What is a SWOT Analysis and Why You Should Be Doing It?

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The SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis technique helps identify a given business, organization, or project's strengths, weaknesses, opportunities, and threats. There are many reasons why this technique is important to have as a part of the strategic planning of any project, product, or other objectives. Without doing a SWOT analysis of the business, there is no way you can accurately evaluate how successful the business, organization, or project is at achieving its objectives.

KEY Takeaways

  • SWOT stands for Strengths, Weakness, Opportunity, and Threat.
  • Strengths and Weaknesses are internally focused, while Threats and Opportunities are externally focused.
  • SWOT analysis is one of most effective tools used by organizations to assess their current situation.

It aims to identify internal factors or external factors that may be favourable or unfavourable to achieving the organization's or project's goals.

1. Strengths:

What are the organization's resources? What is its competitive advantage? They are a factor that boosts the performance of a business. They improve the productivity of the business in various aspects. Strengths, when well developed and utilized, can improve a business in the long run.

Develop an action plan to improve these strengths and position your organization for continued success.

Examples:

  • The company has a strong brand name.
  • The company has a large customer base.
  • The company has an experienced management team.

2. Weaknesses:

What are the organization's weaknesses? It is very important to look at the weaknesses of a business in the sense that it helps solve major problems. Weaknesses are things that hinder the achievement of the organization's or project’s goals. These are usually negative factors that must be addressed before the organization can achieve its goals.

Examples:

  • The company's technology is outdated.
  • The company is not profitable.
  • The company does not have enough funding to support its operations.

3. Opportunities:

What does the environment offer that can be taken advantage of? What are the opportunities available to the organization? This is where the organization should focus on identifying new markets, products, services, etc. The opportunity is something that will help the organization grow and expand.

Examples:

  • A new technology is being developed that would benefit the company's operations.
  • A new management team is being recruited that would benefit the company's operations.

4. Threats:

What are the potential risks to the organization? What are the threats that could affect the organization negatively? A threat is anything that could harm the organization. It is important to identify them so that they can be avoided.

Examples:

  • The company may have to deal with increased competition from other companies with physical stores.
  • Privacy and data security Shifts in consumer buying habits
  • Product life cycle disruption
  • Regulatory and legal changes
  • Natural disaster
  • Competitor’s pricing strategy
  • A sudden drop in demand for the product

Summary

Strength and Weaknesses are internal factors, while Opportunities and Threats are external factors.

SWOT analysis is one of the most effective tools used by organizations to assess their current situation and future prospects. It helps them make better decisions about their businesses and projects.

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