What are the key considerations to performing a SWOT analysis?
Today we're going to walk through developing the best SWOT for your business! Remember, if you're new to SWOT check out our Introduction to SWOT Analysis before you read this. Show
SWOT analysis (alternatively SWOT matrix) is a structured planning method used to evaluate the strengths, weaknesses, opportunities and threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or person. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favourable and unfavourable to achieving that objective. The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies. SWOT has been described as "a convenient visual framework for summarising what is known about an issue and identifying where gaps exist in knowledge" - Fink). When you carry out a SWOT analysis, it's basically a reality check on your business to make sure it is on the right track. It's not a magic formula, but it can be a useful tool to help you find out where you are going, where you have been and how you might get where you want to go in the future. It can be incorporated into strategic planning to discover potential opportunities and may be used in marketing plans. What does SWOT Mean?SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Strengths: What are your company's strengths? These might include things like having a great location, great customer service or having industry expertise or knowledge. Weaknesses: what are the areas where your business could improve? This might include weaknesses in areas such as cash flow management or marketing and sales. Opportunities: What are the external factors that could provide your organization with a competitive advantage? This might include extending into new markets. Threats: What are the factors that could harm your organization? This may include rising material costs, increasing competition or restricted supply of labor. Almost every strategy development session uses SWOT analysis, much like salt in cookery. Used well it can enhance the rest of the strategy. Used badly it overpowers the rest of the process. A well-done SWOT looks at your internal and external factors and can be an insightful and simple snapshot of what to consider when you're developing your strategy. Consider the SW part of the SWOT to be internal, so these lists will be populated by looking at your resources, your products, your internal processes, etc. Conversely, the OT part is external, so consider the wider market, what competitors are up to, any major changes in society, technology, legislation, etc. 1 - Always Start With StrengthsBrainstorm your strengths as a business and ensure a complete and detailed list. Place as many as possible, because you’ll be refining these later. When conducting a successful SWOT analysis for your business planning, ensure you’ve taken into consideration all of the relevant factors including current and future business strategies. It can often help to think of your client journey, all the touchpoints, and your sales messaging during this stage. Example Generic Strength Areas:
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Once you’ve devised your strengths list it’s time to refine them. This involves removing duplicates, making sure you’re as specific as possible and ensuring that they are accurate. A good SWOT will have a decent list of strengths but it won’t be so many that it becomes overwhelming. Take a step back and evaluate each one, is it really a strength that gives you an edge or value, or is it just something that is a decent BAU positive? 2 - Focus On WeaknessesNow you have your Strengths complete, it’s time to focus on the weaknesses of the business. This is the mirror image to the Strengths and if you’ve been through the strengths process you should be able to quickly identify this list. As with the previous entry, look at resources, the capabilities for the business and employees, your overall offering to the market. Running the Weakness session often evokes people giving opinions rather than facts. This is helpful, as there may be information you can tease out of opinions, but it’s important to make sure you keep the SWOT unemotional and factual. It’s also important to be specific, so for example if someone was to say “organisational design” is a Weakness, you need to understand why they believe that. Organisation design itself isn’t a weakness but there may be behaviour the org is showing, such as speed to respond, that the individual is attributing to org design. Example Generic Weakness Areas:
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As with the strengths, once you have your list it’s time to put some refinement into them. The same rules apply, you want to end up with a manageable, clear list that defines your core weaknesses in a way your team will fully understand. No duplicates, nothing too broad and no opinions. 3 - Review Internal AnalysisAt this point you have a full SW analysis, giving you a picture of your internal business. You should have a refined list of Strengths and Weaknesses. Take a step back and review both lists together, is there anything missing, or have you a complete picture of your internal workings? If you’re happy it’s time to move on to the wider market. 4- Look For OpportunitiesThe OT is all about the future of the business, driving it forward and growing in ways that you had not previously considered. In order for this next section to be effective, it’s important to really understand the market you operate in, so if you’re doing this as a group make sure you include team members who are exposed to the market you operate in each day. Make sure your Strengths list is easily accessible during this session as you should be referring to it in order to understand the potential. Example Generic Opportunities Areas:
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Refinement for Opportunities can come by identifying the key ones that would add value to the business. It’s important to recognise what is an Opportunity for the business vs what is correcting a fault. This is sometimes hard to define, for example, if there is no SLA in a company service team, is it an Opportunity to add it in, thus improving service, or not? There is no right or wrong answer, but the purpose of this is to propel the business forward, so consider BAU improvements as take-away key actions but not Opportunities. 5 - Identify the ThreatsTo identify the threats you must consider the external market, consumer trends, contingency plans, competitors, market share and your competitive advantage in the wider market. Threats are items that may hit and negatively affect you outside of your control, so preparing for them and mitigating them is key. Example Generic Threat Areas:
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You should now have a complete set of Threats born from considering the previous parts of the SWOT and your wider market. Once done, it’s time for the final refinement. The same rules apply, try to not be too broad, keep it factual and honest, and ensure you are thorough. Now for two bonus steps to go the extra mile! 💪 6 - Taking ActionOnce you’ve completed your SWOT it’s time to come up with the key actions. It’s surprising how often a SWOT is completed and not utilised to it’s full potential. The following actions should always be done: Quick Wins: There will be quick wins that can be actioned from your SWOT. It could be weaknesses that can quickly be removed, or opportunities you can rapidly take advantage on without any extensive changes. These should be allocated to a manager or employee and actioned. Long Term: A SWOT is part of a wider process, it’s given you a picture of the internal and external landscape. At Lucidity we’d recommend it’s used in conjunction with other tools as by itself it does not provide you with a full picture in order to successfully plan. However, if you have solely have done a SWOT then the longer term actions would be around how to mitigate your threats and take advantage of your opportunities. These will likely always form larger projects. It's helpful to take a look at the SOAR framework as one method of drawing conclusions from the SWOT. 7 - Re-using SWOTYour SWOT analysis can be extended in the following ways:
We hope you found these steps helpful. You can access the full guide to SWOT or, to access more content and complete your own SWOT, sign up for Lucidity today! What are the factors to be considered in performing the SWOT analysis?SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT analysis is a technique for assessing these four aspects of your business.
What is the key of SWOT analysis?Performing a SWOT analysis involves brainstorming and recording strengths, weaknesses, opportunities and threats concerning a task, individual, or organization. The analysis takes into account internal resources and capabilities (strengths and weaknesses) and ones that are external (opportunities and threats).
What are the four key areas of SWOT analysis?SWOT analysis (strengths, weaknesses, opportunities and threats analysis)
What are good ways to ensure SWOT analysis is performed successfully?How to conduct a SWOT analysis. Choose a facilitator. Organizational leaders typically carry out SWOT analyses and rely on other team members to conduct a thorough evaluation. ... . Identify strengths. ... . Determine weaknesses. ... . Analyze opportunities. ... . Identify threats.. |