An effective business is always built on a rock-solid foundation of introspection and analysis. The markets today are dynamic and rapidly changing, and abide by the only rule of “Survival of The Fittest.” Hence only the companies that can identify and adapt to new opportunities find success, while those stuck in neutral suffer losses. To understand the ever-changing market dynamics, professionals employ several essential business analysis techniques, that help them devise a workable strategic plan. One of the cornerstones of this array of methods is the SWOT Analysis.
What is SWOT Analysis?
SWOT Analysis is a simple, widely used, and trustworthy tool, to get a better understanding of the business environment and strategic decision making. SWOT allows you to identify the Strengths and Weaknesses existing in your corporate structure, and translate them in Opportunities while keeping an eye out for external Threats to the business.
SWOT analysis consists of 4 components
Strengths – WHAT ARE THE CORE COMPETENCIES OF YOUR BUSINESS?
What are your company’s strengths in the current business environment? What are the differentiating factors between your business and competition? It can be your business expertise, large clientele, better pricing, diverse products, or guaranteed quality. This analysis will establish what qualities to focus on and pitch to the target audience.
Weakness – WHAT ARE THE AREAS OF IMPROVEMENT OF YOUR BUSINESS?
A good business always looks for a room for improvement. Identification of customer and business pain points, and perfecting them, is how a business pursues excellence. Your weakness can be poor distribution channels, lack of online presence, lack of a distinguishing factor or any other reason. Remember that weakness refers to the internal issues you are facing regarding your business which needs to be improved.
Opportunity – WHAT ARE THE AREAS WHERE YOU CAN FOCUS ON TO INCREASE REVENUE?
You need to ask yourself what are the options you can explore to increase business revenue. Are there any new market trends you can work on? Have there been any changes in technology, government policies, social patterns, population profiles, lifestyle changes, and so on which can lead to opportunities like a new product launch, entering new markets or reduction of costs? You need to look at your strengths and figure out if they open up any opportunities. Similarly, it would also be helpful if you analyzed whether eliminating any of your weaknesses also creates any new opportunity or not.
Threats – WHAT ARE THE ENVIRONMENTAL FACTORS WHICH CAN HAMPER BUSINESS?
Threats generally come out of nowhere and hence should be identified and dealt with at the earliest. Risks can be the change in consumer choice, competitive pricing of competitors, or economic uncertainty (inflation or any other reason). It could be changing technology threatening your position or mounting bad debt & cash-flow problems posing a threat to the sustainability of the business.
DYNAMIC SWOT: SWOT IS AN ONGOING PROCESS IN MODERN AGILE BUSINESS ENVIRONMENTS
Modern markets are incredibly dynamic and vulnerable to change. The markets not only depend on the simple consumer-product relationship, but also the popular culture, political sentiments, endorsements, and branding.
In such a dynamic environment, SWOT cannot be a one-time analysis. It has to be an ongoing process for successful decision making. Opportunities to conduct SWOT include periods of strategic review and planning; reaction to competitors’ launching of a new product; to assess and seize opportunities within the industry to remain competitive; checking the feasibility of any new initiative and so on.
BEST PRACTICES OF USING SWOT
Shortly put, “The most important potential limitation of SWOT Analysis is the practitioner’s implementation of technique and not the technique itself.”
- A SWOT analysis needs to be practical and quantifiable, to produce a workable solution. Otherwise, it is just a list of items divided into Strengths, Weaknesses, Opportunities, and Threats. It is okay to have the latter if you are trying to get an overview of your company’s situation. However, to use SWOT as a serious tool and get an actionable analysis out of it, you need to be rigorous in the way you apply it.
- Use accurate statements, which can be verified and quantified. (“Cost advantage of $10/Kg in sourcing raw material x”, rather than “Good value for money”).
- Spend time to create a comprehensive list of factors, sequenced based on priority. Hence you can spend more time on more significant factors.
- Make sure that options generated are carried through to later stages in the strategy formation process.
- Apply it at the right level – for example; you might need to apply SWOT at a product or product-line level, rather than at the much vaguer whole company level.
- The SWOT analysis along with other strategy tools like PEST, MOST, Porter’s 5 Forces gives a comprehensive picture of the business situation at any specific time.
Given it is one of the critical tools used by Managers, they often need to present the analysis in their business presentations. Below are the different ways in which you can adequately represent your SWOT analysis.
1) Simple SWOT with Lists
Just list down various essential items in the different sections of SWOT to give a detailed overview of your business analysis.
Check out this template here
2) Designer SWOT single slide
A well-designed 3D SWOT with the gist of each section is useful for making an impression on clients or investors.
Check out this template here
3) Detailed SWOT Presentation
When you are presenting a detailed SWOT analysis, it is essential to show it in a visually appealing manner. The template below is an example of detailed SWOT Analysis
Check out these templates here
4) Quantified SWOT summary
Adding quantifiable parameters in a SWOT analysis is necessary to make it usable for decision making. This way you can present precisely how the strengths, weaknesses, opportunities, and threats weigh on your company’s business.
Check out this template here
Browse the complete collection of 100+ SWOT PowerPoint Templates to get creative ideas to showcase your SWOT Analysis.
SWOT Analysis is the most fundamental tool to analyze your company’s situation in the existing business environment. It helps you to identify and focus on your strengths, eliminate your weaknesses, minimize threats and make the most of the available opportunities. Be rigorous when applying the analysis, and try to make it quantifiable and realistic. Apply it at the right level, and supplement it with other analytical frameworks, to get the most out of your analysis.
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