S.W.O.T is an acronym that stands for Strengths, Weaknesses, Opportunities and Threats. SWOT analysis can be conducted on an organization, product, place, or on a person as well. Basically strengths and weaknesses are the internal factors they are within our control and can be changed over a period of time but, opportunities and threats are the external factors they are not in our control and we cannot change them
Existing businesses will do the SWOT analysis to understand the changing environment and to respond proactively in order to withstand the competition and sustain in the market. New businesses will do the SWOT analysis to plan their strategies for entering into new markets. This will help the new businesses to understand their organization/product and thereby plan accordingly to position themselves in the cutthroat competitive market.
These are the internal positive attributes and can be enhanced over a period of time with some efforts. These attributes can be both tangible and intangible. The following are few
- What advantages do you have?
- What do you do well?
- What relevant resources do you have access to?
- What do other people see as your strengths?
Consider this from your own point of view and from the point of view of the people you deal
with and be realistic. If you are having any difficulty with this, try writing down
a list of your characteristics. Some of these will be your strengths.
Look at your strengths and relate them to your competitors and check if your competitors are also having the similar strengths as yours, if yes, then your strength is no longer a strength it is a necessity.
WEAKNESSES: These are the internal negative attributes and can be reduced over a period of time with some efforts. If these attributes are not reduced then it might place your organization or product in a competitive disadvantage.
- What could you improve?
- What do you do badly?
- What should you avoid?
Consult with others and check if they are able to identify your weaknesses that you do not know? Is your competitor doing something better than you? It is better to know the facts as soon as possible then to encounter the bitter truths.
OPPORTUNITIES: These are the external factors with positive attributes that will help your company/product to prosper in this competitive market
- Where are the good opportunities facing you?
- What are the interesting trends you are aware of?
Useful opportunities can come from such things as:
- Changes in market development and technology at micro and macro level.
- Changes in taxes and govt. policies in regards to your business
- Changes in buying pattern, customer profiling, lifestyle changes, etc.
A useful approach to 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 can you reduce your weaknesses and open up your opportunities.
THREATS: These are the external negative attributes which are not in our control and can ruin our business but we can have a plan how to minimize them when we encounter threats.
- What obstacles do you face?
- What is your competition doing?
- Are the requirement for your product specifications/services changing?
- Is changing technology threatening your position in the market?
- Do you have bad debt or cash-flow problems?
- Could any of your weaknesses seriously threaten your business?
Conducting SWOT analysis will often enlighten the businesses in knowing their position in the market and help them to come up with innovative products or upgrading their technology in order to face the competition.
You can also apply SWOT analysis to your competitors. This may produce some interesting insights.