Steps to Define Your Business Strengths, Weaknesses, Opportunities, and Threats
SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses come from within the company and represent elements that you can control to a certain extent via making changes.
For instance, your intellectual property, your patents, your business’s location, or who is in your team.
Opportunities and threats refer to external elements. You can take advantage of opportunities and put plans in place to protect your company against threats.
These include prices of your raw materials, competitor activity, and customer shopping behaviour.
You can create a SWOT analysis to identify your top strengths, weaknesses, opportunities, and threats. This will help you streamline your business processes for maximum productivity and performance.
How to do a SWOT analysis
Make your SWOT analysis a group effort. You’ll need couple of hours to complete the project.
#1 Gathering the Right People
Ensure you have a representative from every department of your business. You will learn employees from different departments may have a different perspective which contributes to an effective SWOT analysis. If you have a trusted advisor who understands your business, consider bringing them into the SWOT analysis, as well.
#2 Collecting data
A SWOT analysis is similar to a brainstorming session. Ask each person to write down their opinions and observations about the four areas: strengths, weaknesses, opportunities and threats.
This will allow everyone to voice their opinion and ensure you benefit from a diversity of viewpoints.
After five to 10 minutes of this individual activity, organizing all the ideas on a wall or project board, grouping similar ideas together. You can also allow anyone to give input and add further notes or pointers at this stage.
#3 Ranking the Ideas
Once you have all the ideas organized, it is time to rank them. You can use a voting system, giving everyone five to 10 votes. They decide how to distribute their votes based on what they think is most critical.
By the end of this exercise, you should have a list of prioritized ideas. However, this list should be open for debate and discussion.
Someone from senior management, like a CEO or a manager from the business strategy department, must be present to make the final call.
Questions to generate ideas in each of the four quadrants
It may be helpful to ask a series of questions to gauge the Strengths, Weaknesses, Opportunities, and Threats for your business. Here are examples to get you started.
Strengths refer to the positive attributes of your organization. To determine your strongest advantages, ask the following questions.
- Which of your processes are successful?
- What assets do your teams have? These may include education, skills, reputation, and network.
- What are your physical assets? These include equipment, technology, patents, cash, and customers.
- What competitive advantages does your business have?
Weaknesses refer to areas that need improvement in your organization. Ask the following questions.
- Are there areas that your company needs to be competitive in?
- Is there room for improvement in any of your business processes?
- Does your company need any tangible assets such as equipment or money?
- Are there any gaps in your team?
- Is your current location ideal for your business's success?
Questions to determine opportunities that may contribute to your success are:
- What is the market growth? Is there an increase?
- Are there any trends to encourage customers to buy more from you?
- Are there any upcoming events or occasions that your business can capitalize on for growth?
- Are there any upcoming regulatory changes that may have a positive impact on your business?
- Do your customers have a positive image of your business?
Knowing potential threats can help devise a contingency plan. Focus on the following questions to help determine potential threats.
- Are there potential competitors who might enter your market?
- Are your suppliers able to reliably supply raw materials at a price you desire?
- Could upcoming technological developments affect how your business operates?
- Can any of the market trends be a threat to your organization?
Once you’ve conducted a SWOT analysi, you will be on the way to developing a strategic plan. Identifying your strengths and opportunities generated from the SWOT analysis will enhance your productivity and performance.
Get in touch with StrategyX for more information on how to conduct a SWOT analysis for your business.