What is a SWOT analysis?

 

Using a SWOT analysis

A SWOT analysis is an analytical method used to identify and understand both the internal and external factors which have an impact on the company’s business environment. SWOT is an acronym that stands for:

  • Strengths (S),
  • Weaknesses (W),
  • Opportunities (O) and
  • Threats (T).

This particular business tool can be used to formulate and select the proper marketing strategy for a certain business. It represents a powerful source of information for strategic planning due to its comprehensive coverage of the company’s business environment. The strengths and weaknesses identified typically cover the internal factors – over which the company has some measure of control, whereas the opportunities and threats relate to external factors – where the company has little or no control.


A SWOT analysis helps you determine the current state of the company and possible opportunities to exploit in order to successfully compete in a certain market.


The outcome of a SWOT analysis is to identify the suitable business model for a certain company. Therefore, it provides a tool necessary for the selection of the best marketing strategy – one that achieves a balance between the company’s resources and the requirements of the environment in which the company operates.

A SWOT analysis helps you determine the current state of the company and possible opportunities to exploit in order to successfully compete in a certain market. It also helps you better understand your company’s weaknesses and how to manage and understand any possible threats that may occur.

It is utterly important to see the SWOT analysis as a dynamic part of your company’s development process by including its outcome in every activity related to decision-making.

How to use SWOT analysis?

Using a scoring system when drawing up the SWOT matrix can be very useful in all the future decision making activities. Therefore, as far as the external factors are concerned, you may use a scale regarding the probability of occurrence of that particular event. When it comes to internal factors, you may asses their significance regarding your overall activity.

Strengths

In this part of the matrix you will write down the qualities (aspects or capabilities) that enable your company to accomplish its mission. You may include here: your employees abilities or performances, financial or intellectual resources, process capabilities, brand loyalty and so on.

Here are certain questions which may guide you through the process:

  • Which are your company’s advantages?
  • Which advantages do your clients perceive?
  • What can you do better than your competitors?
  • What is your unique selling proposition?
  • How strong is your brand reputation?
  • Which are the resources you have access to?

Think about your strengths in relation to your competitors and costumers. Try to be realistic by considering the point of view of your clients.

Weaknesses

Weaknesses are your company’s characteristics that prevent you from achieving your full potential. These factors have a negative influence on your company’s growth and development. Some examples would be: insufficient research and development, technical limitations, financial debts, inefficient decision making process and so on. Remember that you are able to control your company’s weaknesses and therefore you should find solutions to minimize them.

Here are certain questions which may guide you through the process:

  • What factors have a negative impact on your company’s success?
  • What factors can you improve?
  • What factors should you avoid?
  • What do your competitors do better than you do?
  • Which are the weaknesses perceived by your clients?

Opportunities

When your draw up this particular part of the matrix, try considering which are the opportunities offered by the environment your company operates in. You may benefit from making use of market, competition, industry and technology opportunities.

Here are certain questions which may guide you through the process:

  • What trends are you are of?
  • Which opportunities stand before you?
  • Have there been any changes in technology you might benefit from?
  • Have there been any changes in government policy related to your field of activity?
  • Can you spot any changes in your clients’ social patterns?
  • Are your competitors’ clients dissatisfied?
  • Are there any new markets for your business?

Threats

We consider as a threat any change in the external environment that may affect the company’s reliability and/or profitability. You need to remember that a threat is uncontrollable. It may take the form of rapidly changing technology, increasing competition, industry and government changes and so on.

Here are certain questions which may guide you through the process:

  • What kind of obstacles your company is facing?
  • What is competitors’ evolution? Does it have a significant impact on your activity?
  • Are there any changes regarding the standards of your products or services?
  • Is there a weakness that may seriously affect your ability to function in your current market?
  • Are there any alternative products your clients may use?
  • Are there any changes in technology that may impact your business?
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