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FEATURE
Time to SWOT up?
When the going gets tough, going after new opportunities can save your business. Problem is, when you’re under pressure, it can be difficult to know where fresh opportunities lie.
That’s when carrying out a SWOT analysis of your business can really help, with the added advantage that you can also identify things that pose an existential threat to your business.
What is a SWOT analysis?
SWOT is an acronym of: strengths, weaknesses, opportunities and threats. Carrying out a SWOT analysis to identify your strengths can reveal opportunities they create for your business. Identifying your weaknesses can reveal potential threats, so you can better protect your business. Strengths and weaknesses vary from business to business, of course.
What are your strengths?
Strengths refer to internal attributes or resources that provide a competitive advantage to your business. These can include factors such as strong brand reputation, skilled workforce, unique products or services, efficient processes and a loyal customer base.
Unlike opportunities, strengths are inherent to a business and are within its control to leverage. However, there is a connection between the two, as strengths not only represent current advantages but also serve as foundations for future opportunities. For example, a strong brand reputation can lead to increased customer loyalty and market differentiation, presenting opportunities for market expansion or new product development.
What are your weaknesses?
Weaknesses are internal factors that hinder business performance or its competitiveness. These may include elements such as limited resources, outdated technology, inadequate infrastructure, inexperienced staff or poor financial management.
Just like strengths, weaknesses are inherent to a business and require internal action for improvement and again, they are closely linked to another phase of SWOT analysis: threats. Why? Because a business’s weaknesses can make it vulnerable to external threats. For example, a weak online presence may expose it to the threat of losing market share to competitors with robust digital platforms. It’s important to highlight and address internal deficiencies to reduce external risks.
What are your opportunites?
Now it’s time to look outside the business. Opportunities assess the external factors or trends that a business could potentially exploit to its advantage. Market growth, emerging trends, technological advancements, changes in consumer preferences, regulatory changes – there are opportunities aplenty, you just need to work out which ones best fit your business and its goals.
Opportunities can complement business strengths by acting as avenues for growth. For example, a company with strong research and development capabilities may capitalise on emerging technologies to launch innovative products, leveraging both its internal strengths and external opportunities to gain a competitive edge in the market.
What are your threats?
This final part is all about the external factors or challenges that could potentially harm business performance or its competitiveness. Intense competition, economic downturns, changes in consumer behaviour, technological disruptions, or regulatory changes can all qualify as a business ‘threat’.
Threats arise from external circumstances beyond your business’s control, but are closely tied with internal weaknesses as they can make your business more vulnerable to these threats. For example, if your company has a weak financial position it may be more susceptible to the threat of economic downturns or increased competition. Threats will shine a spotlight on the importance of addressing internal weaknesses in order to effectively reduce any risks to the business.
Step-by-step: How to produce a SWOT analysis
1. Identify your objective
Clarify the purpose and scope of your SWOT analysis. Determine what aspects of your business or situation you want to evaluate and what insights you aim to gain.
2. Gather information
Collect relevant data and information from internal and external sources. This may include financial reports, market research, customer feedback, competitor analysis and industry trends.
3. Identify strengths
Evaluate internal attributes that provide a competitive advantage. Consider factors such as brand reputation, unique products or services, talented workforce and efficient processes.
4. Identify weaknesses
Assess internal limitations or deficiencies that hinder performance. These might include outdated technology, poor financial management, lack of resources or ineffective marketing strategies.
5. Identify opportunities
Analyse external factors or trends that your business could benefit from e.g. market growth, emerging technologies, changes in consumer behaviour, and gaps in the market.
6. Identify threats
Intense competition, economic downturns, regulatory changes, technological disruptions… Get to grips with the biggest threats that are specific to your business offering and goals.
7. Priorities and analyse
Prioritise these identified strengths, weaknesses, opportunities and threats based on their significance and potential impact. Analyse the interrelationships between them and their implications for your business.
8. Develop strategies
Based on your analysis, develop strategies to capitalise on strengths, address weaknesses, exploit opportunities and reduce threats. Make sure to define actionable initiatives and allocate resources accordingly.
9. Review and update
Regularly review and update your SWOT analysis to reflect changes in your business environment, market dynamics and/or internal capabilities. Continuously monitor performance metrics and adjust your strategies.