What is SWOT analysis? The importance of a SWOT analysis? How to successfully conduct it and improve your business?
SWOT analysis may seem boring or useless, but in fact, it has more benefits than expected.
Therefore, conducting a SWOT analysis doesn’t take much time, and it’s forcing you to think about your work in a new way.
SWOT analysis aims to develop a strong business strategy and to ensure that all the internal strengths and weaknesses are taken into consideration.
In addition to the external opportunities and threats, you encounter in the market.
In addition, sometimes the SWOT analysis can be known as a situational analysis or a situational assessment.
SWOT Analysis Definition:
The SWOT analysis refers to Strengths, Weaknesses, Opportunities, and Threats.
To clarify, the SWOT is an analysis framework used to assess and evaluate a company’s competitive position and identify strengths, weaknesses, opportunities, and threats that the business face.
SWOT analysis is an important fundamental evaluation model that measures what businesses can and cannot do.
In addition, the SWOT analysis is also used to measure its potential opportunities and threats to take advantage of these opportunities, confront threats, correct weaknesses and turn them into strengths.
Internal strengths and weaknesses
For instance: (Operations, patents, competitive advantage, team members, geographical location, and product) can all change over time. They are all considered to be internal strengths and weaknesses in the SWOT analysis.
External opportunities and threats
For example: (Suppliers, competitors, prices, market, policies, and developed regulations). Subsequently, all of these opportunities and threats can be figured out using a SWOT analysis. In addition, they are associated with the market, and they happen whether you like it or not, and this is something that you cannot change nor control.
SWOT analysis is used to assess the changing environment and respond proactively, consequently, it must be used by all the companies -especially new ones- as a part of the planning process.
There’s no one size fits all, so this method is appropriate for all actions and businesses to put them on track. Therefore, we recommend that a meeting should be held at least once every quarter to review the business strategy through SWOT analysis.
How to conduct a SWOT analysis:
For complete and objective results, SWOT analysis is best done by a group of people with different perspectives and skills; management, sales, customer service, and even clients can contribute a proper adequate vision. Furthermore, the SWOT analysis process could be an opportunity to bring your team together and encourage them to participate and adhere to the company strategy.
The SWOT analysis is usually done using the quadruple analysis template, but you can also create lists for each category. Overall, use the method that makes it easier for you to organize the results and understand them.
Bullet points might be the best way to start your SWOT analysis. Firstly, you just need to pick up factors that are relevant to each of the four areas.
After that, and once the brainstorming has been completed, you create a final version -of the SWOT analysis- of high priority, listing the factors in each category by ranking the top to bottom priority.
Questions to ask when conducting a SWOT analysis:
We have compiled a few questions below to help you develop each SWOT analysis section. Certainly, there are other questions you can ask; This is just meant to help you get going.
Strengths (positive internal factors):
The strengths in the SWOT analysis describe the inner positive features of your institution, both tangible and intangible, especially the ones under your control:
– What is the best thing to do?
– What internal resources do you have to write on your SWOT analysis? Think of the following:
Your team’s skills, such as knowledge, background, education, or company assets, such as capital, existing customers, and technology.
– Do you have strong research and development capabilities?
– What advantages distinguish you from your competitors?
– What other positive internal aspects of your work add value or offer you a competitive advantage?
Weaknesses (negative internal factors):
Weaknesses in the SWOT analysis are aspects of your work that undervalue or put you in a competitive and indistinguishable position that needs to be improved.
– Which factors fall within your control that detract from your ability to gain or maintain a competitive advantage?
-What areas or fields need improvement for you to achieve your goals or compete with your strongest competitor?
-What does your work lack?
For example, experience or access to skills or technology?
-Are your resources limited?
Opportunities (positive external factors)
Opportunities in the SWOT analysis are attractive external factors with which your work is likely to thrive:
-What market opportunities or environment can you benefit from?
-Did you perceive your work positively?
-Was there any growth in the market recently? Or any changes that create a chance?
Threats (external and negative factors)
Threats in the SWOT analysis include external factors, beyond your control, that could jeopardize your own strategy or action.
– Who are your current or potential competitors? –analyze competitors to identify them properly –
– What factors beyond your control may endanger your work?
–Is there a development that could lead to a decline in revenue or profits?
– What situations might threaten your marketing efforts?
– Has there been any significant changes in the price of suppliers =or the availability of raw materials?
– What about shifts in consumer behavior, the economy, or government regulations that can reduce your sales?
– Have new technologies or products been introduced that would make products, equipment, or services obsolete and old?
Unlike what you read sometimes, SWOT analysis requires a reasonable amount of prior analysis, it doesn’t offer solutions on its own, but it shows you the best way to follow it strategically where you can use the right strengths and seize every opportunity while controlling weaknesses and avoiding threats with prior experience and readiness.
Coca-Cola’s campaigns faltered in 2015, and its profits started to fall.
The use of SWOT analysis helped solve this problem as it was clarified.
Its most significant strength points, such as its popular brand name, its distribution power, its coverage capacity, and market opportunities; In addition to its weaknesses and threats such as foreign exchange fluctuations, shifts in customer interests, the increasing interest of many consumers in health, reducing the sugar intake and soft drinks, and the increasing number of competitors in the market.
After that, Coca-Cola has taken many steps to address these concerns and properly write them in the SWOT analysis to adjust and resolve the problems that occurred.
Through these actions, the marketing, advertising, and promotional activities stepped up and increased, in addition to expanding into other drink categories. As a result, within one year the share price rose from $33 to $35.
To conclude from what we have displayed and demonstrated on the SWOT analysis, it was clearly explained how SWOT analysis works, and what is the importance of conducting a SWOT analysis. Due to the consideration that it is a strategy that helps in facing obstacles and developing work. Therefore, it is necessary for entrepreneurs to understand what SWOT analysis is, how to conduct it properly in the correct way to benefit from it completely.
We can assist you if you are looking for other tools to help you improve your work, we have written on our blog about the Ansoff matrix and how you can use it to improve your work, along with a blog about the BCG matrix and how you use it to analyze your work, in addition, we have a blog that interprets the meaning of content marketing and how useful is it nowadays.