SWOT Analysis

SWOT analysis is a popular and simple mechanism utilized to understand the competitive position of a given business or organization. It is often used as a tool to aid in strategic planning along other tools such as market analysis and environmental analysis. The tool can also be utilized in personal development scenarios.
SWOT helps decision maker by providing an overlook of the strengths and weaknesses of an organization in a given target market or an industry.

Components of SWOT analysis

SWOT is formed of four main components to be analyzed:

• Strengths
  

  Strengths are attributes that provide a positive impact for the business.
  The following questions can help identify strength points:

  • What are already doing right- your competitive advantage?
  • What assets and resources are helping you currently do what you do?
  • Any abundant financial or technical resources available?
  • What skills does your team bring to the game?

• Weaknesses
  

  Weaknesses are attributes that provide a negative impact for the business.
  The following questions can help identify weakness points:

  • What is the edge that competitors have over you- the things that you need to become more competitive?
  • What assets or resources are you missing?
  • What skills does your team need development in?
  • Do you have silos or redundant procedures?
  • Gaps in strategy or business model?

• Opportunities
  

  Opportunities are attributes that provide a potential area for improvement for the business.
  The following questions can help identify opportunities:

  • Human, Technical, or financial resources that exist but are not utilized?
  • Activities that can help improve the business?
  • Is the market growing and demanding more similar products and services similar to what you offer?
  • Established brand and community around your brand?
  • Any potential partnership opportunities to help improve the business?

• Threats
  

  Threats are attributes that pose a potential threat or danger area for the business.
  The following questions can help identify threats:

  • Any financial threats that may take place in the near future?
  • Any emerging competitors who are entering the market?
  • Any missed partnerships that may have evolved into competitors?
  • Is the market shrinking?

Scope of SWOT analysis

SWOT analysis can be done for both the internal and external environments of the business. Internal factors focus on the internal business processes (what's going well, what's not going well, existing product placements).
For the external factors, we can consider shifting market powers and changes in legislation as well as other elements that impact all those working in an industry.

Furthermore, SWOT can differ by what you can control. Usually, the Strengths and Weaknesses are elements that lay within your control, while Opportunities and Threats are outside of control.
What this means is that elements under your control can be directly changed or improved as necessary, but elements not under your control need mitigation strategies to adapt.

How to do SWOT analysis?

Aiming to do SWOT analysis correctly, a series of steps should be taken to ensure maximum benefit. These include:

1. Identifying and engaging stakeholders
   In order to develop SWOT analysis correctly, a group of individuals representing management, beneficiaries/customers, and other stakeholders should be formed to get their perspectives and views. This ensures that collected data reflect different points of view and contains a more holistic result.
2. Brainstorming
   Getting the group you want to work with is necessary in order to initiate a brain storming session where each is given the opportunity to say what they thing each of the strengths, weaknesses, opportunities, and threats are. Quality of the input is not very important at this stage as we need as much opinions and suggestions as possible, so we seek quantity.
3. Drilling down
   Once we have noted many thoughts and opinions on what SWOT entails for the business, it is time to identify quality ones to follow through. This stage is focused on quality rather than quantity so that we may select the ones that are most relevant to the business and the context.
4. Drafting the SWOT analysis and getting feedback
   At this stage we should have a draft of SWOT elements noted down as shown in the example below. Here, we want to get feedback from the group on what to add/remove to make sure that we have reached a final draft.
5. Extracting goals from the SWOT analysis
   SWOT analysis is only meaningful if it can provide us with actionable goals to work on, so we need to extract those goals from the SWOT table. To do that, follow this simple approach:
   • Maintaining every strength is considered a goal
   • Dealing with every weakness is considered a goal
   • Utilizing every opportunity is considered a goal
   • Avoiding/ minimizing every threat is considered a goal
6. Prioritize and merge
   We should by now have a long list of goals at hand, so we need to prioritize them according to their urgency, impact on the business, and ease of achievability. Also, similar goals should be joined together here.
7. Turn to SMART goals
   We should now finalize the process by transforming our goals into SMART Goals. We have a great guide on how to do that here.

Example on SWOT analysis

Let's take a quick example on SamaShop, a high-street generic grocery store. The store's management has collected stakeholders for data collection and brain storming (steps 1-4) and this is the result:

Next, we extract goals from the SWOT table. To do that, we collect all the points under each of the SWOT elements, and transform them into goals as follows:

Next we merge and prioritize goals. For instance, facing potential competition is more important than exchanging plastic bags. The ordered list for SamaShop could look like this:

1. Empower competitive advantage against potential competition.
2. Improve offerings and variety of products and produce, and keep prices low.
3. Offering a parking and Expanding shop space.
4. Marketing to community close by and Highlight friendly staff and good service.
5. Replacing stacks of plastic bags with Eco-friendly paper bags and reusable bags.

Finally, we take each of our goals and study it deeply. These goals are not SMART so we need to transform them to SMART goals. Learn more on developing SMART goals with examples here.