This is a basic matter, and maybe, for this reason, is underused despite it is very useful to establish your business strategy and make decisions.
You can think that your problem is X, but after the SWOT analysis, you might realize that problem X is a consequence of problem Y. Once you identify the situation broadly, you can solve problems in a better way.
A characteristic of the SWOT analysis is its simplicity and within that simplicity, it’s worthy to determine the situation of your business.
Allow me to explain this topic from a very basic level in case any of the readers need this information.
SWOT is the acronym of Strengths, Opportunities, Weaknesses, and Threats.
Essentially, this analysis is about grouping information associated with your business in these four categories. And these categories are due to external and internal factors that influence and determine your company’s performance (this works for current businesses and businesses in the planning stages).
The analysis of internal factors
The study of the internal elements allows us to distinguish between the strengths and weaknesses we have. To help us to achieve our goals and improve our disadvantages.
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.
- The work environment that promotes communication and conflict resolution.
- Owned Facilities and suitable for daily operations.
- 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 to do something about it.
Some weaknesses might be:
- Vulnerabilities versus competitors.
- Prices not suitable for customers and 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.
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, some 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 detect factors such as:
- The type of public that lives around the company.
- Other surrounding businesses can benefit in some way.
- Customs or habits.
- Suppliers are willing to help.
- The economy of the country and the zone improves.
- Trends or fashions of any kind.
- New technologies.
- Competitors are not doing a good job.
These are situations that affect or might affect negatively your business.
As external situations, strategies can be designed to go around or evade them to reduce their influence.
Examples of these situations may be:
- The area in which the business is located.
- Habits or customs that do not help.
- Problems with suppliers.
- Legal aspects, regulations, and legislation.
- The economy in trouble.
- The available labor market is inadequate.
- Competitors are committed to their customers.
- Poor public services.
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 beheaded.
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?
Knowing our weaknesses allows you to work on reducing them or get rid of them.
Work on the strategies
Also, it is possible to 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 damages due to external elements.
In the end, this is an analysis from these four perspectives more comprehensive of the situation of your business. 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 analyzing 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.