SWOT Analysis. Overview

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Stephen Wilfred Booker
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1 Overview SWOT analysis is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. Identification of SWOTs is important because they can inform later steps in planning to achieve the objective. A SWOT analysis looks at internal and external factors that can affect your business. Internal factors are your strengths and weaknesses. External factors are the threats and opportunities. If an issue would exist even if your business didn't (such as changes in technology), it is an external issue. A SWOT analysis is a useful tool for brainstorming and strategic planning. You'll get more value from a SWOT analysis if you conduct it with a specific objective or question in mind. For example, you can use a SWOT analysis to help you decide if and how you should: take advantage of a new business opportunity respond to new trends implement new technology deal with changes to your competitors' operations. Building on strengths A SWOT analysis will help you identify areas of your business that are performing well. These areas are your critical success factors and they give your business its competitive advantage. Identifying these strengths can help you make sure you maintain them so you don't lose your competitive advantage. Growing your business involves finding ways of using and building on these strengths. Minimising weaknesses Weaknesses are the characteristics that put your business at a disadvantage to others. Conducting a SWOT analysis can help you identify these characteristics and minimise or improve them before they become a problem. When conducting a SWOT analysis, it is important to be realistic about the weaknesses in your business so you can deal with them adequately. Seizing opportunities A SWOT analysis can help you identify opportunities that your business could take advantage of to make greater profits. Opportunities are created by external factors, such as new consumer trends and changes in the market. Conducting a SWOT analysis will help you understand the internal factors (your business's strengths and weaknesses) that will influence your ability to take advantage of a new opportunity. If your business doesn't have the capability to seize an opportunity but decides to anyway, it could be damaging. Similarly, if you do have the capability to seize an opportunity and don t, it could also be damaging. Counteracting threats Threats are external factors that could cause problems for your business, such as changes to the market, a competitor's new advertising campaign, or new government policy. A SWOT analysis can help you identify threats and ways to counteract them, depending on your strengths and weaknesses. Source: AD303 Design & Business Unit Toolkit : SWOT Analysis : Prepared by Relmi Damiano & Mark O Dwyer 2013

2 Step by step process A SWOT analysis is a tool for documenting internal strengths (S) and weaknesses (W) in your business, as well as external opportunities (O) and threats (T). You can use this information in your business planning to help achieve your goals. To work out if something is an internal or external factor, ask yourself if it would exist even if your business didn't. If it would, then it's an external factor (e.g. new technology). Use the following 8 steps to conduct a SWOT analysis. 1. Decide on the objective of your SWOT analysis To get the most out of your SWOT analysis, you should have a question or objective in mind from the start. For example, you could use a SWOT analysis to help you decide if you should introduce a new produce or service, or change your processes. 2. Research your business, industry and market Before you begin the SWOT analysis you need to do some research to understand your business, industry and market. Get a range of perspectives by talking to your staff, business partners and clients. Also conduct some market research and find out about your competitors. 3. List your business's strengths The first step is to identify and list what you think are your business's strengths. Examples could include strengths relating to employees, financial resources, your business location, cost advantages and competitiveness. At this stage of the SWOT analysis, the list does not need to be definitive. Any ideas and thoughts are encouraged. Step 7 is where the list is prioritised. 4. List your business's weaknesses List things in your business that you consider to be weaknesses (i.e. that put your business at a disadvantage to others). Weaknesses could include an absence of new products or clients, staff absenteeism, a lack of intellectual property, declining market share and distance to market. Make sure you address the weaknesses raised in your SWOT analysis. The list of weaknesses can indicate how your business has grown over time. When you review the SWOT analysis after a year, you may notice that your weaknesses have been resolved. While you may find new weaknesses, the fact that the old ones are gone is a sign of progress. 5. List potential opportunities for your business Think about the possible external opportunities for your business. These are not the same as your internal strengths, and are not necessarily definite - an opportunity for one aspect of your business could be a threat to another (e.g. you may consider introducing a new product to keep up with consumer trends, but your competitors may already have a similar product). Keep this in mind, but for the SWOT analysis, the same item shouldn't be listed as both an opportunity and a threat.opportunities could include new technology, training programs, partnerships, a diverse marketplace and a change of government. 2 - AD303 Design & Business Unit Toolkit : SWOT Analysis : Prepared by Relmi Damiano & Mark O Dwyer 2013

3 6. List potential threats to your business List external factors that could be a threat or cause a problem for your business. Examples of threats could include rising unemployment, increasing competition, higher interest rates and the uncertainty of global markets. 7. Establish priorities from the SWOT When you have completed the steps above, you will have 4 separate lists. Ideally, these lists can be displayed side-by-side so you can have an overall picture of how your business is running and what issues you need to address. You can then work out what issues are the most important and what can be dealt with later (i.e. develop 4 prioritised lists). 8. Develop a strategy to address issues in the SWOT Review your 4 prioritised lists by asking: How can we use our strengths to take advantage of the opportunities identified? How can we use these strengths to overcome the threats identified? What do we need to do to overcome the identified weaknesses in order to take advantage of the opportunities? How will we minimise our weaknesses to overcome the identified threats? Once you have answered these questions and finalised your lists, you can now use the SWOT analysis to develop strategies for achieving your business goals. Source: AD303 Design & Business Unit Toolkit : SWOT Analysis : Prepared by Relmi Damiano & Mark O Dwyer 2013

4 Example The following is an example of a SWOT (strengths, weaknesses, opportunities and threats) analysis conducted by a business trying to decide if they should introduce a new product to their range. The SWOT analysis does not cover the entire business, just the factors that may influence their ability to introduce a new product. To get the most out of the SWOT, they have made specific statements in each category. For example, rather than simply list 'competitors' as a threat, they have included specific details about how their competitors are a threat. Once you have read through this example SWOT analysis, you can delete the entries that do not relate to your business, and type your responses to build a SWOT analysis for your business. Strengths (S) Excellent sales staff with strong knowledge of existing products Good relationship with customers Good internal communications High traffic location Successful marketing strategies Reputation for innovation Weaknesses (W) Currently struggling to meet deadlines - too much work? High rental costs Market research data may be out of date Cash flow problems Holding too much stock Poor record keeping Opportunities (O) Similar products on the market are not as reliable or are more expensive Loyal customers Product could be on the market for Christmas Customer demand - have asked sales staff for similar product Threats (T) Competitors have a similar product Competitors have launched a new advertising campaign Competitor opening shop nearby Downturn in economy may mean people are spending less Review the SWOT analysis In the above example, each category of this SWOT analysis could be expanded. The business can then assess the results to decide if they can use their strengths to take advantage of the opportunities and introduce the new product. After assessing the results, they may decide that the weaknesses and threats need to be addressed before they can make any changes to their existing product line. When you have completed your SWOT analysis you should review the results to help you decide the next step for your business. Source: AD303 Design & Business Unit Toolkit : SWOT Analysis : Prepared by Relmi Damiano & Mark O Dwyer 2013

5 Now, its your turn Strengths (S) Weaknesses (W) Opportunities (O) Threats (T) 5 - AD303 Design & Business Unit Toolkit : SWOT Analysis : Prepared by Relmi Damiano & Mark O Dwyer 2013

6 You can also do it for a competitor! Strengths (S) Weaknesses (W) Opportunities (O) Threats (T) 6 - AD303 Design & Business Unit Toolkit : SWOT Analysis : Prepared by Relmi Damiano & Mark O Dwyer 2013

SWOT Strategy, Checklist and Template

SWOT Strategy, Checklist and Template How to Get the Most Out of a SWOT A SWOT (strengths, weaknesses, opportunities, threats) analysis identifies the internal and external factors affecting your business.