What is SWOT analysis and how to apply it in your company
Self-knowledge is essential for decision making, and it is no different when we think about the corporate world. Companies need to have confidence in order to improve their processes and, for this reason, it is essential to analyze several aspects that can lead to better results.
However, how do we do that?
Some methodologies may help to execute an organization’s strategic plan, such as OKR, PDCA, and FCA – some of which we have talked about in the blog. These articles are complementary and relevant material to your knowledge about strategy. So, keep an eye on the content we release!
In this post, we talk about what is SWOT analysis, which is also an alternative to complement and develop your organization’s planning. If you want to know what is SWOT analysis and how this methodology is applied, keep on reading!
What is SWOT analysis?
SWOT is short for Strengths, Weaknesses, Opportunities, and Threats. It stands for the aspects that will be analyzed in an organization.
This tool was developed around the 1960s by professors Kenneth Andrews and Roland Christensen with the same goal for which it is used today: to improve a company’s strategic plan.
SWOT analysis is a tool that can be used for strategic or business planning or to evaluate an organization’s internal and external factors.
Thus, it is possible to identify its strengths and weaknesses and how important they are for opportunities and external threats. It also helps to identify solutions for possible issues.
It is easy to learn what is SWOT analysis and how to implement its methodology. The SWOT framework facilitates visualization and understanding of collected information. In order to have an efficient SWOT analysis, the organization must do it regularly, so the different areas are always updated and improved.
Developing a SWOT framework has several advantages:
- It serves as the basis for strategic planning;
- It raises awareness of a company’s strengths and weaknesses;
- It helps to understand how the company stands regarding competitors;
- It helps to optimize performance;
- It identifies threats and opportunities that may arise;
- It facilitates the visualization of an organization’s characteristics;
- It helps to define the new market and business strategies;
- It helps to explore new markets
How to do a SWOT analysis
Managers and specialists are fundamental in the process of building the SWOT framework. Their knowledge is essential. However, all the team should get involved in the SWOT analysis process. Their participation makes the process more enriching and thorough.
How to diagnose the company
Internal factors – this is where Strengths and Weaknesses are analyzed. These features can be identified and noted through brainstorming meetings with the team.
Analyzing internal factors provides a better vision of the advantages and disadvantages a company have in comparison to its competitors. By analyzing internal factors, weaknesses can be eliminated or developed, and strengths are improved to become key items for business success.
Some examples of internal factors are staff training, internal structure, planning, goals, etc.
External factors – at this stage, one analyzes opportunities and threats. Those aspects regard the impact of external factors in a company’s development. They are beyond control and cannot be worked upon, but their consequences can be measured with the SWOT framework. Therefore, it makes a company more prepared for possible effects.
Some examples of external factors are climate, water shortage, raw material, interest rate, changes in the exchange rate, political and economic crises, and others.
How to do a SWOT framework
Now that you know the SWOT definition and what the framework stands for, it is time to build one.
After identifying internal and external factors, you have enough material to build the SWOT framework.
This can be done in several ways such as in spreadsheets, on paper, using post-its, or even with the help of a Trello board.
Follow these steps to learn how to do a SWOT framework:
- Create a table of four squares: two lines and two columns.
- The first line is for an internal factor
- On the first square in this line write Strengths;
- On the second square in this line write Weaknesses;
- The second line is for the external factor
- On the first square in this line write Opportunities
- On the second square in this line write Threats;
- Then, determine your possible strategies;
- Use the company’s strengths to enhance opportunities and fight threats;
- Deal with weaknesses that affect opportunities and increase threats
Concluding the process of how to do a SWOT analysis
Because this tool is quickly built and very effective for solving doubts and guiding strategies, a thorough SWOT analysis can be used for business planning in small or large companies.
It is also a useful tool to analyze projects and even to help people out of the business world to make decisions.
For a successful SWOT analysis, the whole team must be prepared and motivated to give their best to achieve the goals.
This methodology, as well as others that help to create a strategic plan, is an option to develop daily routines and consequently, to improve a company’s results. If you want to execute a strategy constructively, focus on these tools, and prepare for success!
Now that you can answer the question “what is SWOT analysis?” it is time to apply what you have learned!
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