The humble SWOT analysis is one of the most powerful tools we have to create a well thought out strategic development plan for a business. Combined with a MOST analysis and/or a Boston Box, PESTLE or even Porter’s Five Forces framework the business analyst can provide robust recommendations on potential growth for any kind of business organisation.
What is a SWOT analysis?
Essentially the SWOT analysis enables you to objectively assess your business's current position, where you could go, what's currently limiting this, and what could limit it further. [newsletter_lock]
SWOT stands for:
- Strengths - current internal assets and factors that will aid the development of the organisation.
- Weaknesses - current liabilities and factors that will undermine the development of the organisation.
- Opportunities - external factors that may be grasped by the organisation to aid in development.
- Threats - external factors that possess the potential to prevent the development of the organisation.
Strengths can be things like your current market position or possession of market share. It could be extensive financial resources. It could be a highly skilled staff, or great reputation with your customers. You could have a celebrity onboard.
Weaknesses are the inverse - things that are currently true about your organisation that will reduce or eliminate the chance of success. It could be unskilled or unmotivated staff, a poor culture or limited financial resources. It could be old or unusable equipment or bad leadership.
Opportunities are external factors that present opportunities for success. For example, social change that makes a product more valuable or desirable than before (for example, hand sanitiser during a pandemic...). It could be the development of a new technology that you could commoditise.
Threats are the external factors that could see you undone. It could be a technological development that makes your current offering obsolete (iPod killed CD, Spotify killed record sales). It could be sudden economic change making business unprofitable (i.e. hospitality in a pandemic...).
Making Your Own SWOT Analysis
The SWOT Analysis is typically depicted as a matrix, although there is no real need for this. Writing it as a simple list is equally effective.
Because the SWOT is used to summarise key issues, it generally should follow on from a PESTLE Analysis and a Resource Audit, although in small businesses it can usually be done without this, as it's quite common for one or two people to hold all the necessary information in a small organisation.
Using the SWOT Analysis
Once the SWOT Analysis has been complete it can be used to identify strategies for future growth.
- Identify avenues for growth via the opportunities identified.
- Identify existential threats revealed by the SWOT.
- Identify the areas of strength that can be utilised to execute on opportunities.
- Identify areas of weakness to be addressed or at least monitored.
Above all, the SWOT is used by consultants to develop and present robust strategic options for delivering success.
My personal preference is to combine the SWOT with the Boston Box to provide more specific areas of potential product development.
Limitations of the SWOT Analysis
Because the SWOT is intended to consolidate issues identified from other analyses, obviously it follows that other analyses must be done prior to getting here. Identifying which ones to use does require some skill and often a great deal of experience is needed to execute them all successfully, especially when dealing with larger organisations. See PESTLE Analysis, MOST Analysis, Resource Audit and Boston Box. In addition to this, the SWOT is of course just a recommendation on what could be done, and in itself makes no attempt to provide any guidelines on how to actually achieve those recommendations. [/newsletter_lock]