What is SWOT Analysis and How Can You Use It for your Business?

Your business or organization can become competitive by gaining tactical advantage on its strengths and opportunities and effectively managing its weaknesses and threats. An essential starting point to achieve this is to do a SWOT analysis.

So what is a SWOT analysis? SWOT refers to Strengths, Weaknesses, Opportunities and Threats. SWOT analysis is a powerful strategic planning tool that helps bring about:

1. The best attributes, characteristics and features within the organization (strengths);
2. The internal attributes that limit growth and development (weaknesses);
3. The external trends, events or circumstances that can benefit the organization (opportunities); and
4. The external trends, events or circumstances that could be harmful to the organization (threats).

SWOT analysis covers both the internal and external factors. Strengths and weaknesses relate to inner qualities, while opportunities and threats are external considerations. A thorough discovery of the organization's SWOT realities will provide vital inputs in crafting competitive strategies for business and organizational development. But first, let’s find out how to conduct SWOT analysis in the overall context of business and organizational planning?

Robert Young (1979) puts planning as determining goals and designing the means by which these goals may be achieved. Therefore, as a management process, planning is an exercise that answers three basic questions: Where are we now? Where do we want to be? And how do we get there?

SWOT analysis is a technique that is usually employed in the early part of the planning process, essentially to answer the question where are we now? The SWOT analysis is best undertaken in the form of participatory workshop with managers and key associates working together through the process and ideally with a designated facilitator steering the discussion.

Strengths

In analyzing strengths, reflect on the comparative advantages of the company or organization. For instance, you may ask: What are the internal qualities that drive your company’s positive sales performance? What are the resources within the company that you can leverage to improve your bottom line? List the answers to these questions in brief and unambiguous statements to make up for your strengths.

Weaknesses

Again, looking within your organization, identify which areas your company or organization did not do well. What systems or processes need some improvement? What are the instances that result in fewer sales? What resources are lacking? The responses that you get from these questions represent your weaknesses.

Opportunities

After completing the internal assessment, it’s time to scan the external environment to look for trends, events and circumstances in the political, economic, social and technological spheres that can benefit your company or organization. What are the emerging trends in the market that are favorable to your company? What new technology you can adopt to improve your production efficiency? What are the local and national policies that can provide enabling benefits for your business or organization?

Threats

The reverse of the opportunity questions mentioned above will actually help you identify your threats.

Now that you have identified your SWOT, the next step is to formulate your strategies for business or organizational development based on the current realities described in the SWOT analysis. You may now decide on strategic innovations that are leveraged from your strengths and opportunities and identify actions to overcome your weaknesses and mitigate threats.

Be creative in designing your strategies. You can match your strengths and opportunities and see if there are emerging strategies or explore your opportunities and find ways to use them to address your weaknesses. By matching your strengths against threats, you can also develop strategies to mobilize your strengths to weather the threats. Finally, working on your weaknesses can help reduce your vulnerability to some threats.

If done properly, SWOT analysis can provide rejuvenating results for the company or organization. It can help you achieve that highly coveted competitiveness for your business or organization!