SWOT analysis is an extremely simple but strong tool. It assists you in making a business plan if you are establishing a new company or guiding an existing company.
SWOT represents Strengths, Weaknesses, Opportunities, and Threats.
Strengths and weaknesses are elements within the company; you can control certain things and make changes. These are intellectual property, team members, and several other aspects.
Things happen out of the purview of the company every day. They happen in the big markets. These may be opportunities, and some may even be threats. They will always be there. What matters is how you use the opportunities and further take steps to guard against threats. These can include raw materials prices, customer shopping trends and many other things. The Opportunities, Threats, your main strengths and even weaknesses can all be properly and efficiently organized using SWOT analysis. It is generally done through a simple grid usually 2 x 2.
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A SWOT analysis requires effort; there is no doubt. But the payoff is you get a greatly reliable strategy. To perfectly develop your business, it will aptly prioritize the work needed.
SWOT forces you to think out of the box when it comes to business and compels you to take new directions. Of course, it will guide you on how to take advantage of any new opportunity it affords. It also helps in understanding how to shield oneself from threats.
Who should handle SWOT?
SWOT analysis is not everyone’s cup of tea. It is effective only in the hands of the company and leaders. Also, you cannot give an assignment to other people.
Though, company leaders should not complete the work themselves, for best results gather people with different views on the company—select people from different departments within the organization. Everybody ought to grab a chair at the table.
Innovative organizations can even look other than their own internal ratings when they perform a SWOT analysis and get input from clients to add their extraordinary voices to the mix.
In case you’re starting or maintaining a business yourself, you can still perform a SWOT analysis. Recruit people with varied perspectives with some knowledge regarding your business and accounts. Different perspectives are the key here.
Existing companies can utilize SWOT analysis to evaluate their present circumstance and regulate a strategy to make progress. However, always keep in mind that the situation is always changing and you have to re-evaluate your strategy, beginning with a new SWOT analysis every six to twelve months.
New companies can take immense advantage of SWOT analysis. It is a vital part when planning the business process. It aids in the organization of the strategy so that the company starts off on the right note with proper direction.
How is the SWOT Analysis done?
As mentioned already, SWOT analysis is best done in a team with varied perspectives.
Though, you do not need to retreat all day to complete the task. One or two hours should be enough.
Gather people from different departments of the company and ensure that each department has representatives. You will find that various groups inside the company will have alternate points of view, which is essential for a successful SWOT analysis.
SWOT analysis sessions are brainstorming. You should give everyone a bunch of sticky-notes, let everyone quietly provide ideas and start everything. It ensures you consider everyone’s ideas.
After a few minutes of talks with the group, post all the sticky notes on the wall and gather relative thoughts together, on the off chance that another person’s input sparks a new idea.
After sorting out all the ideas, it’s an ideal opportunity to rank the thoughts. You should use a voting system. Everyone has five to ten “votes”, and they can distribute them in any way they like. Different coloured sticky points are useful for this part of the activity.
List out the ideas as per the votes. The list is up for discussion and conversation, and someone in the room should have the alternative to choose a formal conclusion on the need. This is the CEO, but it can be another person accountable for business strategy.
SWOT analysis has 4 quadrants. Strengths, Weaknesses, Opportunities and threats. Following this cycle is essential.
Strengths are the supreme element inside the company. These are things within your control.
- Which business processes are effective?
- What are the resources you have in your group, for instance, acquirement, accomplishments, associations, proficiency, and honour?
- What tangible assets do you own, like clients, materials, technology, money and licenses?
- How better do you compare with regards to your opponents.
These negate your strengths. These are things you may need to improve to increase your competitiveness.
- Is your company lacking in competing power?
- Is up-gradation necessary in any business process?
- Does your company need physical assets, for example, money or equipment?
- Are there gaps in your team?
- Is your place norm for your success?
- It is something that is not a part of your business environment. Yet it can increase your prosperity.
- How does your market compare? Is it rising? Also, can you identify trends to increase your sale?
- Is your company likely to use forthcoming occasions to develop the business?
- Are there forthcoming changes to the guidelines that may affect your company?
- If your business is operating, do clients appreciate you?
These are elements over which you have no power. They fall outside of your business environment. You may need to consider developing contingency plans to deal with these situations.
- Is there any strong opponent that may enter your market?
- Will the supplier agree to supply the required raw materials at the cost you need?
- Will the future improvement of technology change how you do business?
- How can changes in customer behaviour negatively impact your business?
- Is there a market trend that may become a threat?
What to do next?
After completing the SWOT analysis, you can transform it into an actual strategy. After all, this is to develop a strategy that you can continue to work on for the next few months.
As evident, you need to sort out your strengths and find ways to utilize these to capture opportunities. Then, see how your strengths respond to threats in the market. With the help of this analysis arrive at a list of actions you will take.
In the company calendar, set targets and objectives. What would you like to achieve in each calendar quarter (or month)?
You also can do this by analyzing how outside opportunities can help you overcome your internal weaknesses. Can you also reduce these weaknesses and thus avoid the threats found?
Let’s wrap it!
The plans that you make from your SWOT analysis will be completely reasonable for the target part of the lean plan and give you a strong base that you can build up your business from.