SWOT analysis is a simple strategic tool for identifying and documenting internal strengths and weakness of the business and external opportunities and threats.
SWOT stands for S-strength, W-weakness, O-opportunities, T-threats
The output of SWOT analysis will support the business in strategic planning and risk management. SWOT also helps the business in identifying immediate goals and objectives of the organisation and assist in achieving them
Step 1: Know your business and the market(s) it operates
The first step, before SWOT analysis, is to understand and know your business and the market it operates. SWOT can be performed with a little research about the industry, core business activities, market and competitors. It is recommended to also consult with other staff, clients and business partner
Step 2: List your strengths
Step 2 is probably the easiest step of all. You need to list the strengths of your business which could be related to core competencies, business model, financial resource, business location, the culture of the organisation and competitiveness.
- What advantages does your organisation have?
- What is your business good in?
- What is the value proposition of your business?
- What is your Unique Selling Proposition?
- Why does customer buy from you?
Strengths are ideally a reflection of the characteristics of your business. The above list need not be definite at this stage. You shall prioritise them in step 7
Step 3: List your weaknesses
Weaknesses to your business are the ones that put your business at a disadvantage to others. In this step, you need to list all such weakness to your business. Weakness can be related to the absence of new technology, high employee turnover, lack of innovation, declining market share, small financial support, change management and culture of the organisation.
- What advantages does your organisation have?
- What areas do you lack expertise?
- What are the reasons for failure in your bid/proposal?
- What does your competitor do better than you?
- What are people in your market likely to see as a weakness?
- Why does customer buy from your competitors?
The weaknesses in the business indicate the growth of your business, and it is essential that you take appropriate actions to address the shortcomings. The weaknesses of the company shall be considered as the risk factors for your business. Weaknesses change over time and have to be removed from this list when the SWOT document is reviewed.
Note: Strengths and weaknesses reflect the internal factors of the business.
Step 4: List your potential opportunities
All businesses have a broad range of the potential external opportunities in the market. For the growth and sustainability of the business, It is important for you to identify those potential opportunities. Opportunities are potentials factors that your company can invest upon and grow. Failure to recognise and take action on an opportunity can become a threat to your business.
- What are potential new markets for your business?
- Any news technologies on the market in your area of business?
- Any changes in the government policy related to your business?
- Trends in the market?
Opportunities could include new technology, training programs, new markets, partnerships, and a favourable change of legal requirement.
Step 5: List your threats
Threats are external issues to the business that you may have no control. These threats may disable the business over time. Threats can be related to employment, increasing competition, higher interest rates and the uncertainty of global markets.
- What does hurdles your business face?
- Any changes in the regulatory, statutory or legal requirement?
- Is changing technology posing a threat?
- Change in customer perception?
- Change in foreign exchange?
- Any Political changes affecting your market?
Step 6: Prioritise your SWOT
Before you develop the strategies for the SWOT list, you need to prioritise them. The list can show you an overall picture of your business and helps you to understand the context in which your business operates (a requirement of ISO 9001:2015 quality management system standard). You need to consider the current business need and objective to prioritise the SWOT list. It is recommended you take actions on items that require immediate care. This allows you to refine and prioritise your SWOT list.
Step 7: Develop strategies and risk mitigations
Failure to develop necessary strategies for the SWOT shall make the entire exercise go in vain. Appropriate strategies are drawn up and identified to ensure growth and success of the business. Weakness, opportunities and threats in your SWOT list can be managed through your risk management process. Answer the below question to determine and develop appropriate strategic direction
- How can you use your strengths to take advantage of the potential opportunities?
- How can you use your strengths to overcome the threats identified?
- What do you need to do to overcome the identified weaknesses to take advantage of the opportunities?
- How will you minimise your weaknesses to overcome the identified threats?