We often believe that anything which is not trendy is obsolete, but that is far from being true when it comes to SWOT analysis. Although there is a number of contrasting, if not contradictory views on the origin of SWOT, nobody can deny that it is one of the best tools for business analysis.
SWOT is an acronym which stands for Strengths, Weaknesses, Opportunities and Threats. The SWOT analysis is about to turn fifty, but it is still as fresh and useful as it was when it first came into play.
The 4 Elements of a SWOT analysis
SWOT analysis is the easiest, yet efficient, method to decide on the future of our business strategy. One of its greatest advantages is that it can be applied to any situation or project at any stage and in any kind of company, regardless of their size and business activity. And the best part is that it analyses both what is internal to the company and the external changes occurring in the marketplace and in the competition.
First of all, we must know what its elements are and what we can assess through them. These four elements are:
- Strengths: all those positive internal attributes and resources that help us make the most of the market opportunities. They are mainly the advantages we have over our competitors;
- Weaknesses: all those internal factors that may be a constraint and stop the company from developing;
- Opportunities: all the external factors that we can benefit from and that offer us a competitive advantage.
- Threats: the external factors that prevent us from growing, reduce our effectiveness or increase the risks which threaten the success of our strategy;
Factors to consider
As with any analytical method, choosing the right questions is the key to getting valuable answers. For this reason, we need to know what factors we are going to take into account.
Internal factors can strongly affect the performance of a company, so it is really important to know:
- our strategic planning and current situation;
- our key skills and abilities (and which ones we lack);
- the state of our facilities and resources;
- actual costs, profitability and financing;
- our innovation potential;
- How consumers rate our products/services and what our brand image is like.
Regarding the environment and external competitors, we must know many factors:
- markets or segments within reach;
- rate of market growth;
- changes in the needs and wants of consumers;
- our direct and indirect competitors;
- legal changes that may affect our business;
- bargaining power of customers and suppliers.
Do not forget that assessment is necessary not only at the end but at any stage of the project. You should conduct a SWOT analysis at the beginning of each new project, but also in its intermediate stages. Your strategy depends on the environment as much as on your ability to assess the overall situation.
And you can always complement it with different tools, some of them as useful as Kiply. They will help you know at all times what your situation is at all levels.