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What is SWOT analysis ?
( SWOT stands for Strength, Weakness,
Opportunities & Threats )
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toastmasters
SWOT Analysis is a useful technique for
understanding your Strengths and Weaknesses, and for identifying both the
Opportunities open to you and the Threats you face.
Used in a business context, a SWOT Analysis
helps you carve a sustainable niche in your market. Used in a personal context,
it helps you develop your career in a way that takes best advantage of your
talents, abilities and opportunities
Business SWOT Analysis
What makes SWOT particularly powerful is that,
with a little thought, it can help you uncover opportunities that you are well
placed to exploit. And by understanding the weaknesses of your business, you can
manage and eliminate threats that would otherwise catch you unawares.
More than this, by looking at yourself and your
competitors using the SWOT framework, you can start to craft a strategy that
helps you distinguish yourself from your competitors, so that you can compete
successfully in your market.
How to Use SWOT Analysis
Originated by Albert S Humphrey in the 1960s,
SWOT Analysis is as useful now as it was then. You can use it in two ways - as a
simple icebreaker helping people get together to "kick off" strategy
formulation, or in a more sophisticated way as a serious strategy tool
To help you to carry out a SWOT Analysis,
download and print off our free
worksheet, and write down answers to the following questions.
Strengths:
- What advantages does your organization
have?
- What do you do better than anyone else?
- What unique or lowest-cost resources can
you draw upon that others can't?
- What do people in your market see as your
strengths?
- What factors mean that you "get the sale"?
- What is your organization's
Unique
Selling Proposition (USP)?
Consider your strengths from both an internal
perspective, and from the point of view of your customers and people in your
market.
You should also be realistic - it's far too easy
to fall prey to "not invented here syndrome." Also, if you're having any
difficulty with this, try writing down a list of your organization's
characteristics. Some of these will hopefully be strengths!
When looking at your strengths, think about them
in relation to your competitors. For example, if all of your competitors provide
high quality products, then a high quality production process is not a strength
in your organization's market, it's a necessity.
Weaknesses:
- What could you improve?
- What should you avoid?
- What are people in your market likely to
see as weaknesses?
- What factors lose you sales?
Again, consider this from an internal and
external basis: Do other people seem to perceive weaknesses that you don't see?
Are your competitors doing any better than you?
It's best to be realistic now, and face any
unpleasant truths as soon as possible.
Opportunities:
- What good opportunities can you spot?
- What interesting trends are you aware of?
Useful opportunities can come from such things
as:
- Changes in technology and markets on both a
broad and narrow scale.
- Changes in government policy related to
your field.
- Changes in social patterns, population
profiles, lifestyle changes, and so on.
- Local events.
Tip:
A useful approach when looking at opportunities is to look at your
strengths and ask yourself whether these open up any opportunities.
Alternatively, look at your weaknesses and ask yourself whether you
could open up opportunities by eliminating them.
Threats
- What obstacles do you face?
- What are your competitors doing?
- Are quality standards or specifications for
your job, products or services changing?
- Is changing technology threatening your
position?
- Do you have bad debt or cash-flow problems?
- Could any of your weaknesses seriously
threaten your business?
Tip:
When looking at opportunities and threats,
PEST
Analysis can help to ensure that you don't overlook external
factors, such as new government regulations, or technological changes in
your industry.
Example SWOT Analysis
A start-up small consultancy business might draw
up the following SWOT Analysis:
Strengths:
- We are able to respond very quickly as we
have no red tape, and no need for higher management approval.
- We are able to give really good customer
care, as the current small amount of work means we have plenty of time to
devote to customers.
- Our lead consultant has strong reputation
in the market.
- We can change direction quickly if we find
that our marketing is not working.
- We have low overheads, so we can offer good
value to customers.
Weaknesses:
- Our company has little market presence or
reputation.
- We have a small staff, with a shallow
skills base in many areas.
- We are vulnerable to vital staff being
sick, and leaving.
- Our cash flow will be unreliable in the
early stages.
Opportunities:
- Our business sector is expanding, with many
future opportunities for success.
- Local government wants to encourage local
businesses.
- Our competitors may be slow to adopt new
technologies.
Threats:
- Developments in technology may change this
market beyond our ability to adapt.
- A small change in the focus of a large
competitor might wipe out any market position we achieve.
As a result of their SWOT Analysis, the
consultancy may decide to specialize in rapid response, good value services to
local businesses and local government.
Marketing would be in selected local
publications to get the greatest possible market presence for a set advertising
budget, and the consultancy should keep up-to-date with changes in technology
where possible.
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