Use SWOT for your Business Analysis

Calendar October 30, 2009 | Posted by lmfoong

 

 

SWOT Analysis also commonly known as SWOT is a tools to evaluate organizations’ external competitive position as well as its internal capabilities. By examining its Strengths; Weaknesses; Opportunities and Threats, a SWOT Analysis template | matrix allow you to develop your strategies in order to exploit its competitive advantages or defend against its internal weaknesses. Strengths and Weaknesses involve identifying the firm’s internal capabilities and / or disadvantages against its competitors, while Opportunities and Threats involve identifying external factors such as government policies, forces from competition such as 5-Forces of Competition, emergence of new technology, governmental intervention and/or domestic and international economic trends that influence the financial performance and business operations of an organization.Edit

An organization has its strengths and weaknesses in their departmental and functional aspects. It is usual that an organization do no have equally strong in all areas. Internal strengths and weaknesses combined with external opportunities and threats created the basis for establishing short and long term strategies and goals.

Strengths Weaknesses
List your internal strengths in relation to your competitors List weaknesses in relation with your competitors
Opportunities Threats
Establish potential opportunities from external factors or tools as as PEST Analysis (positive factors) that can help to boost your sales and revenue Establish potential opportunities from external factors or tools as as PEST Analysis (negative factors) that can damages your business
STRENGTHS

The strengths of your organization if realized, would able to provide a comparative advantage against its competitors. Its internal strengths that cannot be matched or imitated by competitors are widely referred to as distinctive core competencies. Generally, perceived strengths that build competitive advantages by exploiting distinctive competencies can include emerged brand name, market leadership, excellent customer service resulted in customer loyalty, superior quality products, innovative Research & Development, , and/or strong financial resources. To remain strengths, they must continue to be developed, maintained and defended.

WEAKNESSES

The weaknesses of your organization refers to a situation when your competitors have potentially advantages over you in their capabilities. Generally, a perceived internal weaknesses may include negative images / reputation, poor quality products, long lead time, poor delivery, incompetent marketing personnel, irresponsive customer service, inconsistent vendor support, poor financial management. These are examples of Weaknesses that has direct impact to the customers hence the revenue and it should take priority over the rest of weaknesses. You should include Weaknesses derived from your own operation analysis

OPPORTUNITIES

An external Opportunities, which is another environmental factors that provide an venue to increase revenue ( so is to your competitors as well). These perceived opportunities may include an include a growing market segment, acquisition and mergers, joint ventures and strategic alliances with others players. Include the positive aspects of external forces changes consumer behavior that can derive from PEST Analysis such as economic situation, social and cultural aspect, demographic changes, political and governmental stability, technological changes and competitive forces, example: Michael Porter 5-Forces of Competition. .

THREATS

External Threats are environmental factors that can hinder you in achieving your business objectives and goals. Generally, perceived threats can include the entrance of new competitors directly or indirectly, erosion of profit margin due to price wars, impending negative legislation, buyers market, suppliers form informal cartel seek to increase their bargaining power, emergence of new technology could made your product obsolete, Introduction of innovative products by competitors, competitors open more new sales channels, change of tax structure, removal of incentive schemes etc. Include the negative aspects of external forces changes consumer behavior that can derive from PEST Analysis such as economic situation, social and cultural aspect, demographic changes, political and governmental stability, technological changes and competitive forces, example: Michael Porter 5-Forces of Competition. .

In summary, a holistic SWOT analysis should realistically take advantage of Opportunities with your strengths and to reduce the impact of Threats with Strengths. At the same time, a focused program to put in place to improve any Weaknesses that could mitigate the potential Threats. Finally, SWOT Analysis should always be applied in relation to competition to offer a comparative analysis of your organization and your competitors.

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