SWOT Analysis adds clarity to your short and long term business planning

Swot analysis
Swot analysis (Photo credit: Wikipedia)

What do you do next? What’s the impact?

A tool that I use with my clients to help discover strategy’s to achieving their goals is a SWAT Analysis.  This tool is simple and when done in the context of what is the impact of a change effort, they are key to discovering action steps that may not have surfaced without the exercise.  If you are working on a potential new hire,  a new piece of equipment,  launching a new product line, etc…  SWAT with help with all of them!

In the last post on business strategy development tools, we listed SWOT analysis as one of the tools. In this, we look at this technique.

SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities and Threats. While strengths and weaknesses are internal factors of the organisation, opportunities and threats come from the external environment. The goal of the analysis is to:

  • Identify those opportunities in the environment which can best be tapped with the organisation’s strengths
  • Develop strategies to overcome internal weaknesses and external threats

To be practically useful, SWOT has to be done in the context of a specific objective. It is a clearly defined objective that helps us identify the strengths that makes achieving it easier and the weaknesses that makes achievement difficult.

A generic exercise of listing supposed general strengths and weaknesses of the organisation will be a meaningless exercise.

How to do a SWOT Analysis

Define the Goal: Articulate clearly why you are doing the analysis. What is it that you plan to achieve? Develop a new product? Increase the market share for an existing product? Improve organisational effectiveness? Each of these (or any other) goal will require different strengths and be affected by different kinds of weaknesses.

Identify the Strengths: If your goal is to develop a new product, you should look at your strengths in market research as well as relevant technology-related capabilities. If increased market share is your goal, review your understanding of the market and the strategies of competitors as related to the product under consideration. Improving organisational effectiveness will require very different skills, such as an understanding of organisational behavior and of managing change. Strengths can take such forms as previous experience, people with relevant skills, reputation and established brand names, a network of contacts and partners, proven business processes and strong financials.

Identify the Weaknesses: Again, the specific goal determine which aspects of your organisation are considered as weaknesses. Poor technology capabilities might be a weakness for new product development (and you might decide to overcome it by outsourcing the technological aspects of product development). Weaknesses can be seen as the absence of strengths that we have listed above. Just narrow down to those that affect the achievement of the goal (instead of listing everything out and becoming gloomy in the process!)

Identify Market Opportunities: Any possibility of leveraging your strengths to deliver superior value (that has market demand) is an opportunity. New opportunities typically arise from changes in the environment. For example, the increasing popularity of the Internet created the opportunity for offering products and services on the Web. Similarly, an ageing population creates an opportunity for home healthcare and other support services needed by senior citizens. Just identify which of your resources can help you tap one of these opportunities.

Identify Threats: Threats are factors in the external environment that can seriously affect the achievement of your goals. For example, when new technologies are resulting in making a product of yours obsolete, an expensive marketing effort to achieve additional market share for that product might be inappropriate.  On the other hand, your focus should be on deciding where to focus next to cope with the threat posed by the changing technology scenario. Threats can come from many fronts such as: Technology developments, new legislation on environment or compliance issues that have significant financial implications, changes in consumer tastes, retirement of key personnel, an economic downturn and imports from cheaper sources.

Responding to Analysis Findings: Response to a SWOT analysis can take such forms as developing new marketing strategies, improving the effectiveness of business processes and filling up gaps in capabilities through training or new recruitment. It is likely to involve significant changes in the ways things are done now and change management skills will be called for.

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About Kelly Business Advisors, LLC

Early in his career John started-up and sold 7 years later a Moving and Storage Company in Milwaukee. He acquired and was President of Kelly Pickle Company f/k/a Bond Pickle Company, in Oconto, WI for 12 years. Built a monthly round-table networking group of manufactures in Oconto. Developed marketing plans, sales plans, products and implemented lean manufacturing practices with many North American companies. Worked with non-profits as both a front line leader and behind the scenes. He is active in his church, a member of the Green Bay Chamber of Commerce,Business Networkers International (BNI) and now is joining the Green Bay Downtown Rotary.

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