What is SWOT Analysis?
SWOT analysis is a type of business analysis procedure that helps in developing a robust strategy for the business. SWOT analysis is done with the involvement of company leaders and founders. This process helps in identifying the Strength and Weakness of a project or a company by recognizing both internal and external factors. It is beneficial in the inventory control process.
The definition of SWOT or the SWOT analysis process involves four key areas: Strength, Weakness, Opportunity, Threats.
Strength– Strength is described as the resources, skills, or capabilities that can be used for competitive advantage. These are factors within an organization that is considered compulsory for completion of the success of the project and is under control. Example- Good company reputation, Robust brand names.
Weakness– Weakness is described as factors like- lack of funding, lack of resources or materials, strong competitors. It can be described as the factor that prevents the successful result of a project. Example- Bad company reputation, Poor brand name, and Ineffective cost structure.
Opportunities– Opportunities are described as the factors that help to achieve the goals set for the project. The common factors involve reputable vendors who wish to work with the company, good awareness of the company in the market, favorable market conditions related to a project. Examples- Developing a new skill set, the Arrival of the latest technology, etc.
Threats– Threats are described as factors that affect the reputation of a project. The common factors that affect the projects or a company reputation are a bad public image, lack of resources and vendors. Example- New rules and regulations, tough competitors, trend change, etc.
Steps to perform SWOT Analysis
Doing SWOT Analysis is simple; you have to gather all the people in your company, or you can gather only the representatives from the sectors as this will help you to understand the problem of every sector and helps in making the right strategy or decision.
Now, follow the given steps-
- Define the objective of your project.
- Create a big square and then divide it into four equal smaller squares.
- Now label the Strength on the top left side of the box and write the questions or doubts related to a particular project. Some of the general questions are:
- What resources do you have?
- What are the assets that your company has?
- What is the unique selling point of a product?
- How are you different from your competitor?
- What do customers like about your product?
- Label the Weakness within the top right box and write all Weakness of your project. These are the things that you need to improve in order to get ahead of your competitor. Some of the general questions are:
- What are the internal factors that interfere with your product success?
- What are the weak points do our workers/products or companies have?
- Which are the main areas of your project that could be improved?
- What are the advantages your competitors have?
- Label opportunities within the bottom left of the box and wrote all the opportunities related to your project. These are the external factors that can help to contribute to the success of your project. Some of the general questions are:
- What are the external factors that can help to make your project successful?
- Do the opportunities are temporary or permanent in the market?
- How can you take advantage of market variations?
- What are the economic or political conditions that can help to make your project successful?
- Label Threats inside the bottom right box. These are the factors that you cannot control; hence, they are uncontrollable. They can affect the success of your project. Some of the general questions are:
- What are the upcoming trends that can severely affect your business or product?
- How can innovation in your niche affect your business or product?
- Which market areas can affect your product?
- How reliable is your supplier or vendors?
Write conclusions. After thoroughly analyzing your SWOT diagram, make sure that you write the conclusion at last. Write the positive and negative outcomes and check whether the positive outcomes are more than negative outcomes. If they do, then carry forward your project, and if they don’t, then make the changes and adjustments in the plan, or cancel the project.
Benefits of SWOT Analysis
- Helps in developing goals business strategy
- Helps in identifying the weakness
- Negligible cost and saves time
- Helps in identifying the issues in your business
- Helps in overcoming the weakness and builds organization strengths
- Do no provide solutions for other decisions
- It can lead to confusion
- One issue is not prioritize