- A Brief History of SWOT
- Why and when to conduct a SWOT analysis
- S.W.O.T. Detailed analysis of the components
- Actions based on the results of the SWOT analysis
- Examples of successful and unsuccessful SWOT analysis
- From SWOT to TOWS? How to deploy the algorithm and achieve the best results
- SWOT Templates
What is SWOT?
SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats.
SWOT analysis is a methodological tool designed to help companies and their employees optimize productivity, increase competitiveness, maximize potential and minimize risks. The SWOT model helps to make better decisions - both large and small. It allows you to evaluate the effectiveness of actions - from the launch of a new product or service to a merger with another organization or the acquisition of a subsidiary. SWOT is a method that, when used correctly, produces only positive results.
The Fundamental Guide to SWOT Analysis was designed, written and designed by Justin Homer and Jackson Hille.
Justin Homer lectures at the University of California at Berkeley and will soon publish two books.
Jackson Hille is one of FormSwift's partners and is a recipient of a Special Achievement Award in American Studies from the University of California, Berkeley.
The manual contains all the information that a SWOT specialist needs. It describes examples of SWOT use by prominent companies (eg Dreamworks and Uber) and thoroughly examines all the components and ways to apply the analysis. There are free templates at the end. The guide will be useful to anyone and everyone, including executives from creative startups and entertainment companies, strategic planners in nonprofits and government organizations, and private entrepreneurs who are in the sale of real estate or the restaurant business.
Who is the guide for?
SWOT is a technique that can be used for any business goal, big or small. If you run a Fortune 500 company and are trying to determine the value of a special offer or are evaluating your position to chart your individual path, this guide will be a great help to you.
Why is guidance needed?
Your company is at risk! You risk freezing in place! Lack of movement can destroy any business, and SWOT analysis is an effective antidote. This guide reveals all its subtleties.
It is written in an accessible language and contains concise but effective examples. More importantly, it is backed by extensive research on the use of SWOT, published in leading business journals.
How to use the guide?
This guide discusses the SWOT method from a variety of perspectives that people with varying degrees of knowledge can understand.
If you are just getting started with SWOT, we recommend that you read the entire text from beginning to end to learn more about the history of the method and its scope.
If you are already familiar with SWOT, you can relearn the basics or scroll to the section you want (for example, about using the method in a certain type of organization). You may find our templates useful. Dispose of the guide at your discretion!
Brief summary and examples of using SWOT
In 1960, several American corporations launched a project at Stanford University to develop an improved method of strategic planning. This is how SWOT was born.
It is suitable for:
- rethinking the company's position in the market (Weaknesses, Threats - Disadvantages and Risks from competitors);
- determining the strengths of the company (Strengths - Benefits);
- search for new directions of development (Opportunities - Opportunities).
All this SWOT!
Although SWOT was "originally designed for business needs," "it can be used for the health and development of the community as a whole, and even for personal needs."
Below are examples of using SWOT analysis in a company that provides taxi services using a mobile application.
Uber + Lyft
SWOT example
Benefits
- The use of a special application for finding drivers and clients and a cashless payment system greatly simplifies the work process.
- Lack of staff and dispatchers
reduces costs. - Drivers use private vehicles, so the company has access to a huge fleet of vehicles that do not require maintenance.
- Drivers are in complete control of their schedule.
Weaknesses
- The business model is easy to copy.
- The use of GPS to track the location of drivers and customers poses a privacy risk.
- The flow of customers is unpredictable and changes rapidly.
- The company does not establish relationships with drivers, so the level of loyalty is extremely low.
Opportunity
In the following example, we'll look back at the inception of taxi companies using mobile apps.
Consider the impact that the emergence of Uber and Lyft has had on companies that provide services in the traditional way. The use of the latest technology has allowed them to easily penetrate the market.
They can expand and capture new sites (cities) or provide additional transportation services (for example, run school buses).
Risks
The use of mobile apps not only opened up new opportunities for Uber and Lyft, but also created serious risks for existing companies that have not mastered the latest technologies.
SWOT is often misused to justify existing practices. If you are doing an analysis to find areas for development, you need to clearly identify all the shortcomings.
Comments on individual companies
Uber services are only available in some metropolitan areas, so the next step could be to reach smaller cities and suburbs. However, the main threat to Uber is the numerous complaints and proposals to legally ban the company's activities.
Dreamworks
DreamWorks has taken the lead in 3D animation production due to two main strengths - extensive reserves (like the Shrek franchise) and an attractive work environment suitable for creative workers.
Logan decided that a busy training schedule and a trip to an international tournament could provide the team with new opportunities for gaining experience, and the youth and potential injury of the players posed significant risks.
Restaurant: By adding online food ordering and delivery, a business could gain new opportunities, while opening new restaurants and changes in the cost of products (for example, an increase in the price of fish) would pose a serious threat to it.
Construction firm: In terms of new opportunities, the firm could study the city's plans to expand the public transportation system and see how this expansion would affect the scale of private and corporate construction.
And here we return to the basic postulate of SWOT again: analysis is only useful when you compare yourself with competitors.
Uber + Lyft
SWOT example
Let's go back to the Uber and Lyft example. The services themselves arose under the pressure of mobile technologies on traditional companies that provided taxi services. If any of them had recognized this Risk earlier, they would have realized that the mobile offering could enable customers to get from one point to another efficiently and quickly.
By turning a Risk into an Opportunity, a company could evaluate its Disadvantages in terms of the existing Risk (in this case, lack of investment in technology or underdeveloped infrastructure for a mobile application), and then make a strategic plan to eliminate the Disadvantages and use the Benefits (in this case, experience full-time drivers, knowledge of routes, etc.) to get ahead of the competition.
1. Brief history of SWOT
SWOT analysis was the product of years of research conducted by Stanford University in the 1960s and 1970s. By the end of the 1950s, many American companies were frustrated by the lack of results from investments in strategic planning, so in 1960 some of them launched a project to develop new methods. This is how SWOT was born.
2. SWOT analysis
When to do a SWOT analysis
When should a SWOT analysis be done? SWOT analysis is useful in countless ways.
- Do you want to know how effective a new initiative, product or acquisition is?
- Do you need a solution to a specific business problem?
- Do you want to evaluate an existing and ongoing strategy?
- Do you have extra funds that you need to invest profitably?
- Are you a non-profit or government organization that has received a large grant or donation and you don't know how to spend the money?
- Do you have new competitors? Do you need to evaluate a potential merger with another organization?
- Do you want to more precisely formulate your mission or social significance?
If you answered yes to at least one question, SWOT analysis will definitely help you!
Ultimately, it will come in handy in any situation that requires assessing the current state of affairs in the market (Disadvantages and Risks), identifying strengths (Advantages) and development directions (Opportunities).
Why Conduct a SWOT Analysis
Why is SWOT needed? SWOT analysis gives the company the opportunity to accurately assess its position in its field. Members of the Health Promotion and Community Development Working Group at the University of Kansas point out that "knowledge of the situation facilitates effective strategic planning and better decision making."
"Simple and applicable in any context" SWOT analysis provides such information, so its results can be used to create a strategy that takes into account internal advantages and external opportunities and focuses on correcting (internal) shortcomings and eliminating (external) risks. Moreover, despite the fact that "originally SWOT was designed for business needs", "it can be used for the healing and development of the community as a whole, and even for personal needs."
3. S.W.O.T. Detailed analysis of the components
Having determined the subject of analysis, you can begin to analyze all the components. SWOT consists of four components - Strengths, Weaknesses, Opportunities and Threats. All of them are divided into two categories - external and internal. The internal components include Advantages and Disadvantages, while the external components include Opportunities and Risks.
| Internal | External | ||
| Benefits | Weaknesses | Opportunities | Risks |
Advantages (Strengths) (Strengths)
Once you've identified your primary research question (eg, "Should I add product X to my new line?"), try to articulate the benefits. Any organization must be stable and reliable. Charlie Ioannue defines advantages as "resources and manufacturing capabilities that can be used to gain competitive advantage" (Ioannue, SWOT Analysis - An Easy to Understand Guide, 47-49).
This definition makes you think about the most important aspect of Benefits evaluation, which is how you compare yourself to your competitors. In other words, highlight the unique qualities of your company (eg long lifespan, proven brand, low operating costs, high quality service, strong online presence, etc.) These will be your Benefits.
Weaknesses (Weaknesses)
After that, it is necessary to identify the existing shortcomings. Be honest with yourself. On the one hand, disadvantages are the absence of advantages. Thus, if some aspect of your business is not considered an advantage, most likely it is a disadvantage. Cash flow, brand awareness, marketing budget, distribution system, age of the company - you can find weaknesses in all of this. The main goal is to turn disadvantages into strengths, but this requires an honest recognition that the organization needs improvement.
Having considered the internal components (Advantages and Disadvantages), let's move on to the external ones (Opportunities and Risks). Opportunities and Risks interact with each other in the same way as Advantages and Disadvantages. They have similar (external) dynamics that allow them to be evaluated.
Opportunities
Opportunities are prospects for growth, greater profits and market share. Again, the evaluation is made in comparison with competitors. What capabilities differentiate your company from competitors? What opportunities would allow you to offer the same products or services, but at a higher quality or at a lower price? What customer needs are you still not meeting?
Technology is an external factor that always provides new opportunities and, as discussed below, creates new risks. What technological innovations could reduce the cost of goods or services, speed up production or distribution, or improve the customer experience?
Remember that opportunities always involve action. If you don't act, your competitors will.
Risks
Finally, determine in what aspects of the activity you are at risk. Are competitors developing similar products? Are they poaching your best employees? Such actions threaten your business.
Harvard Business Reviews defines Risks as "Possible events over which you have no control, and if they occur, you must have a mitigation plan."
Are you familiar with the latest legislative changes? Has a new law come out recently that increases your costs? What about taxes? All of these may be considered Risks.
Finally, technological innovations that provide new opportunities may create additional risks.
For example, you may be sued for insurance liabilities or demanded that the company be banned by law.
4. Actions based on the results of the SWOT analysis
The choice of an action plan based on the results of the analysis is a complex process that must take into account the specifics of the company. However, there are general notions about which approach to take. Here he is:
- Enjoy the Benefits
- Eliminate Flaws
- Identify Risks
- Invest in Opportunities
In addition, it must be remembered that the main purpose of the SWOT analysis is to assess the current state of affairs. As researchers from the University of Kansas write, it is necessary to look for new boundaries, not justifications. SWOT is often misused to justify existing practices. If you are doing an analysis to find areas for development, you need to clearly identify all the shortcomings.
5. Examples of SWOT analysis for companies from different industries
tech startup
- Leadership, Management, Company management
The business environment is often associated by unprepared people with a meat grinder - yesterday the company existed and seemed to be even in good health, but today competitors have already wiped it off the face of the earth. Decisions in the field of entrepreneurship must sometimes be taken at lightning speed, but this is impossible without a clear understanding of the real state of affairs - a manager must know everything about his business, like a parent about an unintelligent child.
Difficult, agree? But there is a way out - conducting a SWOT analysis, which allows you to identify the strengths and weaknesses of the company, assess development prospects and potential threats. Let's discuss what a SWOT analysis is and how to do it. Of course, one cannot do without an example, so let's confirm the theory with practice by considering a specific enterprise.
What is SWOT analysis?
Most entrepreneurs are faced with a situation where they need to do something to develop their business - reduce the price of goods, take a big loan, start releasing new products ... There are a lot of options. But is it possible to make an important decision if the leader simply does not have information about what is happening under his nose? It is logical that it is not, because, for example, strong dumping will easily bring about the collapse of a company if it does not have a financial cushion or the opportunity to increase profits by increasing sales. In such cases, a SWOT analysis is indispensable. To understand its essence, let us turn to the definition.
SWOT-analysis is an economic term based on the English abbreviation:
- S- strengths - the strengths of the company, allowing it to compare favorably with competitors;
- W– weaknesses - weaknesses, some pitfalls and peculiar “holes” into which a business can fail under unfavorable circumstances;
- O- opportunities - opportunities and prospects, the bet on which is likely to play;
- T- threats - threats and risks that can affect the organization in the most negative way.
Important: the environment that reigns inside the company is reflected in the letters S and W, and the external environment - in O and T.
For the first time, the abbreviation was uttered in 1963 at a Harvard conference covering current business problems - Professor Kenneth Andrews suggested using SWOT analysis as a possible way out of trouble. The idea was accepted extremely favorably, and after a couple of years the methodology began to be used to develop an effective and competent behavioral strategy for the company.
SWOT analysis allows the management of the organization to get answers to the following important questions:
- Does the firm's strategy focus on existing strengths and competitive advantages? If the latter are not yet available, who can get them?
- How do weaknesses affect the business, are they really vulnerabilities that do not allow full use of favorable situations? What "holes" need to be urgently patched up in order to increase the efficiency of operations?
- Thanks to what opportunities does the enterprise have a chance to succeed if all available resources are used?
- Are there hypothetical risks that you can insure against in advance? Where to lay the straw to avoid the collapse of the company due to an unfavorable situation?
Important: it seems to some that conducting a SWOT analysis is fraught with many difficulties, and in general it is laborious and boring, which is much easier to just calm down if it suits you. But the results of SWOT provide an opportunity to look at the business with a fresh and uncomplicated look, get rid of the anchors that pull to the bottom, catch a fair wind and move forward.
How is a SWOT analysis of an enterprise carried out?
Any marketing analysis begins with a simple one - it is necessary to study the market sphere in which the enterprise operates in a comprehensive and as detailed as possible. SWOT, like , is needed to identify and structure the strengths and weaknesses of the company; Potential risks and opportunities are also not ignored. Many are interested - when should a SWOT analysis be carried out? There is simply no single answer to this question, since everything depends on the desires of the leadership.
Of course, one must understand that planning and new strategic ideas will never be superfluous. SWOT results allow you to take into account the changes that constantly occur in the business environment and develop options for proactive response. Beginners can apply the methodology to draw up a company development plan. There is no universal recipe suitable for all organizations, since initially the “ingredients” and conditions are different for everyone, and the SWOT analysis is precisely aimed at determining the features and distinctive features of each particular business. Consider step by step the process of conducting a SWOT analysis.
Definition of participants in the SWOT analysis
It is logical that the organization decides this on its own, however, there are recommendations from the gurus of the economy - experts advise involving almost the entire team of the enterprise in the SWOT analysis process. Why? Lots of answers:
- Firstly, brainstorming has not been canceled - sometimes even a cleaning lady can express an interesting idea.
- Secondly, such an event is a great opportunity to rally employees, since a common problem always contributes to the establishment of not only working, but also friendly contacts.
- Third When people understand that they can influence the development strategy of an enterprise, and also see the results of their work, their motivation increases significantly, which means that the outcome of the discussion is likely to bring real, not imaginary results.
Choosing the form of conducting a SWOT analysis
Written, oral, whatever. For example, for SWOT analysis, the following options are possible:
- Table– participants of the event fill in a table consisting of four areas (strengths and weaknesses, opportunities and threats);
- mind map- refers to the most creative way, which allows you to present the situation more clearly and non-standard (drawn individually or collectively);
- Questionnaire Each member of the SWOT analysis team answers a series of questions.
Most often, the best result is achieved through a combination of a written survey followed by a group discussion of its results.
Advice: when planning the format of the SWOT analysis, pay attention to the brainstorming method, as it can be used to determine as accurately as possible the aspects that need to be researched. It should be borne in mind that the most significant points in SWOT are indicated at the top - the higher the priority of the factor, the higher it is in the final list.
Identification of the strengths of the enterprise
Strengths in the SWOT analysis are understood as internal positive factors that contribute to the development of the company. To determine them, it is necessary to get answers to some questions. Of course, for each organization they can be different. For example:
- What is currently great about your company? For example, low cost of production, high, excellent organization of advertising campaigns, etc.
- What internal resources do you have? Perhaps you have highly qualified specialists, a good business reputation, many years of experience, a friendly team, etc.
- What tangible and intangible assets do you have available? Here we are talking about capital, equipment, customer base, patents, innovative technologies, established distribution channels and the like.
- What sets you apart from your competitors? What is your strength compared to them? Maybe you have a prepared springboard for new research or more modern technology.
Everyone has long been accustomed to an interesting property of the human psyche - when you observe something or someone every day non-stop, you begin to perceive the object as ordinary, not paying attention to the merits and strengths. Like it should be. But there is a mistake here - any company is individual and original, which means that it has something positive that can help in developing a new effective strategy.
Identification of the weaknesses of the enterprise
Weaknesses in SWOT are internal negative factors that can hypothetically reduce the demand for the goods offered by the enterprise, or its value as a whole. It is logical that weaknesses must be constantly worked on, trying to level them or remove them completely.
For a clear understanding of what needs to be improved, according to the SWOT analysis, it is important to understand the following points:
- What areas of the company's activities are not effective enough, although they are under your full control? For example, staff turnover due to dissatisfaction with personnel policy, lack of a company development plan, etc.
- What should be improved? Here the scope for imagination is huge - the range of products is too narrow or prices differ significantly from competitors for the worse.
- What is the company missing? For example, high-level specialists, technology, experience, distribution channels, etc.
- What factors are holding back a business? Maybe outdated equipment does not make it possible to keep up with the times or the qualifications of the staff are not high enough.
- Is the business in a good location? Here we mean the country and the city, because sometimes it is the location that determines the success of a business. No wonder there is a saying about how important it is to be at the right time in the right place.
Enterprise Opportunity Research
Opportunities in SWOT analysis include external factors of the micro- and macro environment, which cannot be influenced, but they can contribute to the effective development of a business if you behave correctly:
- What market opportunities are not currently being exploited by your organization? For example, competitors have long mastered the sale of similar products through online stores, and you continue to trade only in classic ones, losing a significant part of hypothetical buyers.
- Are there any developments currently happening in the world (or market) that you can use to your advantage? It's about catching the wave in time. For example, the World Cup held in Russia has led to the fact that the popularity of this sport has increased unthinkably - everyone wants to run with the ball and wear the appropriate uniform, so sportswear and paraphernalia companies can really quickly turn around. Those who make ceramics can make mugs with World Cup symbols or just soccer balls. Options (as well as our fans) - the sea, if you dream up.
- What legislative innovations and political trends are favorable for your enterprise? Perhaps, recently another masterpiece has come out from under the pen of the rulers of the law, changing the reality for business. It is interesting to note that opportunities and threats are very closely related: the same thing for different companies can turn out to be both death and a truck with free candy that unexpectedly turned over on the street. This brings to mind how more than a decade ago, legislation banned casinos. For the latter, it is a complete and absolute collapse of a profitable business, but for many others, this is an unprecedented opportunity to organize a business based on human excitement, since a huge number of consumers are left with nothing. People don't change. Just at this time, bar games, quests and the like came into fashion.
Analysis of potential threats to the enterprise
Risks and threats in SWOT analysis are environmental factors that are in no way dependent on your company. A human life can be cut short due to a banal accident - an icicle will fall on the head, and that's it. With business, the situation is similar - something happens, and you do not have the resources to influence it. Or does it just seem so? Still, you should not become fatalists, because even they look around when they cross the road. The bottom line is that it’s really not to walk under the roofs, knowing about the danger of snow melting. That is, organizations must analyze possible threats and prepare airbags for different cases. To begin with, calculate to understand how independent the company is from creditors. Of course, you can’t lay a straw everywhere, but you can foresee some situations - and forewarned means armed. How to prepare and what to look for? Answering the following questions will help:
- How will the emergence of new competitors affect your business? It is logical that if you are lagging behind and lagging behind, your entry into the market of a new similar company may no longer survive, so you urgently need to stabilize your own position.
- Could the value of your products increase in the near future? What will happen to the organization? Of course, no one forces you to guess on the coffee grounds, and sometimes you won’t find out such information otherwise, but it often happens otherwise: the company’s management clearly knows that prices will rise for a number of objective reasons (the growth of the dollar, an increase in the price of materials, an increase in tax rates and etc.).
- How will progress affect your business? Technological upheavals have long been a part of our life, which cannot be forgotten, because sometimes entire industries are wiped off the face of the earth (and who needs a cassette player or a disk drive now?), but new ones are also being created. Entrepreneurs must monitor technological progress and adjust, and sometimes completely repurpose their activities so as not to become outsiders offering unnecessary goods to anyone.
- The adoption of what laws can negatively affect the enterprise? Imagine that due to sanctions, for example, the import of feijoa is banned, and your company specializes in the production of tinctures from this fruit. Everything, finita la comedy, there is nothing to do. But if we assume such a situation in advance, no one bothers to think about growing fruits on their territory or about a possible substitute.
SWOT analysis on the example of an enterprise
A theory that is not confirmed by practice, as a rule, is of less value, so we will give an example of a SWOT analysis of a particular organization. We will discuss two options - in the first we will analyze the existing business, and in the second - the idea.
Example #1 - McDonald's
As an object, consider the well-known McDonald's, and present the result in tabular form:
| SWOT analysis | |
|
strengths (S)
|
Weak sides (W)
|
|
Possibilities (O)
|
Threats (T)
|
Example #2 - Confectionery
Let's suppose that an entrepreneur with a big sweet tooth has an idea to start a business - a small confectionery specializing in the manufacture and sale of chocolate, cakes and handmade pastries. Let's evaluate the project using SWOT analysis:
| SWOT analysis | |
|
strengths (S)
|
Weak sides (W)
|
|
Possibilities (O)
|
Threats (T)
|
Important: of course, not all factors are listed above, but it is quite possible to understand the essence of conducting a SWOT analysis. If you are just planning to create a business, then it is best to first turn to the setting methodology, and only then do a SWOT analysis.
How to use the results of the SWOT analysis?
Of course, each leader decides independently how the results of the SWOT analysis will influence the further development of the organization. However, the convenience of the method lies precisely in the fact that it is the formulation of the company's hypothetical problems that actually determines the front for work, because gaps and weaknesses can be corrected in the enterprise strategy if you know about their existence.
Here, as with a disease - when it is known, a cure is often not difficult to find. But we must not forget about prevention, that is, about actions aimed at smoothing threats and reducing risks. The essence of the SWOT analysis is as follows - interference and weaknesses should not be taken as a sentence or a stone hanging around the neck forever. These are tasks that need and often can actually be solved. Of course, there are situations when nothing can be done - objective reality does not allow, then it is necessary to change the idea and create a new organization.
Summing up
SWOT analysis is widely used today to evaluate business, management decisions, ideas, and sometimes hypothetical employees. The technique is simple and effective, since it is aimed at a holistic perception of the object of study - strengths and weaknesses, as well as opportunities and risks, are identified.
When conducting a SWOT analysis of a company, it is important not to lose objectivity - it is clear that a beloved brainchild is being dismantled, the shortcomings of which prick the eye, but otherwise it is sometimes impossible to develop a new effective strategy for the development of an enterprise.
We present a simple and convenient methodology for conducting SWOT analysis with ready-made examples for a manufacturing and trading enterprise, as well as with a template in Excel format.
The SWOT analysis method described in the article is universal and suitable for a company of any profile: an industrial company, a non-profit organization, a retail store or a separate department.
After reading the article, you will definitely be able to make a SWOT analysis for your product or an entire enterprise from scratch, even if you are conducting it for the first time.
Definition: SWOT analysis (from English SWOT Analysis) is a type of situational analysis that allows you to assess the current and future competitiveness of a company's product in the market by analyzing the internal and external environment of the organization.
Essence and main elements of SWOT analysis
Briefly about the method of swot analysis, we can say the following:
- SWOT analysis technology is widely used in strategic management and management, as it is both a simple and high-quality tool for a company on the market.
- A feature of the method is that since the 1980s, SWOT analysis has been actively used to develop strategic decisions and has not lost its relevance for the entire time of its existence in the tools of managers.
- Why is a SWOT analysis needed? The purpose of the method is to study the current position of the company in the market and the correct structuring of information for the development of the enterprise.
- SWOT decoding: S= Strengths, strengths of the product; W=Weaknesses, product weaknesses; O=Opportunities, company opportunities; T=Threats, company threats.
You can read more about the theoretical foundations of SWOT analysis of a product in the article:.
How to prepare for a SWOT analysis?
Remember that the method of swot analysis is only a convenient tool for systematizing the available information. Therefore, an effective SWOT analysis should start with two steps:
- Spend on which the company operates, pay close attention to consumer research and the definition of key characteristics. More than 70% of the conclusions of your analysis depend on who is yours, what quality criteria your consumer imposes on the product.
- Swipe and . The strengths and weaknesses of the product will depend on who your competitor is.
Step one: identify the strengths and weaknesses of the product
The first step in conducting a SWOT analysis is to identify the strengths and weaknesses of a product or service. To do this, make a comparative analysis of the internal resources of the company or product with key competitors:
- Those parameters that turned out to be better than those of competitors are the strengths of your product.
- Parameters that turned out to be worse than those of competitors are the weaknesses of your product
Table 1 Example of Strengths and Weaknesses Analysis 
Strengths (S = Strengths) - such internal characteristics of the company that provide a competitive advantage in the market or a more advantageous position in comparison with competitors.
Weaknesses (W = Weaknesses) or shortcomings of a product or service - such internal characteristics of the company that make it difficult for business growth, prevent the product from leading the market, are uncompetitive in the market.
- Prioritize the level of influence of factors on sales and profits of the company.
- Leave 6-8 key factors.
- The rest may come in handy in the future - take note of them.
Be sure to check out. The methodology contains more than 14 directions of various factors of the internal environment, which can become the strengths or weaknesses of the company.
Step Two: Identify Threats and Opportunities for Business Growth
The second step of the SWOT analysis is to identify opportunities and threats for business growth in the future. To do this, an analysis of external environmental factors is carried out, the level of influence of each factor on the company's sales, the probability of occurrence is assessed.
Opportunities of the company (O=Opportunities) - factors of the external environment that will allow the company to increase sales or increase profits.
Company Threats (T=Threats) are environmental factors that may reduce the company's sales or profits in the future.
Illustrative examples of conducting a SWOT analysis
Most of the concepts and tools used in strategic planning are difficult to use the first time without illustrative examples. For those who doubt the correctness of the SWOT analysis, we have prepared ready-made solutions:
- : includes a brief analysis of the key success factors and threats of the world's largest retail chain.
- : contains detailed recommendations for conducting a swot analysis in the trading industry.
- - this is the most complete and step-by-step example that will be more useful to manufacturing companies and organizations.
Quantitative method of SWOT analysis
In modern literature, a quantitative example of SWOT analysis is often found: a model in which it is necessary to evaluate the analyzed factors of the external and internal environment on a point scale.
The quantitative approach is undoubtedly effective, as it allows you to demonstrate the significance of factors, but is too time consuming.
It will be more efficient to evaluate each factor of the company's internal and external environment in terms of importance and priority expertly, without resorting to complex scoring quantitative assessments. The accuracy of this approach will be close to the quantitative method of assessment, since in both cases you yourself, and therefore expertly evaluate each factor of the SWOT matrix.
If after compiling the SWOT analysis you still have a free minute, we suggest that you familiarize yourself with
Detailed video course
Four detailed video lectures on the SWOT analysis methodology are concise and fully structured information on: how to do a SWOT analysis from scratch, how to find the strengths and weaknesses of a company's product, identify business opportunities and threats, how to write the right SWOT conclusions analyze and effectively present the results of the work done.
Part one: SWOT analysis, determination of the strengths and weaknesses of the product
Fully.
Ready samples, templates and cases
A ready-made template - a sample of compiling a SWOT analysis from scratch in Excel, as well as an example of presenting the results of a SWOT analysis in PowerPoint format, you can download in the section.
SWOT-analysis
SWOT- a method of analysis in strategic planning, which consists in dividing factors and phenomena into four categories: s trends (strengths), w eaknesses (weaknesses), o pportunities (opportunities) and t hreats (threats).
SWOT - analysis can be presented in the form of a table:
SWOT was first introduced in 1963 at the Harvard Business Policy Conference by Professor Kenneth Andrews. Kenneth Andrews). Initially, SWOT analysis was based on voicing and structuring knowledge about the current situation and trends. Since SWOT analysis does not generally contain economic categories, it can be applied to any organizations, individuals and countries to build strategies in a wide variety of areas of activity.
The methodology for conducting a SWOT analysis is very simple, and the analysis itself consists of two parts. Opportunities and threats are an analysis of the external environment, all factors that may affect the company, but do not depend on it. Strengths and weaknesses are internal analysis of the company/product. According to Professor Philip Kotler, a good manager, when compiling a SWOT analysis, should indicate at least 5 global external threats and opportunities that can both develop and destroy a business. Opportunities like this are always there, it's important to find them.
Usually, a SWOT analysis begins with identifying strengths and weaknesses. It is important to consider here that when determining them, one should be guided by the opinion of consumers, and not employees of the company. Customers are the ones who know your strengths and weaknesses best. Here is a list of factors that are often found in the analysis of the strengths and weaknesses of the factors:
1) Company reputation
2) Product quality
3) Service quality
4) Market share
6) Logistics
7) Promotion efficiency
8) The quality of the work of sales agents
9) Geographic coverage
10) Innovation
11) Costs
12) Fin. Sustainability
13) Workers
14) Technical equipment
15) Ability to meet deadlines
16) Flexibility, quick response to events
17) Assortment
19) Resources
20) Knowledge of buyers
It is important that the data be real facts, not someone else's guesses. In addition, it is very bad when the responsibility for creating a SWOT analysis lies with one person. It turns out a little one-sided vision.
Opportunities and threats. These are all elements of the external environment that do not depend on the company in any way. When analyzing them, it is important to understand that the data must be clear, verified. Otherwise, the whole analysis may lose its meaning. External opportunities and threats include:
1) The economic situation in the country and the world
2) Demographic situation
3) Political
4) Social movements
5) Technical progress
6) Analysis of competitors
7) Legislation
8) Cultural factors
9) Social issues
A SWOT analysis is usually presented in the form of a table. After it is carried out, it is necessary to develop a plan to eliminate weaknesses, and the company's actions in case of threats. Consideration should also be given to how opportunities and strengths can be used most effectively.
In practice, several different forms of SWOT analysis:
1) Express SWOT analysis- the most common (because of ease of conduct) type of qualitative analysis, which allows us to determine which strengths of our organization will help to deal with threats and use the opportunities of the external environment, and which of our weaknesses will prevent us from doing this. Some business schools like to show this type of analysis, because the scheme for conducting it has an undeniable advantage: it is very clear and simple. However, in practice, this technique has disadvantages: only the most obvious factors fall into the points of all cells of the table, and even in this case, some of these factors disappear in the cross matrix, since they cannot be used.
2) Summary SWOT Analysis, which should present the main indicators that characterize the activities of the company at the current moment and outline the prospects for future development. Therefore, it should be done not "BEFORE" and not "INSTEAD", but only AFTER all other types of strategic analysis. The advantage of this form of analysis is that it allows, in some approximation, to quantify the factors that have been identified (even in cases where the company does not have objective information about these factors). Another advantage is the ability (based on all types of strategic analysis) to immediately proceed to strategy development and develop a set of measures necessary to achieve strategic goals. The obvious disadvantage is a more complicated procedure for conducting an analysis (during strategic sessions in which the top management of the company participates, it can take 1-2 days, depending on the depth of elaboration of factors).
3. Mixed SWOT analysis is an attempt to combine the first and second forms of analysis. To do this, at least the main three types of strategic analysis are preliminarily carried out (usually these are STEP-analysis, analysis according to Porter's "5 forces" model and analysis of the internal environment using one of the methods). Then all the factors are combined into single tables, from which a cross matrix is formed (as in the express form). Factors are usually not quantified. The advantage of this form is the depth of analysis. The disadvantage is the psychological factor: in practice, very often the case ends with the construction of a beautiful matrix and complacency (“well, now we know what to expect and what to fear, so we don’t need anything else”), or forgetting all the factors included in a large SWOT table: only those factors that are included in the matrix remain in front of your eyes and in memory.
Anti-SWOTanalysis
There is also the “Anti-SWOT” method, which relies on SWOT, but its essence lies in the fact that an analysis is made of the consequences of not fulfilling the intended statements indicated in strengths, weaknesses, opportunities and threats.
Quadrant "strengths - opportunities":
-How not to realize the strengths, if there are opportunities?
-How high expectations about the realization of opportunities will not allow you to use your strengths?
Quadrant "strengths - threats":
-How and when (under what circumstances) will strengths not allow leveling the threat?
-How will increasing threats reduce the strong side?
Quadrant "weaknesses - opportunities":
- How and under what conditions, the change of weaknesses will not allow to take advantage of opportunities?
- How and under what conditions will opportunities not allow leveling weaknesses?
Quadrant "weaknesses - threats":
How and under what conditions will threats strengthen weaknesses?
It is assumed that carrying out an anti-SWOT allows you to form a plan for crisis measures that may arise during the implementation of the strategy.
MatrixSPACE-analysis
The main method of such assessments is the matrix of strategic position and assessment of actions (SPACE).
The SPACE method consists in the fact that four groups of factors are evaluated for the enterprise. Each factor is evaluated by experts on a scale from 0 to 6.
Environment stability factors (ES)
Technological changes (little - many)
Inflation rate (low - high)
Demand volatility (small - large)
Price range of competing products (small - large)
Market access barriers (few - many)
Competitive pressure (weak - strong)
Price elasticity of demand (inflexible - flexible)
Industrial Potential Factors (IS)
Growth potential (small - large)
Profit potential (small - large)
Financial stability (low - high)
Technology level (easy - hard)
Degree of resource use (inefficient - effective)
Capital intensity (large - small)
Ease of access to the market (easy - difficult)
Productivity, utilization of production capacities (low - high)
Factors of Competitive Advantage (CA)
Market share (large - small)
Product quality (high - low)
Product life cycle (initial - final)
Product replacement cycle (fixed - replaceable)
Customer loyalty (strong - weak)
Capacity utilization by competitors (strong - weak)
Vertical integration (high - low)
Financial Strength Factors (FS)
Return on investment (low - high)
Financial dependency (unbalanced - balanced)
Liquidity (unbalanced - balanced)
Required / available capital (large - small)
Funds flow (weak - strong)
Ease of leaving the market (small - large)
Enterprise risk (big - small)
After evaluating the value of each factor, it is necessary to calculate the average value of the factors within each of the groups, and then plot the obtained values on the coordinate axes. The result is a quadrilateral of one of the types shown in Fig. below.
If the side in the FS-IS quadrant is the farthest from the center of coordinates, then the company is in an aggressive strategic state. If the party in the IS-ES quadrant is as far away as possible, then the company is in a competitive strategic state. If the side in the CA-FS quadrant is as far away as possible, then the company is in a conservative strategic state. If the side in the CA-ES quadrant is as far away as possible, then the company is in a defensive strategic state.
SWOTAndSPACE- analyzes on the example of enterprises.
In the beginning, let's consider a practical example of SWOT analysis for the company OOO "Donut"
The company sells Russian equipment and bakes rye bread (the owner's hobby). The owner established the company 10 years ago and has established good working relationships with all major buyers.
|
Strengths of the Company |
Opportunities of the Company in the external environment |
- Well-known brandQualified Service Center Dealer agreements with well-known factories Market structure of the sales department The HR manager found a Sales Director six months ago, who increased sales by 60% in 6 months. Availability of own site and service center 3 months ago, the Marketing Department was created, headed by a strong marketer, the Marketing Information System is working This month, the Department for Prospective Development was organized, headed by an experienced leader. The head of the department was involved in the creation of 7 new businesses. |
Improved service and reduced service time Possibility of narrow specialization Development of corporate clients and new consumer industries Integration with manufacturers Tight integration with factories and getting big discounts Increasing profitability, controlling costs Creation of a new equipment rental business Implementation of CRM |
|
Weaknesses of the Company |
Threats of the external environment for business |
|
Quality problems (below average quality) Lack of working capital for purchases, weak CFO? At the beginning of the month, the owner fired the General Director, the deputy director temporarily appointed to this post is weak Last year drastic changes: high staff turnover (20% over the past six months) Weekly conflicts (arrows) between the Head of Purchasing (old) and Sales Director (new) |
Instability of the dollar exchange rate (purchase prices are pegged to $ and sold in rubles) (forecast of the dollar exchange rate) Supplier policy changes |
ApplicationSPASE-analysis for the choice of strategies in JSC "Yartelecom"
Using SPASE-analysis, it can be concluded that the most appropriate strategy is a strategy - a conservative position.
Factors that determine the competitive advantage of a firm
Factors that determine the financial position of firms
Average value 2.44
Factorsdetermining the stability of the environment
Average value - 2.43
Factors that determine the attractiveness of the industry
Average value 4.63
Conclusion The firm takes a conservative stance.
This position is typical for stable, slowly growing markets.
The critical factor is product competitiveness.
Recommended strategies 1) range reduction; 2) cost reduction; 3) focus on managing the flow of payments; 4) additional protective competitive products; 5) development of new products; 6) an attempt to penetrate more attractive markets.
Firm Behavior: This is the behavior of the analyst. The policy of firms is based on a careful analysis of the opportunities available on the market and their careful use.
Strategy development begins with an analysis of the external and internal environment. The starting point for such an analysis is the SWOT analysis, one of the most common types of analysis in strategic management. SWOT analysis allows you to identify and structure the strengths and weaknesses of the company, as well as potential opportunities and threats. This is achieved by comparing the internal strengths and weaknesses of their company with the opportunities that the market gives them. Based on the quality of compliance, it is concluded in which direction the organization should develop its business, and ultimately the allocation of resources to segments is determined.
The purpose of the SWOT analysis is to formulate the main directions for the development of the enterprise through the systematization of the available information about the strengths and weaknesses of the company, as well as potential opportunities and threats.
Tasks of SWOT-analysis:
Identify strengths and weaknesses compared to competitors
Identify opportunities and threats in the external environment
Associate strengths and weaknesses with opportunities and threats
Formulate the main directions of enterprise development
SWOT Analysis Basics
SWOT is an abbreviation of 4 words:
S trength - strength: an internal characteristic of the company that distinguishes this company from competitors.
W eakness - weakness: an internal characteristic of the company, which in relation to a competitor looks weak (undeveloped), and which the company has the power to improve.
O pportunity - opportunity: a characteristic of the company's external environment (ie the market), which provides all participants in this market with the opportunity to expand their business.
T hreat - threat: a characteristic of the external environment of the company (ie the market), which reduces the attractiveness of the market for all participants.
SWOT analysis in general form is built using the following table.
Table 1. General form of SWOT analysis
Elements of the internal environment: strengths and weaknesses
Under the strengths and weaknesses can hide a wide variety of aspects of the company. The categories most frequently included in the analysis are listed below. Each SWOT is unique and may include one or two of them, or even all at once. Each element, depending on the perception of buyers, can be either a strength or a weakness.
Pricing
Promotion
Marketing Information/Intelligence
Service/staff
Distribution/Distributors
Trademarks and positioning
Manufacturing/engineering
Sales and Marketing
Processing orders/transactions
Research and development
Distributors
Marketing
After-sales service/service
Service/customer service
Marketing
Engineering and new product development. The closer the connection between marketing and technical department becomes, the more important these elements will be. For example, a strong relationship between the new product development team and the marketing department allows direct use of customer feedback in the design of new products.
Operational activities
Staff. This includes skills, wages and bonuses, training and development, motivation, working conditions of people, staff turnover. All of these elements are central to the successful implementation of a customer-focused marketing philosophy and marketing strategy. The role of personnel in the following areas is being investigated.
Management. Sensitive and often controversial, but sometimes requiring changes, management structures directly determine the success of the implementation of a marketing strategy. Such aspects should be reflected in the analysis.
Company resources. Resources determine the availability of people and finance, and thus affect the company's ability to capitalize on specific opportunities.
