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What is a SWOT analysis

What is a SWOT analysis

What is a SWOT analysis

What is a SWOT analysis? A SWOT analysis is a methodological tool for identifying an organization’s internal strengths (S) and weaknesses (W), as well as its external opportunities (O) and threats (T).

If you’ve ever created a business plan or tried to make an organizational decision, chances are you’ve heard of a SWOT analysis.

Some say the tool was developed by the Stanford Research Institute in the 1960s, while others credit the efforts of the Harvard Business School in the 1950s.

One thing’s for sure though, the different origin stories agree that the SWOT analysis was developed to improve strategic decision making in organizations.

  • Who needs a SWOT analysis?

    Businesses typically conduct a SWOT analysis to make strategic decisions. But other organizations, such as non-profits and universities, can use this tool too weather your:

    1. An entrepreneur planning a new business.
    2. A start up presenting a business case to potential investors
    3. A manager deciding to launch a new product or service.
    4. A company implementing a repositioning strategy in the ever-changing market environment.
    5. Introduction of new tech to the organisation.
    6. A business contemplating a new merger.
    7. Gauging performance against competition and looking to identify potential threats they pose.
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How to conduct a SWOT analysis

At its most basic, a SWOT analysis encompasses an organization’s internal capabilities (strengths and weaknesses) and external environment (opportunities and threats).

Before jumping right in, here are some tips to consider:

  • Establish your goal for the SWOT analysis. What is it for? Identify the decision you want to make or the strategy you want to develop.
  • Conduct background research. The topic depends on your SWOT objective. You may need to focus on your industry, competitors, and market trends. Or you might research about a new technology or a potential investment.
  • Get input from others in your organization. Talk to people representing different teams. Don’t limit your sources to sales and product development teams. Talk to finance, marketing, and customer-facing staff too.

Once you’ve established your goal and gathered the data and input you need, you can start working on the SWOT analysis. For the first four steps, encourage brainstorming and ideas. You can organize the list later on.

Start with a table with space for each category. Make a table with two rows and two columns (our template has this and a guide to help you). Place strengths at the top left, weaknesses at the top right, opportunities on the bottom left, and threats on the bottom right.

Steps to identifying your SWOT

1. Strengths

The first step is to identify your organization’s internal capacities and resources – things that you can control. These are your strengths. Think in terms of product, service, finance, brand leadership, technology, company culture, and related areas.

One tip is to assess your strengths – as well as weaknesses – in relation to those of your competitors.

2. Weaknesses

Identify your organization’s internal weaknesses. Examples include high employee turnover, weak sales performance, lack of a clear branding strategy, poor cash flow, inefficient processes, and others. These are under your control too.

3. Opportunities

This time, think externally. List possible opportunities for your organization. These can be new trends that complement your products, a lack of competitors in your space, industry events, and new software that will help streamline your workflow.

4. Threats

Lastly, list down external threats. These may include tough competition, strong branding by other companies, an unstable economy, political uncertainty, community traditions or beliefs that may clash with your product.

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Making sense of your SWOT

Now that you’ve listed your SWOT, take a look at each category and lay out your priorities. Select issues that you need to address now, and decide which ones you’ll deal with in the future.

Now it’s time to develop a strategy to address your prioritized issues.:

  1. How can we use our strengths to take advantage of the opportunities identified?
  2. How can we use these strengths to overcome the threats identified?
  3. What do we need to do to overcome the identified weaknesses in order to take advantage of the opportunities?
  4. How will we minimize our weaknesses to overcome the identified threats?

If you take a closer look, you’ll see that the questions address what you can do about your strengths and weaknesses. That’s because they’re a part of your organization. What you do about them can influence how you leverage your opportunities and deal with your threats.

In other words, you can control internal issues in order to influence external outcomes.

Download your 6 page pre-filled marketing Plan template! This has been tested with 15 small business owners from different industries and proven to suit their needs. This template is not suitable for businesses that employ over 100 staff members.

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