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What is SWOT Analysis?
SWOT analysis is a type of business analysis that makes sure a project’s objectives are well defined and that all related factors are identified. The SWOT analysis involves four areas: Strengths, Weaknesses, Opportunities and Threats. This analysis process takes both internal and external components into account, as they both can impact the success of a future project or venture.
Strengths in SWOT Analysis
The strengths in a SWOT analysis are the key features within a business that are necessary for the success of a project. They are the resources and capabilities that a business uses to have a competitive advantage. Examples are:
A good reputation
Strong brand name
Business know-how
Weaknesses in SWOT Analysis
The weaknesses within a company are the factors that could prevent successful results for a certain project. Weaknesses can include factors such as departmental rivalry, weak communications, poor funding or inadequate resources. These can hinder a project before it has even started. Examples are:
A bad reputation
A weak brand name
Weak internal communications system
Opportunities in SWOT Analysis
The opportunities in a SWOT analysis are external elements that can help to achieve the objectives set for a project. These can involve vendors who want to work with the business to achieve success or even market conditions that makes the project desirable to the market.
Other opportunities could be:
A gap in the market for your product
New technology
Training
Threats
Threats are external factors that can prevent the success of a business project. Possible threats critical to SWOT analysis could be: negative image of the business or brand, no ready-made marketplace for the end product or no available vendors who can supply the necessary raw materials. Other threats can include:
New government regulations
Introduction of substitute products
Change in trend
Benefits of SWOT Analysis
Easy and practical to use
Easy to understand
Focuses on both internal and external factors that can affect a business
Helpful in identifying future goals
A good starting tool for further analysis
Limitations of SWOT Analysis
Factors can be too broad
Factors can often be opinions and not facts
Excessive list of strengths, weaknesses, opportunities & threats
No established method of differentiating strengths from weaknesses and opportunities from threats
Why is SWOT Analysis important?
This business analysis tool can be extremely valuable in shaping your business strategy as it allows you to see things from a new perspective. It can lead to the discovery of previously unknown niches in your industry, or even to help you find out the possible threats that can prevent your business from growing. By knowing your company’s strengths and weaknesses, you are then able to shape the opportunities and avoid the potential threats that can hinder your growth.
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