SWOT Analysis is a time-tested analytical tool that encourages you to focus your planning efforts around analyzing the Strengths, Weaknesses, Opportunities and Threats facing your enterprise. The first two are seen as being Internal to your organization while the latter two are External environmental or market conditions.
A lot has been said and written around SWOT Analysis and the basics of this technique are easy to master. In order to add value to this discussion, I will present the basics of SWOT in new ways as well as provide overview guidance on making the most of this analytic tool.
SWOT can be applied to any planning exercise and not just business. For the purposes of our discussion, however, I will examine it from a purely sales and marketing perspective.
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SWOT Analysis: The Basics
An often overlooked aspect of SWOT Analysis is that it is always based around achieving a definitive objective. Your Strengths allow you to capitalize on Opportunities in achieving your objective. On the other hand, your Weaknesses expose you to Threats that hinder you from your objective.
Strategic Planning around SWOT is built on answering the following questions: How can you best maximize and utilize strengths? How can you minimize and overcome weaknesses? How can you discover and exploit opportunities? How can you discover and eliminate threats? I will explore additional synergies between Strengths and Opportunities and between Weaknesses and Threats later in this section.
In understanding and applying SWOT Analysis to your own planning it is useful to consider the Key Questions and Pertinent Factors I have outlined below for each SWOT category (Strengths, Weaknesses, Opportunities and Threats). Remember that you will benefit most by developing a creative mindset that allows you to shape tools such as SWOT to fit your own situation and circumstances.
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SWOT Analysis: Key Questions
What are the fundamental points of differentiation that define each category for your specific situation? For each SWOT category you should have a handful – ideally not more than 3-5 – of essential questions that uniquely shape that category for you. These Key Questions for each category will depend on what you are using SWOT Analysis for, e.g. general business planning, a specific marketing exercise or something else.
The same questions can be used to analyze Strengths and Weaknesses together and as well, Opportunities and Threats together. In asking what our unique strengths are, the inverse of that question asks what our unique weaknesses are. In the same way, because Opportunities and Threats are opposites that relate to the external environment, they can be explored similarly.
Generally speaking, the Key Questions for any given exercise will always be the same. So, an overall business planning SWOT exercise will always revolve around the same key questions in each category. In developing the right mindset for making the most out of such analytical tools you should be able to develop you own key questions as best suit your specific purpose and circumstances.
Let us examine Key Questions for each SWOT category for the purpose of general business planning. Our objective in this case is to maximize profitability.
Strengths and Weaknesses
What are your de facto strengths / weaknesses?
What are your competitive strengths / weaknesses?
What are you perceived strengths / weaknesses?
What other internal factors will help / hinder you in meeting your objectives?
Analyzing your strengths and weaknesses in a SWOT Analysis seeks to answer the questions of what you do better or worse than anyone else and what unique advantages or disadvantages you have in achieving your objectives.
In the customer-centric view of the world I talk about with "You" Sales and Marketing your strengths should translate into unique customer benefits. Similarly, weaknesses are where you ultimately fall short in serving customers.
Operational or de facto strengths or weaknesses are based on your resources and abilities as a company. These are things you do well or not by virtue of your own competencies. Alternatively, comparative strengths and weaknesses are based on your knowledge of the competition can also be analyzed. These shape your unique positioning strategy.
Understanding how the market views you – that is, customers, competition and analysts – equips you to gear sales and marketing efforts around emphasizing perceived strengths while educating around real ones. In the same way you must address real weaknesses while educating around perceived ones.
The question of reality versus perception is crucial to all of sales and marketing. It is no good having the best product in the world if nobody knows about it and the same can be said of your unique strengths and competitive advantages. As the saying goes, perception is reality and if a customer believes you are weak in a certain area then you just as well are.
Opportunities and Threats
What current opportunities / threats do you face?
What future opportunities / threats do you face?
What competitive opportunities / threats do you face?
What other external factors will help / hinder you in meeting your objectives?
Analyzing Opportunities and Threats in a SWOT Analysis seeks to make you aware of market conditions, trends and the competitive landscape affecting how you do business now and in the future.
SWOT Analysis: Relevant Factors
A list of general factors which affect Strengths, Weaknesses, Opportunities and Threats is a great thinking aid that allows you to better analyze the complete range of variables that affect your enterprise. Pertinent Factors can be categorized as Internal Factors and External Factors for the purposes of SWOT planning.
These factors are those that affect your Strengths and Weaknesses and are within or a part of your enterprise. Internal Factors usually imply organizational characteristics and can include:
General: People, Process, Technology, Information, Ideas, Beliefs, Values, Experience
Departmental: Sales, Marketing, Finance, HR, IT, Administration, Operations
Financial: Costs, Assets, Liabilities, Capital, Leverage, Liquidity, Expenses, Value, Profitability, Revenue, Debt, Risk
Organizational: Management, Team, Morale, Structure, Location, Industry, Business Model, Partners, Accreditations
Operational: Efficiencies, Time, Cost, Manpower, Machines, Automated, Manual
Marketing: Product, Price, Place, Promotion
What other ways are there of looking at your organization and breaking it up into a series of related parts and concepts? As you can see, SWOT Analysis brings up the more basic question of how to define the internal and external factors that shape business. Any methodology used to define your business and business environment can then provide points of analysis for a SWOT exercise.
These factors within a SWOT Analysis are those that affect Opportunities and Threats and are external to your organization. External factors usually imply environmental or market conditions and can include:
Macroenvironment: social, economic, legal, government, technology, environment
Market: customer, competition, trends
The purpose behind looking at internal and external factors affecting your business is a thinking exercise. The factors listed above are merely definitions to get your started and are not endpoints that are graded from 1-10 to establish Strengths, Weaknesses, Opportunities and Threats. Each should be elaborated on as appropriate for your situation.
What other ways can you find to categorize the various factors that play into your own SWOT Analysis? Almost any model for analysis internal and external business conditions can be used to define specific factors that will come into play in a SWOT exercise. Whichever model you are comfortable with and use should also be applied to SWOT planning.
There is no end to how you can categorize the various factors that affect your decisions in obtaining your objective. Each set of factors is based on a specific perspective of looking at businesses and so you may find some overlap and interchange when looking at and analyzing the factors pertaining to your specific enterprise in various ways.
Thinking about factors is a great way to expand your analysis of any one Strength, Weakness, Opportunity or Threat to ensure that you cover the full range of variables affecting your planning. For example, if a specific organizational process is deemed "time intensive" and this is seen as a weakness, then what about other process delays? Similarly, the same Weakness can be expanded upon to look at the “people” factor within your organization as a whole.
SWOT Analysis: Synergies
In the diagram below I show another representation of SWOT that captures the internal and external significance of each category. As well, the synergies between Strengths and Opportunities as well as Weaknesses and Threats are highlighted here.
Generally speaking, your strengths allow you to capitalize on opportunities in order to fulfill objectives. On the other hand, weaknesses make you vulnerable to threats which in turn detract from objectives.
SWOT Analysis brings to light the ongoing and dynamic effort that is necessary to achieve success in any enterprise. Internal strengths and weaknesses must be continually assessed in order to build on opportunities while safeguarding against threats.
A final element brought to light in this representation of SWOT is that the organization seeks to expand and fulfill its objectives through the market. As much as you can focus on the customer and market conditions, you will be able to meet your organizational goals.
On the other hand, threats and weaknesses bring the focus back home where diligent housekeeping is needed to keep you competitive and able to take advantage of all the market has to offer. At times you may find yourself in crisis mode where you are simply struggling to correct mistakes, adjust and survive.
SWOT Analysis: SWOT / TOWS
Looking at the interplay between the various SWOT categories is a a useful exercise in strategizing around your findings. This kind of analysis is represented by a SWOT / TOWS diagram.
S-O Strategies: How can you utilize strengths in order to capitalize on opportunities?
W-O Strategies: How can you address a weakness and turn it into an opportunity?
S-T Strategies: How can you build on strengths in order to safeguard against threats?
W-O Strategies: How can you minimize weaknesses in order to offset threats?
You Marketing SWOT Analysis
What is the goal of SWOT planning and, ultimately, your business venture? Looking back at basic definition, your business revolves around creating value then creating customers for this value. As such, is is useful to analyze your SWOT findings from this perspective as well.
The "You" Sales and Marketing approach to SWOT Analysis seeks to boil each set of questions down to crucial questions of customers and value. Your strengths are the unique benefits you provide customers. Weaknesses are areas where you fall short in meeting customer needs. Opportunities are areas to add value to your offerings and a threat is anything that can cause you to lose customers.
"You" Sales and Marketing SWOT Analysis should be applied in conjunction with the more traditional SWOT approaches discussed here. The intent is not to replace but complement established techniques and tie your SWOT planning into the perspective of how you interact with your customers.
SWOT Analysis: General Guidance
SWOT exercises encourage a systematic approach to planning that can be applied to almost any business decision or venture. The tools and methods I have provide here are meant to give you a solid understanding of SWOT Analysis which you should then tailor to meet your specific needs.
Business analysis is a vast subject of discussion encompassing countless definitions, models and theorization that extend beyond the scope of this brief summary. Nevertheless, understanding the basics of SWOT Analysis is invaluable no matter which other business analysis tools and methodologies you apply.
As you apply SWOT thinking to your specific situation and business planning, it is useful to keep in mind the following general guidance in order to proceed with the correct mindset.
SWOT Analysis should not be a "pie in the sky" exercise based on conjecture. Do not fall prey to overly-optimistic business thinking based on hopes rather than facts. As you embark on your venture, preparation and due diligence is vital to your success.
In analyzing the various factors affecting your business decisions and outcomes it is important to break things down in order to arrive at the most simplistic descriptions possible. For example, instead of listing "marketing problems" as a weakness, specify the who, what, where, why and how of the problem.
SWOT Analysis is not a one-time exercise but should be applied on an ongoing basis when and as appropriate. The ultimate goal should be creating a mindset around business planning that you use everyday and at every milestone in achieving your objectives.
Things change, the market changes and your business changes. As such, your planning should change as you continue to develop new strengths, investigate new opportunities, assess weaknesses and stave off new threats.
As with all planning, it is important to develop a order of priority in dealing with the various findings your SWOT Analysis uncovers. As well as measuring the importance versus urgency of issues, you can also apply a system of ranking and prioritizing various factors in terms of their organizational importance.
Building on the need for specificity in all your planning it is importance to incorporate as much data as possible into your SWOT exercises. If you are looking at a problem with retaining new customers, are there specific conversion metrics you can gather? What other measurements and standards can you effect in order to shore up your study?
As the size of your organization grows and more and more people are involved in your business enterprise, you can begin to tap into different pools of expertise in lending credibility to a SWOT Analysis. As well as internal teams consisting of members from various departments, you can also lean on customer, partners and other industry sources for crucial insights.
Any kind of business planning can always be high level or low level going from strategic to tactical. SWOT planning can similarly be applied to long term objectives as well as shorter term goals and overall corporate strategy as well as day-to-day tactics.
Get help with SWOT Analysis!
What Is Positioning? Product Differentiation Differentiation Strategy Niche Marketing Market Segmentation Marketing Segmentation The BCG Matrix SWOT Consultant
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