Importance of SWOT Analysis for Business Strategic Planning
Posted 26 Nov, 2019
Author - teapotNG
Importance of SWOT Analysis for Business Strategic Planning
Conducting a SWOT analysis of your business is a lot more fun than it sounds. It won’t take much time, and doing it forces you to think about your business in a whole new way.
The point of a SWOT analysis is to help you develop a strong business strategy by making sure you’ve considered all your business’s strengths and weaknesses, as well as the opportunities and threats it faces in the marketplace. What is a SWOT analysis? S.W.O.T. is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is an organized list of your business’s greatest strengths, weaknesses, opportunities, and threats.
Strengths and weaknesses are internal to the company (think reputation, patents, location). You can change them over time but not without some work.
Opportunities and threats are external (think suppliers, competitors, prices) they are out there in the market, happening whether you like it or not. You can’t change them.
Existing and new businesses can use a SWOT analysis, at any time, to assess a changing environment and respond proactively. In fact, I recommend conducting a strategy review meeting at least once a year that begins with a SWOT analysis. Strengths (internal, positive factors) Strengths describe the positive attributes, tangible and intangible, internal to your organization. They are within your control.
What do you do well?
What internal resources do you have? Think about the following:
Positive attributes of people, such as knowledge, background, education, credentials, network, reputation, or skills.
Tangible assets of the company, such as capital, credit, existing customers or distribution channels, patents or technology.
What advantages do you have over your competition?
Do you have strong research and development capabilities? Manufacturing facilities?
What other positive aspects, internal to your business, add value or offer you a competitive advantage?
Weaknesses (internal, negative factors) Weaknesses are aspects of your business that detract from the value you offer or place you at a competitive disadvantage. You need to enhance these areas in order to compete with your best competitor.
What factors that are within your control detract from your ability to obtain or maintain a competitive edge?
What areas need improvement to accomplish your objectives or compete with your strongest competitor?
What does your business lack (for example, expertise or access to skills or technology)?
Does your business have limited resources?
Is your business in a poor location?
Opportunities (external, positive factors) Opportunities are external attractive factors that represent reasons your business is likely to prosper.
What opportunities exist in your market or the environment that you can benefit from?
Is the perception of your business positive?
Has there been recent market growth or have there been other changes in the market that create an opportunity?
Is the opportunity on-going, or is there just a window for it? In other words, how critical is your timing?
Threats (external, negative factors) Threats include external factors beyond your control that could place your strategy, or the business itself, at risk. You have no control over these, but you may benefit by having contingency plans to address them if they should occur.
Who are your existing or potential competitors?
What factors beyond your control could place your business at risk?
Are there challenges created by an unfavourable trend or development that may lead to deteriorating revenues or profits?
What situations might threaten your marketing efforts?
Has there been a significant change in supplier prices or the availability of raw materials?
What about shifts in consumer behaviour, the economy, or government regulations that could reduce your sales?
Has a new product or technology been introduced that makes your products, equipment, or services obsolete?
