What is a SWOT Analysis and How to Use It

A SWOT Analysis is an underrated tool with incredible value if done correctly. Learn more about how to implement them within your business.

What is a SWOT Analysis and How to Use It

Building the right tech stack is key

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How to choose the right tech stack for your company?

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What to consider when choosing the right tech stack?

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What are the most relevant factors to consider?

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What tech stack do we use at Techly X?

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What is the SWOT Analysis

The SWOT Analysis is somewhat of an underappreciated but very effective tool; it helps you get insight into your organisation's strengths and weaknesses and the opportunities and threats it's facing. Perhaps the SWOT is a victim of its simplicity as it is either underutilised or skimmed over based on its fundamental pillars and the ease of consideration. However, when the SWOT is utilised and implemented correctly, it is vital for strategic initiatives.

The core concepts are foundational to the success of every organisation; they exist and impact your business whether you pay attention to them or not. Using a SWOT analysis can help you with the following:

  1. It is a tool for strategic planning, used to enable you and your organisation to rethink or formulate new strategies, to understand your organisation, competitors and market.  
  2. To improve your business by building on your strengths or minimising your weaknesses.
  3. Assess new ideas. Do you have the right capabilities or resources to capitalise on an opportunity?
  4. A foundation for goal setting. Across all levels of your organisation. You can identify the requirements for enabling your team to achieve more.

The Benefit of SWOT

Focusing on your strengths can build upon what you are doing well, but that can leave you blind to your weaknesses, opportunities, and threats. A SWOT allows you to have a bird's eye view, providing insights from each perspective simultaneously. If you address your weaknesses, then you are in a position to continue to win for today. The Opportunities and Threats are both future based. Go into more detail below.

S for Strengths

They are within your control and present, your core competencies, the capabilities and resources that you have at your disposal that allow you to compete and win in your industry. These may be easy to identify, tangible or intangible, but it is what enables you to succeed in your chosen playing field.

W for Weaknesses

Assuming these are the direct opposite to your strengths would not be a total error, but over-simplifying your perspective may limit the impact of performing the analysis. They are your competitive disadvantages versus your competitors, and some of your strengths can also be your weaknesses. For example, having a robust local reputation helps you win local contracts, but it can also make you look like a local business when competing nationally or internationally.

O for Opportunities

Opportunities are trends and events outside your control but things you could pursue based on your organisation's strengths. These could be macro, micro, or even temporary trends that impact your business. An example would be consumer migration to e-commerce, a macro trend changing for many years. However, the speed of change was accelerated by covid-19. When covid-19 is a distant memory, and the impact is minimal, a lot of the acceleration may persist; however, there may be a temporary slow down or reversal based on consumer behaviour and sentiment changes.

T for Threats

For many companies, the acceleration of technological change was a threat because they did not have the internal capabilities to make adjustments. Today we have threats of further covid restrictions, broad and high inflation and interest rate increases. There is numerous other PESTLE (political, economic, social, technological, legal and environmental) changes that could significantly impact businesses. Assess all things that you believe can impact your business, rank them in order of the likelihood of it happening and the impact it will have on your business. Once you have done so, prioritise initiatives to minimise the threats or turn them into opportunities.

How to be a SWOT

When carrying out a SWOT analysis, you should follow a few essential pointers. Have a small, diverse team of people who have relevant knowledge of different elements of your business and would be involved in the implementation of any new initiatives. If possible, you should have an outsider with sufficient information to contribute to the conversation but remain objective.

  1. Small - Ideally, you should have 4-8 people, with no more than ten in a large and complex organisation.
  2. Diverse - Bring people with significant knowledge from different functional areas that you know will add value to the conversation.
  3. Relevant - Ensure that the people you have invited have relevant information on different issues, especially if you have an underlying concern of a problem or thoughts regarding an opportunity.
  4. Practitioners - Ensure that the people will be those who will be carrying out the initiatives you have decided upon; they will be an excellent test for initial viability.
  5. Outsider - If possible, bring in an outsider or consultant who will look at the problems objectively; sometimes, teams have a significant bias. Each person may see the issues from their lens, which will impact the prioritisation of solutions.
  6. Use Porters 5 Forces, PESTLE, and other frameworks where necessary.
  7. You should allocate one and a half to two hours, with about 15 mins per section with a short introduction and analysis followed by the following steps to ensure you can implement the findings.

Consideration

A SWOT analysis is not free from criticism, and there are alternative models such as SWOT/TOWS. However, for the vast majority of businesses, it is an adequate and very beneficial tool. You need to set your objectives before you commence, allocate sufficient time, find the right participants, and most importantly, implement the findings to the best of your ability.

Conclusion

Correctly using a SWOT Analysis will enable your business to make decisions based on the most recent and pressing facts whilst also making positive changes for the future. It would be best to do a SWOT Analysis around once a year but vary the schedule depending on your organisational needs.