Knowing what SWOT is will be helpful if you ever need to create a business plan or marketing strategy. The following article will explain exactly what this business tool is and why it is essential for every company.
What is a SWOT analysis?
The SWOT analysis is a strategy tool for determining a company’s internal strengths and weaknesses and external opportunities and threats. That’s precisely what the acronym stands for:
“Strategy without process is little more than a wish list.” -Robert Filek.
How to Conduct a SWOT Analysis
A SWOT analysis is relatively easy once you know how to do it. To make the analysis more accessible for you, we have created this easy-to-understand SWOT “recipe” for you:
Step 1: Decide on your goal
A SWOT analysis is a strategy tool that can be used for various outcomes. Therefore, you should know what you are working towards. Do you want to see if you should launch a new product? Or should you align the company differently overall? With a SWOT analysis, you can only find an answer if you know the question you want answered.
Step 2: Conduct a proper assessment of your company, your industry, and your target audience
A SWOT analysis must be conducted based on facts to obtain meaningful results. You can only get these facts through thorough research. The goal is to understand your company, the industry it operates in comprehensively, and the audience you market your products/services to.
Step 3: Make a list of your company’s strengths
Write down all and as many strengths as you can think of on this list. The list is then defined later in the process. Your company’s strengths can include B. range from excellent customer service to a first-class location to cost advantages.
Step 4: Make a list of your company’s weaknesses
Use the same procedure here for the list of your company’s strengths. These weaknesses include a need for intellectual property rights, no new customers, or a general decline in the market.
Step 5: Make a list of potential opportunities
What external opportunities could you use? An example could be new software streamlining your processes and making your work more efficient. Another example would be a possible partnership or a change in the law that makes certain things possible that were not possible before.
Step 6: Make a list of potential threats
The same procedure applies here, too. The threats include B. a recession, a growing number of competitors, or technological automation.
Step 7: Establish priorities
This step of the SWOT analysis is about prioritizing your lists. Place the four lists above side by side to get a better overview. You should then divide the content of your lists into categories, e.g., B. Your most essential strengths are what needs to be done urgently or what has time for later. After prioritizing the items on your list in this way, you will end up with a neat, 4-quadrant list.
Step 8: Create your strategy
Now, it’s time to develop a strategy to solve the various problems that have popped up on your SWOT list. Ask yourself the following:
- How can we leverage our strengths to capitalize on some of the potential opportunities identified?
- What powers can we use to address some identified threats?
- How do we overcome some of the identified weaknesses to exploit the potential opportunities or eliminate some threats?
By answering these questions, you can create a roadmap for the specific goal set in Step 1.
Why is SWOT analysis so valuable for a company?
SWOT analysis as a strategy tool is helpful for a company for various reasons. These include the following:
- It helps decision-makers make intelligent and well-informed decisions.
- It is a cost-effective strategy tool. You do not need a specialist or have a specific SWOT degree to carry out the analysis.
- A SWOT analysis can be used for various objectives, such as B. for analyzing competitors, business planning, marketing strategy, and much more.
- It promotes communication within an organization. Since thorough research is required, detailed discussions with many stakeholders in the company are necessary. Every dialogue opens the way for further and future talks.
- SWOT analysis provides valuable insights. I am starting with the company’s situation, through to developments in the market and among competitors.
- It helps with integration. This means you get a better, more precise overview and understanding of your strengths, weaknesses, opportunities, and potential threats. Additionally, you will better understand how to integrate them, such as what strengths you can leverage to take advantage of opportunities, etc.
- It promotes collaboration. The SWOT analysis requires input from different levels and actors within the organization. As already stated, an intensive dialogue is needed. This exchange of information encourages collaboration and sets the standard and tone for future cooperation between team members.
- It is a strategy tool that can show the growth or decline of the company. It is exciting to do the same SWOT analysis again after some time. You’ll be surprised at how many vulnerabilities you’ve eliminated in a year or how many new opportunities suddenly appear.
As you can see, a SWOT analysis is invaluable to any business and can be used as a strategy tool for various goals.