or maintain it if you are happy with your final analysis).
Strengths
Determine your company's strong points. Consider these from an internal perspective, and externally from the point of view of your customers and people in your market. These strengths are your company's resources and capabilities that can be used as a basis for developing a competitive advantage.
What advantages does your company have?
What do you do better than anyone else?
What unique or lowest-cost resources do you have access to?
What do people in your market see as your strengths?
A strength could be:
Your specialist marketing expertise
A new, innovative product or service
Location of your business
Quality processes and procedures
Any other aspect of your business that adds value to your product or service
Weaknesses
In some cases, a weakness may be the flip side of a strength, or a weakness may be viewed as a lack of certain strengths. Again, consider this from an internal and external basis.
What could you improve?
What should you avoid?
Wht are people in your market likely to se as weaknesses?
A weakness could be:
Lack of marketing expertise
Undifferentited product or services
Location of your business
Poor quality goods or services
Damaged reputation
Opportunities
A useful approach to looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities for profit and growth. Or alternatively, look at your weaknesses and see whether you could open up any opportunities by eliminating them.
Where are the good opportunities facing you?
What are the interesting trends you are aware of?
An opportunity could be:
A developing market such as the Internet
Mergers, joint ventures or strategic alliances
Moving into new market segments that offer improved profits
A new international market
A market vacated by an inefficient competitor
Threats
Changes in the external environment may present threats to your company. A threat is a major unfavourable situation in a company's environment. They are key impediments to the company's current or desired position.
What obstacles do you face?
What is your competition doing?
Are the required specifications for your job, products or services changing?
Is changing technology threatening your position?
Could any of your weaknesses seriously threaten your busines?
A threat could be:
A new competitor in your home market
Price wars with competitors
A competitor has a new, innovative product or service
Competitors have superior access to channels of distribution
Taxation is introduced on your product or service
Example SWOT analysis (in brief) - Wal-Mart
Strengths - Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.
Weaknesses - Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.
Opportunities - To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe, or the Greater China Region.
Threats - Being number one means that they are the target of competition, locally and globally.
Summary
SWOT analysis is a framework for analysing your company's strengths, weaknesses, and the opportunities and threats that it may face.
This will help to use your strengths to provide an insight to your business opportunities. Also it will allow you to see any weaknesses in your business that can cause immediate threats.
