SWOT Analysis

SWOT Analysis- Powerful tool for strategic business planning

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT analysis is a technique for assessing these four aspects of your business in the book Strategy Safari (1998), management scholar Henry Mintzberg and colleagues of strategic management, "with its famous notion of SWOT" emphasizing assessment of a company's internal and external situations

Since the information is presented in an easy-to-read grid, SWOT analyses are quick and straightforward assessments. And Once everything is organized, the condition of your business is easier to assess. Here’s a breakdown of what each word means in the context of a SWOT analysis:

Strengths

Strengths are internal, positive attributes of your company. These are things that are within your control. What business processes are successful? What assets do you have in your teams? ie. knowledge, education, network, skills, and reputation. What physical assets do you have, such as customers, equipment, technology, cash, and patents?. What competitive advantages do you have over your competition?

Weaknesses

Weaknesses are negative factors that detract from your strengths. These are things that you might need to improve on to be competitive. Are there things that your business needs to be competitive? What business processes need improvement? Are there tangible assets that your company needs, such as money or equipment? Are there gaps on your team? Is your location ideal for your success?

Opportunities

Opportunities are external factors in your business environment that are likely to contribute to your success. Is your market growing and are there trends that will encourage people to buy more of what you are selling? Are there upcoming events that your company may be able to take advantage of to grow the business? Are there upcoming changes to regulations that might impact your company positively?

Threats

Threats are external factors that you have no control over. You may want to consider putting in place contingency plans for dealing with them if they occur. Do you have potential competitors who may enter your market? Will suppliers always be able to supply the raw materials you need at the prices you need? Could future developments in technology change how you do business?

When Should I Do a SWOT Analysis?

There’s no right or wrong time to do a SWOT analysis. There are, however, times when a SWOT analysis can be particularly useful. Here are 4 times when it’s a good idea to look inward and outward:

When internal business conditions change

Maybe you’ve got a new CEO, your business is scaling rapidly, or departments are being restructured. A SWOT analysis can provide insights that can help with transitions and adjustments.

When external market conditions change

New competitors, shifting economic conditions, regulations, and other shifts in the marketplace can leave businesses in need of reflection. A SWOT analysis can help keep you on your toes and ready to address incoming challenges.

Before strategic planning

Strategic planning often involves new initiatives and changes in resource allocation. Before beginning the planning process, it helps to know the current condition of your business or team so you can make forward-looking decisions.

On a scheduled basis

While most companies do strategic planning every few years, it won’t hurt to do a SWOT analysis on a more regular basis. A quick SWOT analysis on a quarterly or semi-annual basis will provide information you can use in the short term, and bring to the strategic planning process when it’s time.

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