SWOT Analysis In Business Planning
The SWOT Analysis. Do you know what exactly one is? Essentially, it is a technique used to assess the performance, risk, competition, and potential of an entity. It is meant to examine these factors of a business, organisation, team, individual, product line, industry, and more.
Each SWOT Analysis contains four key components. They are:
Strengths
This outlines the things that you are good at. It spells out what puts you ahead of your competitors and what makes you or your business so special in the marketplace.
Weaknesses
This outlines what is holding you back from further success. It points out issues that need attention and correction for you to remain competitive and successful.
Opportunities
This outlines the outside influences that can contribute to furthering the success of your business. It is the silver lining or silver bullet that takes you over the top.
Threats
This outlines the issues that can derail any future plans or conditions that can suddenly create a roadblock. Or it identifies several hurdles slowing the progress of your business.
How To Conduct A SWOT Analysis
Typically, a SWOT Analysis comes to a room of people as a large square split into four different quadrants. Each quadrant represents one of the SWOT elements (Strengths, Weaknesses, Opportunities, Threats). The top two are usually considered internal factors (Strengths, Weaknesses), with the bottom two quadrants representing the external factors (Opportunities, Threats).
There are five basic steps to conducting a SWOT Analysis. They are:
Step 1 – Define Your Objective
You will have better success if you aim the purpose of the exercise at a single target. It may be to streamline a department or examine a new product line. A focused SWOT Analysis works best.
Step 2 – Gather Resources
Information gathering should come from various sources. This will include both internal and external. Once you have your objective, gather data that relates to your objective from all available sources.
Step 3 – List Ideas
With the group that is conducting the SWOT Analysis, each person should list their ideas for each of the categories of the exercise. This includes both internal and external and could include:
Internal Factors
-What are we doing well? (Strength)
-What is our strongest asset? (Strength)
-What are our distractions? (Weakness)
-What are our lowest-performing products? (Weakness)
External Factors
-What trends exist in the marketplace? (Opportunity)
-What demographics are we not reaching? (Opportunity)
-Who are our competitors and their market share? (Threat)
-What regulations can slow our product production? (Threat)
It is common that the ideas are written on small sticky notes and are placed within the SWOT Analysis quadrant they are related to. This produces a visual representation of all the responses that fill the different SWOT quadrants.
Step 4 – Refine The Findings
There should be several ideas listed under each of these categories. This is where you review all of them and focus on the best ideas or the largest risks to your business. You can accomplish this by ranking priorities and matching the ideas to those.
Usually, all participants mark their choices for the top one or three ideas that appear in each quadrant. The marking is commonly done with coloured dots or ink marks. This makes it easy for the presenter to determine priority rankings.
Step 5 – Strategy Development
With a complete list ranking the strengths, weaknesses, opportunities, and threats you can convert the findings of the SWOT Analysis into a strategic plan. The elements from the exercise become the tools that guide towards the objective defined in Step 1.
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In Conclusion
If you need a tool to assist with guiding business strategy meetings, you can’t go wrong with a SWOT Analysis. It brings everyone in the room into a discussion on the core strengths and weaknesses of the organisation. It also helps to define existing opportunities and possible threats. A SWOT Analysis is the perfect tool to brainstorm ideas and focus on specific business goals. Following the findings of one can bring business success.