This is a basic subject, and maybe this is the reason why is little used, despite how useful it can be to establish your business strategy and make decisions.
Initially, you can think that your problem is X, but at the end, you can realize that problem X is a consequence of problem Y. Once you identify the situation enough, you can solve it better.
A characteristic of the SWOT analysis is its simplicity, and within that simplicity is its value to determine the situation of your business.
Allow me to explain this topic from the most basic in case any of the readers might need this information.
SWOT is they are the abbreviation of Strengths, Opportunities, Weaknesses, and Threats.
Essentially it is about grouping information related to your business in these four categories. The same ones that are due to external and internal factors that influence and determine to your company (whether you are planning or already established).
The analysis of external factors
Every business is surrounded by an external context that affects it for good and for bad. The company can not do much or nothing to change this context.
In this part of the analysis, we should detect and describe these factors that influence either positively or negatively the business, which can be political, legal, governmental, economic, social and technological.
From all these factors mentioned above, there are those that are opportunities, the factors that do not depend on the company and help to achieve the goals. It is good to detect them and therefore take advantage of them.
You can take appoint factors such as:
- The type of public that lives around the company
- Other surrounding businesses that can benefit in some way
- Customs or habits
- Suppliers willing to help
- Economy of the country and the zone
- Trends or fashions of any kind
- New technologies
- Competitors are not doing a good job
These are situations that affect or may negatively affect your business.
As external situations, strategies can be designed to go around or evade them in order to reduce their influence.
Examples of these situations may be:
- Area in which the business is located
- Habits or customs that do not help
- Problems with suppliers
- Legal aspects, regulations, and legislation
- Economy in trouble
- Available labor market is inadequate
- Competitors are committed with their customers
- Poor public services
The analysis of internal factors
The study of the internal elements allows us to distinguish between the strengths and weaknesses we have. What helps us to achieve our goals and what are our disadvantages with respect to the scene.
Being internal factors, we have the ability to influence and therefore change and improve what is wrong, as well as enhance what benefits us.
Everything what your business has or does and favors its development, are its strengths.
Here are some points that give strength to the company:
- Key employees and experts
- Work environment that promotes communication and conflict resolution
- Owned Facilities and suitable for the daily operation
- Highly demanded products or services
- Good presence on the internet
- Very good customer service
- Hours and delivery times
- Ongoing training for workers
- Good leadership
- Economic muscle
- Advantages over competitors that customers appreciate
- Percentage of penetration in the market
They are obstacles for the business, internal problems that have to be stopped and controlled. These elements have to be detected first in order to do something about it.
Some weaknesses may be:
- Vulnerabilities versus competitors.
- Prices not suitable for customers and for the company.
- Mediocre leadership
- Poor financial control
- Insufficient experience in the market
- Lack of knowledge of the target public.
- Visual presence and communication that does not stand out
- Weak internet presence
SWOT Quadrant or Matrix
Traditionally the SWOT analysis is presented with a quadrant that serves as a guide to place the characteristics mentioned in the previous paragraphs.
With the DAFO matrix, we can have a visual overview of the company's characteristics and where it should be headed.
The goal is to do something about this. If there are opportunities, you have to take advantage of them, what are the first steps to do so?
If you see threats, can you do something to avoid them or diminish their effects?
You have strengths! How can you maintain and strengthen them?
Know our weaknesses, work to reduce them or get rid of them.
In addition, also is possible combine strengths and opportunities to obtain offensive strategies. I mean more aggressive actions that seek a relationship between external and internal fortitudes to grow the company.
If you relate the strengths with the threats, defensive strategies can be obtained. Is to react to the negative effects of the exterior taking advantage of the good thing that exists in us.
With the combination of weaknesses and opportunities, you can have adaptation strategies. If you change some of our weaknesses you can seize the opportunities and reorient the business.
In the combination of weaknesses with threats, we would be carrying out survival strategies. Make changes to the internal environment to avoid damage due to external elements.
At the end, all this is summarized in analyzing the situation of your business from these four perspectives. Knowing our position lets us know what can happen in the short, medium and long-term. You can better understand the problem or problems in which you must focus and make better decisions to generate growth.
Now it's up to you to take action. What is the use of doing the analysis on paper if you do not proactively continue to take advantage of your opportunities and increase your strengths as well as reducing the risk of threats and improving to make your weaknesses smaller.
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Have a nice day.