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Business and our personal lives will always be filled with uncertainty. However, you can make it through the rough patches with a touch of creativity and an analytical mindset. Innovative strategies are essential to success in life at all times.
Strategic planning begins with defining where you want to go and identifying where you are now. When you start with a future vision, everyone gets excited and inspired. If you look at your current situation with a future-focused mind, you’ll be able to move your organization forward.
Facilitating a SWOT analysis will help you analyze where you stand right now. It is a way to create hope for change while identifying opportunities for growth and areas for improvement in our current situation.
This article will discuss creating a SWOT analysis with examples and a few tips and tricks.
SWOT is one of the elements that make up a much larger strategic analysis. It simply looks at an organization’s situation and lets everyone understand the context they hope to change.
What is a SWOT Analysis?
It is a tool used to evaluate a company’s strengths (S), weaknesses (W), opportunities (O), and threats (T). It helps you to identify your organization’s weaknesses so that you can improve them. Plus, it helps you see what opportunities your industry has to offer. Lastly, it evaluates the potential risks or threats so you know what your competition is up to.
SWOT analyses are commonly presented in a two-by-two grid. The four quadrants of the grid correspond to strengths, weaknesses, opportunities, and threats (SWOT). It helps you write down what’s important for an organization’s goals and objectives. It’ll make the boardroom less stressful.
This article will discuss creating a SWOT with examples and a few tips and tricks.
SWOT analysis is not an end product but rather a tool to align your strategy with areas where you will benefit the most. New strengths, weaknesses, opportunities and threats can emerge at any time. Therefore, you must continuously identify them and incorporate them into the analysis.
There are many different opinions about the origin of SWOT. In 1957, Albert Humphrey used this type of analysis to talk about strategy planning at Harvard Business School. The technique was used in a study to identify why corporate planning consistently failed.
However, Humphrey is not credited as the founder of the SWOT acronym. Instead, Kenneth R. Andrews is considered the pioneer of SWOT analysis. He formally articulated the technique in 1971 as one of the better methods for determining a strategy.
What is the importance of SWOT analysis?
It can be employed whenever you want to explore new opportunities or pivot from one plan to another. It helps you take the pulse of your whole business or a part of it or an ongoing project. It’s a good replacement for those informal conversations that don’t produce results.
Develop strategic plans
This involves analyzing the strengths and weaknesses of an organization and then formulating strategies to take advantage of the strengths while compensating for weaknesses.
SWOT analysis can be turned into actionable strategies with the TWOS matrix. Different departments, like sales, marketing, and finance, can then use these strategies to come up with specific plans.
Awareness of competition
Whenever an organization is about to enter a new market or expand its market share, it should be aware of its competitors. Effective analysis can identify the threats posed by competitors. And how they relate to the organization’s strengths and weaknesses. Then, they can figure out what steps they need to take to achieve their goals.
Understand your limitations
It is crucial for the management team to be aware of the organization’s capabilities and limitations. SWOT helps them identify areas where they can improve to serve customers better.
Conduct Risk Assessments
It can also be used to assess risk within an organization. Periodically analyzing risks is important otherwise, it may lead to losses in terms of time, money, and other resources. However, with proper analysis, these resources can be invested in an area that is not risky.
Establish effective marketing strategies
It identifies potential opportunities for the company’s products or services. This allows marketing teams to develop suitable marketing strategies to capitalize on these opportunities.
In addition, it helps them avoid problems associated with failures in marketing since they’ll be aware of what to expect. By being proactive, a company can reduce marketing costs by avoiding certain marketing activities.
Better resource allocation
By analyzing SWOT, a business can utilize its resources more effectively, both human and financial. In an organization, all the allocated resources may not contribute towards tangible results. SWOT analysis helps identify where and how to utilize these resources to add value to the business.
Strengthen relationships with partners and suppliers
Companies can use SWOT analysis to strengthen their relationships with business partners. It’s basically identifying areas where partnerships can be strengthened. Developing partnerships can help companies grow, specialize, and diversify.
SWOT Analysis Steps
It is best to conduct a SWOT analysis as a group activity in a business setting. This is a brainstorming exercise. So, there’s no right or wrong way to come up with ideas. Generally, you should focus more on quantity than quality. But it helps when facts and real-life experience back up the ideas.
Find an experienced and unbiased facilitator
Usually, the inputs into the four quadrants are subjectively captured from key stakeholders by the facilitator. Since it’s a simple enough process, it is easy to overlook the importance of the facilitation process. An ad-hoc approach to this process with an inexperienced facilitator will not bode well.
Inputs from participants are usually biased. An experienced facilitator can identify and remove some of these inherent biases in our thinking. The facilitator should not be a stakeholder or owner of the outcomes of the SWOT analysis.
The facilitator will take care of the crucial planning and preparation steps essential for a successful brainstorming session.
A few helpful tips for SWOT facilitators,
- Communicate the goals and success criteria in advance to all participants.
- Provide a list of questions for each quadrant in a SWOT analysis.
- Ensure that participants agree to brainstorm insights instead of assigning blame or looking into root causes.
Assemble the right team
Choose people who represent different aspects of your company and have different perspectives on the issue. This ensures the analysis captures the most relevant insights. If in doubt who to invite, performing a stakeholder analysis may help determine who should attend the session.
This group should include some of your core leadership team members who usually work on strategy. The brainstorming group can have up to 12 people. If you have a large group, it makes sense to break it up into two or more sessions.
Brainstorm and conduct the SWOT analysis
Make sure that the participants have enough time to prepare. Give everyone a week or two to think about it and prepare before gathering in the same room.
Encourage people to come up with new ideas. After everyone has shared ideas, it’s time to prioritize and document the results of the session so they can be used for strategic planning.
Prioritize and develop strategies
Using multi-voting, you can prioritize your lists to identify the most important ideas. There are several voting techniques you can use to prioritize these four lists. Each participant should have a limited number of votes.
Once all votes have been tallied, you can clearly see that five to ten items will get most of the vote. This is where your team needs to focus all the effort on those top issues and write strategies to ensure they are addressed from start to finish.
Once all ideas have been ranked, someone from your core leadership team can make the final decision on action items.
Implement and monitor strategies
The best way to execute the SWOT strategy is by creating an action plan. This will help you get started right away. Then it requires allocating a budget to put the best people in charge of each action item. Finally, to track the progress of your action plan, your executives should meet the SWOT team periodically.
Well, once everything moving along seamlessly, it is time to move back to the beginning and start a new cycle of the whole process.
Performing SWOT Analysis
A business’s strengths are its positive aspects that add value to the business. These are what make it stand out among competitors. It requires little external information or resources for identifying your strengths.
It is important that we know our unique process, knowledge, and perspective that sets us apart. One pitfall to watch for is that we tend to pat ourselves on the back without challenging our ideas and assumptions.
Here are some of the examples you can consider in a positive light to identify those strengths invaluable for your success.
- Great customer service
- Strong brand identity
- Positive Employee experience
- Strong financial performance
- Advantageous physical location
- Technology Innovations
- International presence
- Loyal customers
- Best in class Business Software
- Economy of scale
- Highly integrated supply chain
- Sustainable business model
- Best quality control practices
- First mover advantage
- High productivity
- Accurate forecasting
- Expertise in complex projects
Once you have identified your internal strengths, you need to explore ways to go after opportunities. And, mitigate or eliminate imminent risks.
Also, identify those assets in one area of your business that can be used to meet needs in other areas.
Usually, we tend to downplay our weaknesses. Knowing your weaknesses, however, can be a powerful tool. That knowledge can empower us to improve.
Think about how your organization’s weaknesses are chipping away at its value. The ultimate goal is to turn our weaknesses into strengths. Here are a few of the weaknesses that could hurt a business.
- Negative public image
- Weak Digital marketing strategy
- Weak cash flow
- Loss of employee morale
- Disengaged employees
- Outdated technology
- Lack of Customers
- Unable to compete with rivals
- Limited R&D budget and expertise
- Inefficient operational processes
- Diminishing profits
How to convert weaknesses into future strengths?
A SWOT analysis reveals where improvements need to be made next. It’s a chance to dig down to the root causes, get creative, and finally take action on the issues we knew were always there.
Once you can get past the symptoms, you may discover more weaknesses that could have a significant impact.
Techniques such as the five whys and fishbone diagrams help to figure out why a weakness exists.
Through trends, data, technological advancements, and market analysis, new opportunities can be identified. A SWOT analysis looks at the strengths and weaknesses of an organization in terms of its environment. It’s important to remember that external influences are more potent than internal ones.
Some opportunities worthy of your consideration are listed here.
- Improve brand reputation
- Business expansion
- Mergers and acquisitions
- Cutting edge technology
- Hiring new talent
- Cost reduction
- Changing demographics
- Better customer service
- Improve online presence
- Capitalize on legal or policy changes
- Forming new strategic partnerships
- Supplier failures
- Increasing costs
Once you have developed a list of strengths, it’s crucial to think about how they’ll strengthen your business in the future. Opportunities can give your organization a roadmap to grow your business.
The most effective strategies combine external opportunities with internal capabilities. It ensures that there are no gaps when we decide to set the strategy in motion.
You may be faced with legal, technological, and environmental issues depending on your location.
We must consider political, economic, social, and environmental factors when analyzing external factors. Porter’s Five forces method and PESTEL analysis can be helpful tools to find threats.
List of example threats;
- Economic downturn
- Political uncertainty
- Technology transformation
- Changes in consumer behaviour
- Tariffs and Taxes
- Labour shortage
- Global pandemic
- Supply chain disruption
- Disgruntled customers
- Natural disasters
Unfortunately, external threats are not going anywhere. You can mitigate them by addressing your internal weaknesses. We must develop strategies to protect ourselves from outside influences.
Here is an example SWOT analysis of Disney for 2021.
Using SWOT Analysis for personal growth
In order to succeed, you must take charge of your goals. SWOT analysis is a great way to evaluate your current situation. Also, come up with plans on how to proceed with future endeavours.
I’ve learned that it’s often difficult to see yourself from someone else’s point of view. One way to do this is by doing a personal SWOT analysis. Many of us are used to being judged by others instead of evaluating ourselves critically for our benefit.
By taking the time to analyze ourselves, we can understand what’s practically achievable under the current circumstances. A personal SWOT analysis is a great way to take our own initiative.
Now that you have completed the SWOT analysis, what should you do next? How do you translate the analysis into actionable strategies? It requires some strategic thinking on your part. A popular technique is to convert the SWOT matrix into a TWOS matrix.
SWOT Analysis Stage 2 –TOWS Matrix
A TOWS matrix can be used to address strong and weak areas identified in a SWOT analysis. Again, TOWS is an acronym for Strengths, Weaknesses, Opportunities, and Threats. It is simply SWOT spelled backwards.
Taking advantage of external opportunities is one way to continue your company’s strategic growth. Being able to ride on their strengths and take advantage of opportunities in any market is great for a business. Perhaps you should consider expanding overseas or exploring new products.
Here, even though the company has apparent weaknesses against its competitors, there are opportunities in the market to grow its business. Most of the time, it means the market is not saturated and is still growing rapidly. When a company lacks the expertise and resources to explore these opportunities, it is best to bring in outside consultants or partners.
The company is performing strongly against its competitors, but there is little room for error or poor performance. This quadrant should focus on taking advantage of the strong areas of the business to drive out the competition and reduce risks. Maybe you should look into strategic alliances to compete against your main competitors.
In the TOWS matrix, WT occupies the defensive position. It means that an organization should avoid threats and minimize weaknesses. There are certain areas of your business where you are at a disadvantage and perhaps stand to lose money.
It’s best to minimize your damage in such cases. For example, the strategy might be to phase out a production line and move it to a more profitable product line. Or sell a part of your business to strategically focus on areas more profitable.
In conclusion, SWOT analysis evaluates an organization’s strengths, weaknesses, opportunities, and threats. Interestingly, you can use this for your own personal situations too.
This type of analysis should be done periodically to identify areas for improvement. After brainstorming, prioritize what’s most important by developing strategies based on strengths and weaknesses.
Remember that opportunities should be seized upon while threats must be neutralized before they become real problems!