What is a SWOT Analysis?
Investopedia defines SWOT analysis as:
“SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework used to evaluate a company’s competitive position and to develop strategic planning. SWOT analysis assesses internal and external factors, as well as current and future potential.”Investopedia
SWOT analysis is a method for evaluating a business’s success, competition, threat, and opportunity, along with aspects of a business.
The internal factors of your business are strengths and weaknesses which are aspects you have some power over and can modify. These factors include:
- Current procedures: such as staff initiatives, management structures, and software structures.
- Financial resources: such as funding sources of revenue, and investment funds.
- Human resources: such as staff, partners, and target market.
- Natural resources access: such as trademarks, patents, and copyrights.
- Physical resources: such as infrastructures and location.
The external factors affecting your business are opportunities and threats that occur outside of your business, in the larger market. You can seize opportunities and defend your business from risks, but you can’t change them. These factors include:
- Changes in society
- Government controls on the economy
- Market developments
- Partners and Suppliers
- Threats from competitors
SWOT Elements Explanation
S – Strengths
Strengths are aspects that the business performs very well or in a way that sets it apart from its competitors. Consider the advantages your business has over competitors. This may include employee encouragement, access to specific resources, or a robust collection of manufacturing processes.
W – Weaknesses
Weaknesses prevent a business from reaching its full potential. A poor brand, relatively high turnover, high debt levels, an inefficient supply chain, or a shortage of resources are examples of places where the business needs to change to stay competitive.
O – Opportunities
Opportunities are described as external factors that may be effective in fulfilling the project’s objectives. These factors may include suppliers that choose to partner with the business to help it succeed, the public’s favorable view of the company, and market dynamics that make the project appealing to a specific market segment.
T – Threats
Threats are factors that have the capacity to cause harm to your business. Threats such as supply chain issues and consumer demand changes. Foreseeing threats and taking precautions against them is critical before your business development stagnates.
How to Carryout a SWOT Analysis
Determine the business’s strengths, weaknesses, opportunities, and threats to perform a SWOT analysis.
1. Strengths: Assess your strengths from both an internal and external standpoint.
- What are the benefits of your business?
- What distinguishes you from others in terms of resources?
- What is the USP (Unique Selling Proposition) of your business?
- What is your business’s optimistic customer experience?
- What free or low-cost tools do you have that others don’t?
2. Weaknesses: Assess your shortcomings from both an internal and external standpoint.
- What does your business struggle with?
- What flaws do customers see in your business?
- What factors lead to a deterioration of a company’s brand image?
3. Opportunities: Assess opportunities from a different (external) angle.
- What are the good prospects in the marketplace?
- What are some current trends that your business might benefit from?
- Are there any technological or business developments that your business might benefit from?
- Are there any shifts in lifestyle, social habits, or other factors that your business might benefit from?
4. Threats: Take a look at the challenges from the outside.
- What challenges does your business face?
- What are the things that your competitors do better than you?
- Is your company’s status threatened by a technological shift?
- What risks are you vulnerable to because of your flaws?
- Lifestyle changes, social patterns, and so on, do they pose a threat to your business?
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