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SWOT AnalysisSWOT AnalysisA SWOT analysis is an analytical tool that can help analyze a business. "SWOT" stands for strengths, weaknesses, opportunities, and threats. This type of analysis represents an effort to examine the interaction between the particular characteristics of your business and the external marketplace in which you compete. The internal portion of a SWOT analysis looks at the individual strengths and weaknesses of your specific business. Similarly, the external analy
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SWOT Analysis
A SWOT analysis^ is an analytical tool that can help analyze a business. "SWOT" stands for strengths, weaknesses, opportunities, and threats. This type of analysis represents an effort to examine the interaction between the particular characteristics of your business and the external marketplace in which you compete.
The internal portion of a SWOT analysis looks at the individual strengths and weaknesses of your specific business. Similarly, the external analysis looks at the opportunities presented by the marketplace and the threats that you face in your chosen market.
Strengths Every organization has some strength. In some cases this is obvious, for example,
dominant market shares. In other cases, it is a matter of perspective, for instance, a company is very small and hence has the ability to move fast. It is important to note that companies that are in a bad position also have strengths. Whether these strengths are adequate is an issue for analysis. A strength could be:
your specialist marketing expertise.
a new, innovative product or service
location of your business
quality processes and procedures
state-of-the-art equipment
any other aspect of your business that adds value to your product or service
Weaknesses Every organization also has some weakness. In some cases, this is obvious; say for
example, a stricter regulatory environment. In other cases, it is a matter of perspective, for example, a company has 99% market share and is open to attack from every new player. It is important to note that companies that are extremely competent in what they do, also have weaknesses. How badly these weaknesses will affect the company is a matter of analysis. A weakness could be:
lack of marketing expertise
undifferentiated products and service (i.e. in relation to your competitors)
location of your business
poor quality goods or services
damaged reputation
problems managing inventories
poorly motivated or untrained staff
inefficient or obsolete production methods
Opportunities All organizations have some opportunities that they can gain from. These could range from diversification to sale of operations. Identifying hidden opportunities is the mark of an astute analyst. An opportunity could be:
a developing market such as the Internet.
mergers, joint ventures or strategic alliances
moving into new market segments that offer improved profits
a new international market
a market vacated by an ineffective competitor
Threats No organization is immune to threats. These could be internal, such as falling productivity. Or they could be external, such as lower priced international competition. A threat could be:
a new competitor in your home market
price wars with competitors
a competitor has a new, innovative product or service
competitors have superior access to channels of distribution
taxation is introduced on your product or service
Simple rules for successful SWOT analysis
Analysis should distinguish between where your organization is today, and where it could be in the futures
Be specific. Avoid grey areas.
The SWOT framework offers a good starting point for analysis, but don’t ignore your common sense, gut feel and experience.
Analyze in context to your competition i.e. better then or worse than your competition
Keep your SWOT short and simple. Avoid complexity and over analysis
SWOT is subjective—two people rarely come up with the same final version.
Questions to help you determine SWOTs
Strengths
What is golden about your company? What do you do well (in sales, marketing, operations, management)? What are your assets? What are your core competencies? (I.e., what are essential business operations you do very well?_ What are the most profitable products/services? What experience do you have?
Weaknesses
What looks a bit rusty inside your company? What do you need (customer service, marketing, accounting, planning)? Where do you lack resources? What can you do better? Where are you losing money?