What is the meaning of SWOT Analysis?
→ SWOT stands for Strengths, Weaknesses, Opportunities, and Threats in SWOT Analysis.
→ As our business grows, we need to face various challenges, obstacles, opportunities, and new projects.
→ This is the best tool for handling all challenges.
Table of Content
- What is the meaning of SWOT_Analysis?
- What is SWOT_Analysis?
- How To Conduct a SWOT_Analysis
- Example of SWOT_Analysis
- Tips for Conducting a Good SWOT_Analysis
- Benefits of SWOT_Analysis
- Advantages of SWOT_Analysis
- Disadvantages of SWOT_Analysis
What is SWOT Analysis?
→ The SWOT_Analysis is a strategic planning & decision-making management technique that is used to identify Strengths, Weaknesses, Opportunities, and Threats.
→ This technique is widely used for any company, organization, business, product, project planning, marketing, development, market research, etc.
→ Strengths are characteristics of the business (or an organization) that give it a benefit over others.
→ Weaknesses are characteristics of the business (or an organization) that give drawbacks as compared to others.
→ Opportunities are the elements in the environment (or we can say external factors) that the business could utilize for its benefit and also can give a competitive advantage as compared to others.
→ Threats are the external factors that could cause trouble for the business.
→ This tool is an excellent decision-making tool and it helps an organization achieve its goals.
→ It is a well-defined structure to evaluate the business's or an organization's competitive position as compared to competitors.
→ This tool is not only used for businesses or organizations but also used for development purposes such as personal development, employee development, business process management, etc...
→ This is a very effective tool for any Lean Six Sigma Project.
The SWOT Analysis can be used for:
- Workshop sessions
- Brainstorming meetings
- Problem-solving
- Product evaluation
- Employee development
- Strategic planning
- Competitor evaluation
- Personal development planning
- Business Process Management
- Marketing, etc
Internal and External Factors of SWOT Analysis
→ The main objective of the SWOT analysis is to identify the relevant internal and external factors that have a direct impact on the organization's goal.
→ We can divide the SWOT analysis into two main groups as mentioned below:
- Internal factors - Strengths and Weaknesses
- External factors - Opportunities and Threats
→ The internal factors may be strengths or weaknesses of the organization based on their impact on the organization's objectives.
→ The positive impact leads to strength and the negative impact leads to weakness.
→ The external factors may include macroeconomic indicators like technological change, legislation change, socio-cultural changes, political change, environmental change, changes in the marketplace, or change in competitive position, etc.
→ The above-mentioned al factors can be mentioned in the 2X2 matrix for easy tracking and working on that.
Guidelines for Conducting Good SWOT Analysis
→ We can refer to the below-mentioned guidelines.
→ Be realistic when performing a SWOT_Analysis.
→ Consider answers from the organizations and their stakeholder's points of view.
→ Distinguish between where the organization is today and where it could be in the future.
How To Conduct a SWOT Analysis?
→ Refer to the below 10 Steps for conducting a SWOT_Analysis
- Preparation and Driving Forces of the Organization
- Note down Strengths, Weaknesses, Opportunities, and Threats
- Clarification of SWOTs for all Team Members
- Categorization into a sub-category
- Prioritization
- Desired State & Implications to Unit
- Strategy Development
- Strategy Selection
- Implementation of the right strategies
- Documentation
→ Some other key points are mentioned below.
→ As many as possible people need to take part in this analysis.
→ We can also conduct this analysis for ourselves but it is better to include all cross-function team members into this for better effectiveness of this analysis.
→ One of the best methods is brainstorming for conducting this analysis.
→ We can use a flip chart, a whiteboard, or a piece of paper to note down all points, or we can store data in MS Excel, MS Word, or PowerPoint as a digital file.
→ We can also use different software or tools for this analysis as per the organization's need.
Example of SWOT Analysis
→ Refer to the below example for a better understanding of the SWOT_Analysis.
→ We will take one generic example that suits all organizations for this analysis.
→ The main four parts of this analysis are mentioned below.
- Strengths
- Weaknesses
- Opportunities
- Threats
→ Now we learn all the above points in detail.
👉 Get a SWOT Analysis Template
1. Strengths
→ The Strengths mean that give us benefits over others.
→ Or we can understand what we are doing well
→ Also from other people's perspectives, we need to note down our strengths.
→ During this analysis we need to be realistic.
→ Refer to the most common strengths of any business or organization.
- Overall Experience of an Organization
- People Skill, Experience, Knowledge, and Data
- Strong Financial Condition
- Transparency
- Reputation
- Capabilities
- Strong Relationships with all stakeholders
- Lessons learned from past experiences
- Low-cost Products and Services with Higher Quality
- Simplicity
- Strong brand recognition
- Good relationships with customers
- Flexibility
- Collaborative Efforts
- Quick responsiveness
- Competitive Advantage
- Intellectual property
- Proprietary technologies
- Granted patents
- Our USP (Unique Selling Point)
- Innovative aspects
- Geographical Location
→ For better understanding refer to the below example of strengths of the ABL Limited
→ Example: ABL Limited, a leading pharmaceutical company, points out its strengths as various patents granted, a highly talented R&D team, strong customer relationships, and a global distribution network, etc.
2. Weaknesses
→ Weaknesses give drawbacks to the business or an organization.
→ Also we can find weaknesses by asking a simple question as: 'What the organization can improve?' or 'What business should avoid?'
→ Also from other people's perspectives, we need to note down our weaknesses as well.
→ Refer to the below-mentioned most common Weaknesses of any business or organization.
- Lack of Skill and Experience
- Financial Crisis
- Poor Marketing
- Low Public Awareness
- Weak management
- Communication Gap across the organization
- Things our competitors do better than us
- Resource Limitations
- Unclear or Unidentified USP (Unique Selling Point)
- Disagreement on Business Strategy
- Unfocused on Goal
- No online presence
- Decision Making without any data or statistics
→ For better understanding refer to the below example of weaknesses of the XYZ Limited
→ Example: XYZ Limited, a Manufacturing Company, points out its weaknesses as outdated machinery, high employee attrition, inconsistent product quality, higher breakdowns, higher manufacturing cost, not meeting on-time delivery, etc.
3. Opportunities
→ Opportunities are the external factors that the business could utilize for its benefit and also can give a competitive advantage as compared to others.
→ Organization has no control over the opportunities but businesses can take positive benefit of it.
→ Refer to the below-mentioned most common opportunities of any business.
- Change in lifestyle
- Market Developments
- Influential connections
- Good community response
- Support from media
- Expansion into new markets
- Development of new products or services
- Underserved markets for specific products
- Less Competition
- The emerging need for your products or services
- Press/media coverage of our companion
- New Government Policy that gives benefits to the business
- New grants available
→ For better understanding refer to the below example of Opportunities for the XYZ Enterprise
→ Example: XYZ Enterprise, a retail company, identifies opportunities in online selling to various e-commerce platforms, and also found the increased consumer demand for their organic products, etc.
4. Threats
→ Threats are the external factors that could cause trouble for the business.
→ Maybe we can understand that the economic slowdown might create difficulty for business.
→ Organization has no control over the threats but need to protect themselves from all kind of threats to the business.
→ Refer to the below-mentioned most common threats to any business.
- Rising raw material and labor cost
- Security problems
- Lack of interest at the customer level
- Lack of access to an expansion of the market
- Emerging competitors
- Changing regulatory requirements
- Negative social media coverage
- Changing customer's perception
- Competition from new entrants
- Economic downturn
- Political change
- Environment change
- Legislative change
→ For better understanding refer to the below example of Threats for the BBB Transport LTD
→ Example: BBB Transport LTD, a transport company, identifies threats such as rising fuel prices, increasing competition from other low-cost transporters, driver strikes, etc.
Tips for Conducting a Good SWOT Analysis
→ Before starting the SWOT Analysis team should be aligned with the organization's Goals and Objectives.
→ Collect all the information such as internal information, market research, and information related to employees, customers, suppliers, etc.
→ Prioritize the agenda points.
→ Be realistic and transparent.
→ Keep ready a structured framework for analysis and give training to all participants before starting the analysis.
Benefits of SWOT Analysis
→ Refer to the below benefits of this tool
→ It is very easy to scale and flexible
→ This model is very simple to use
→ This model has huge benefits with very low cost
→ We can improve our decision-making power with this tool
→ We can optimize our resources and better allocate for a specific task
→ With the help of this tool we can make a better business strategy
→ This tool is very helpful during ISO 9001 Certification.
Advantages of SWOT Analysis
→ This tool has many advantages, some of the advantages are mentioned below.
→ This tool is very easy to understand.
→ It is very flexible for use, we can use this tool for an individual person, for a team, for a business unit, for a division, etc...
→ With the help of this tool we can identify strengths, weaknesses, opportunities, and threats of any business.
→ We can improve our communication at the personal as well as organizational levels with this tool.
Disadvantages of SWOT Analysis
→ Apart from the above-mentioned advantages of this tool it has some disadvantages that are explained below.
→ This tool uses subjective or qualitative data rather than quantitative data.
→ This tool is more depends on the perception of the person, the personality of the person, and the preference of the person so we can say it might a biased tool.
→ SWOT_Analysis is a static tool so it does not consider the dynamic nature of the business.
→ This tool is very time-consuming.
→ It is very difficult to involve all people in this analysis at a time.
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