One of the main pillars to raise and maintain your company is the strategy, and the first step to devise an adequate one is to know well the place where you are positioned. That is why the SWOT analysis is one of the basic tools to visualize where you are today and to set the challenges you will have to take on from now on. We want this article to serve as a guide for you to make your SWOT analysis and to propose successful strategies. Let’s get to it!
Entrepreneurship is a challenge, and being the leader of a business requires that you are very well prepared and have all the tools that allow you to scale to success. For this, there is a perfect methodology that will help you evaluate your chances in the market. It is known as SWOT, and in this article we will explain everything you need to know about it.
What is SWOT analysis?
SWOT is an acronym whose acronym represents the 4 aspects that we will evaluate within the company. They are: Weaknesses, Threats, Strengths and Opportunities.
The SWOT analysis helps us to glimpse the greatest advantages that our company has and alerts us to the dangers that can affect the correct performance of the business, thus minimizing the probability of failure.
In other words, through SWOT we can begin to design a strategy that will help us make better decisions and distinguish us from our competitors by bringing a value-added proposition to the market.
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Why do a SWOT analysis?
You can never think you know everything about your business. Carefully considering your possibilities can save you from making mistakes that may even be obvious.
In this sense, doing a SWOT analysis will help you to see your business from new angles, so you will understand what your strengths and weaknesses are and how you can take advantage of them to take advantage of the opportunities and threats in the market.
If you were looking for a way to stay one step ahead and anticipate all obstacles and occasions to grow your business, this is it.
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What does the SWOT matrix consist of?
First of all, we must bear in mind that the SWOT analysis of a company is divided into two parts, the external and the internal.
The internal part focuses on the company’s self-knowledge, and includes weaknesses and strengths.
The external part, on the other hand, focuses on the competition and the environment, and includes the threats and opportunities present.
When you start your analysis, you will have to draw up a matrix like the one shown in the image below.
As you can see, it is a 2×2 grid, with a square for each of the four aspects of SWOT. This could be done by hand, in a word document, PowerPoint presentation, or Excel spreadsheet like the one we leave you in this free template.
Once you have your box prepared, gather your team and representatives from the various levels of your organization and brainstorm a list of ideas about the current situation of the company.
And so, each time you come across a strength, a weakness, an opportunity or a threat, write it down in the corresponding part of the grid.
To clarify to which section an idea belongs, it can be useful to think of strengths and weaknesses as internal factors, i.e., related to the organization, its assets, processes and people.
On the other hand, think of opportunities and threats as external factors, arising from your market, your competition and the economy in general.
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How to do a SWOT analysis?
Knowing the weaknesses will let you know what the company is capable of and what it is not. You will be able to avoid taking risks that you will not be able to cover later, and by understanding the weak points, you will know in which areas you need to improve.
Remember, to solve a problem you must first identify it, so be very honest when analyzing this aspect.
3 questions to help you identify weaknesses:
What does the company need to be more competitive?
What business processes do you need to improve?
Is your location ideal for your success?
If you want to survive in the market, you must be able to anticipate threats, because only then will you be able to define how to avoid them or minimize their effects.
If you let your company be taken by surprise by a strong competition or crisis, there will be no way to react in a timely manner, and above all, you will not be able to act effectively because you never prepared your team for it.
4 questions to help you identify threats:
Do you have potential competitors that could enter your market?
Will suppliers always be able to supply you with the raw materials you need at the prices you need?
Can future technological advances change or affect the way you do business?
Is consumer behavior changing in a way that could negatively affect your business?
When we are clear about what we do best, and what is that special element that distinguishes us from the rest of the competition, we can more easily see the opportunities and identify our weaknesses.
The first thing a company or individual is supposed to ask themselves is what their strengths are, and once they have been identified, the ideal thing to do is to promote them.
3 questions to help you identify strengths:
What assets do your teams have? (i.e. knowledge, education, network, skills and reputation)?
What physical assets do you have (such as customers, equipment, technology, cash and patents)?
What competitive advantages do you have over your competitors?
Opportunities are a springboard for favorable situations to occur in your company, but to take advantage of them you have to know how to see them, and if it is before anyone else, the better.
The truth is, these are often found outside the organization itself. They may come, for example, in the form of market development or the use of a new technology.
Being able to spot and seize opportunities can make a big difference in your company’s ability to compete and take the lead in the marketplace.
Think of good opportunities that you can spot quickly, keep up to date with changes in government policy related to your field, variations in social patterns, population profiles and lifestyles.
Always try to be the first to take advantage of market trends in your favor and exploit every opportunity that comes your way. Remember, the earlier you ride the wave, the earlier you will reach the crest!
3 questions to help you identify opportunities:
What are the upcoming events that your company can leverage to grow business?
What is your customers’ opinion of your company? (if the company is already in operation)
What trends are there in the market that might encourage people to consume more of your products or services?
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Examples of SWOT analysis
If you need an example of what the SWOT analysis looks like once it has been carried out, here is a list of elements that could be appropriate for each aspect.
This would be the hypothetical SWOT analysis of an SME that has been in the market for some time.
Examples of weaknesses:
High prices for the standard population
Infrastructure of some premises in a state of neglect
Lack of experience in the sector
Low budget for marketing actions.
High production costs
Internal operational problems
Lack of suppliers and distributors
No customer loyalty plan
Poor quality customer service
Examples of threats:
Possible entry of new competitors
Low implementation of the business model in the sector
High number of substitute products
Global or national economic crisis
High administrative procedures for starting a business
Ease of entry of new competitors
High changes in consumer lifestyles
Increased costs on certain public platforms
Examples of strengths:
The company’s personnel has experience and training in the sector.
Excellent management skills
Larger number of locations compared to competitors
Previous experience with a product launch
24-hour customer service
Availability of sufficient financial resources
Breadth of product or service portfolio
Motivated and qualified personnel
Examples of opportunities:
Strategic collaborations with partner companies
Growth in Internet penetration in the sector
Improving corporate image through campaigns and social responsibility
Accessible foreign markets
New technological developments
Ready to develop strategies based on SWOT analysis?
The larger a company is and the faster it is growing, the harder it is to keep everything under control. The objective of SWOT is to bring the context of the company or potential business down to just one page, and guide it to action plans.
The direction you take will depend on where you want and can go. At TAS Consulting we believe that making a good plan now is better than a great plan later, so don’t wait to design one for yourself and test it with the help and guidance of our best business managers. And if you have any questions, contact us here.