Nowadays, SWOT analysis is well-known for every marketer or businessman. It is impossible to develop an effective marketing strategy or achieve business success without making the analysis. However, many new participants of the business environment still ask: “what are SWOT analysis?” or “why are SWOT analysis important”. That is why this article is dedicated to this topic. We are going to consider it in detail so that you understand its effectiveness and prominence for business development.
What is the definition of SWOT analysis?
To begin with, it is important to note that SWOT analysis is one of the most widely used methods in marketing and management. SWOT is a set of marketing and other research on the strengths and weaknesses of an enterprise or a specific product. The analysis should give a clear idea of the situation and indicate in which directions one has to act using strengths in order to minimize weak points and threats and maximize opportunities.
Its name is an acronym where first letters denote the following notions:
These are four fundamental elements of the analysis. When analyzing a product/business from these four sides, you can get an overall picture of your position.
A bit of history
It is important to note that before the introduction of this algorithm, only the strengths and weaknesses of a company were taken into account to determine the prospects of a business. For example, the advantages and disadvantages of a company or a product without considering external factors were only compared, and on the basis of their ratio, they made a conclusion about further development. Kenneth Andrews expanded the formula with two components – factors of influence from the outside and inside, which turned the analysis of strengths and weaknesses into one of the popular models of business evaluation.
It was 1963 when the abbreviation sounded for the first time at a conference at Harvard. Kenneth Andrews was the one who created SWOT analysis. He introduced the term and since that time it has become one of the important tools for business development. Nowadays, the method is still relevant.
Components of SWOT analysis
Now, let’s proceed to the consideration of the main analysis’s constituents.
These are properties of a product or an enterprise which determine its success or high position on the market when comparing to competitors. These are advantages, values, unique skills. Due to them, a company increases sales, ensures its presence on the market, feels confidence in the competition.
These are weak sides of an enterprise or a product. Those features that impede company development and increase of profit and sales, as well as do not let to get to a new segment of the market. These are factors because of which you can lose the competition.
These are levers that are in the hands of a business and are directly affected. For example, staff training. These are potential advantages that can bring a business to a new level, help achieve the desired result, and become strengths in the future.
These are external factors that do not depend on your decisions. It is necessary to take them as they are and find out how to develop a business along with them.
Pros and cons of the method
There are the following advantages of the method:
- Determining the strengths and weaknesses of a business, identifying growth factors and external threats.
- Simplicity of carrying out and efficiency for any forms of commercial activity. An express analysis can be conduct by any entrepreneur or group of employees without the help of specialists.
- Identifying a company’s opportunities that affect working with real business problems.
- Defining the relationship between weaknesses and strengths in terms of growth opportunities, taking into account external risks. This is one of the main tasks that S W O T analysis solves – to find leverage for disadvantages and become better.
- Absence of necessity to collect arrays of information for the analysis. Quite often, all the data is already at hand, you just have to organize it.
- Finding out company’s prospects.
- Quantitative calculation of factors and options for effective development, taking into account all market realities. A composite or mixed calculation algorithm allows you to deeply consider growth characteristics.
- Assessment of project profitability in existing realities.
- Strengthening competitive advantages, market intelligence.
- Assessment of the internal potential of a company, enterprise’s resources, identification of possible problems and measures development to level them.
- Identifying threats that are most critical in the current situation, taking measures for effective protection.
Nevertheless, some disadvantages are also distinguished:
- Strengths weaknesses opportunities and threats analysis is an analytical tool that does not provide clear numerical indicators or guidelines for action. First of all, this is clear, structured information. Further analytical work is required.
- There is no temporary dynamics. If the market situation changes or changes occur within a company, then the analysis should be carried out again.
- SWOT operates with subjective information, which complicates work.
Where is the analysis used and what for?
As you see, each part of the technique is designed to consider a different side of the market and a business. Thus, in combination, they create a perfect match and are able to disclose even the smallest pros or cons of the situation.
The main task is to develop a business strategy for the development of an enterprise or a product, making sure that all the main factors – the driving forces for successful growth, were taken into account, as well as opportunities within the company and external factors were considered.
SWOT analysis is suitable for designing the strategy of a new enterprise, company, service, product. Often, the algorithm is also used for introspection of personal, professional growth. It is also frequently applied to competitive intelligence in a niche. For example, the analysis helps list the available offers on the market by the degree of their demand in Central Asia.
For any business, it is important to really see the leverage that it can manage – the company’s internal resources, as well as understand the factors that are outside the impact zone – external threats. A simple understanding of these points already saves the budget and time.
How to make SWOT analysis
Write down the main goals, tasks of a company or a project. Find out motives.
In order to list strengths and weaknesses, answer the following questions or similar ones:
- What are strong characteristics of your employees?
- Are there any advantages in technology or working methods over competitors?
- Why do customers choose you?
- What are the features of a product?
- What do you do better than others on the market?
- What spheres have you mastered “perfectly”, in addition to our core business?
- What are our weak sides in comparison with competitors?
- What prevents you from introducing innovation/technologies or technical equipment to work?
- What are disadvantages of marketing, advertising, corporate campaigns?
- What hinders the development of a strategic plan?
Group answers in a matrix, fill in two cells and name them – strengths and weaknesses. Discuss the received matrix with colleagues, partners. At this stage, it is advisable to start using presentations created using a S.W.O.T. analysis template, which will help visualize and display the table.
When analyzing the first two columns, note enterprise’s opportunities. Look at them and determine which internal resources will help eliminate weaknesses.
Identify threats that may affect the development strategy. These are external factors – opposition of competitors, changes in laws, natural disasters, political sanctions and so on. At this stage, it is possible to count everything you may face on the market.
Fill in two other cells, name them threats and opportunities. Then analyze the whole table; find out how “strength” can be used to overcome “weakness” and effectively protect against uncontrolled factors.
As you have all the data obtained, it is time to develop a strategy.
To draw the line, let’s consider a S.W.O.T analysis example:
Imagine the situation: a new fast-food chain in a city with a population of 500,000 residents.
Strengths include fast cooking, partnership with local bakeries and food suppliers, serving all groups of the target audience (children, adolescents, students, employees, retirees), products from private owners (equal to high quality).
Weaknesses are poor brand recognition, competition with McDonald’s, high advertising costs.
Opportunities are engagement of active clients among young people as promoters for budget advertising in universities and schools; adding food delivery at home and in offices to services; adding healthy foods to the menu.
Threats include the competition with McDonald’s and Burger King; opposition of supporters of a healthy diet.
5 rules of an effective analysis
- Do separate research on each market segment, department, product to get more objective results.
- Strengths with opportunities as well as weaknesses with threats should not be confused. Weaknesses and strengths are internal factors of an enterprise. It is possible to control them. While threats and opportunities are external factors that are beyond your control.
- Strengths and weaknesses should be identified from the point of view of a customer. Conduct interviews or surveys among clients to make sure of your assumptions.
- Use precise, unambiguous statements.
- For each factor of weaknesses and threats, try to find ways to eliminate or minimize it. For strengths and opportunities – ways to enhance and use them. Write down all data to the decision matrix.
Convenient digital tools for presentation creation
It is impossible to imagine the consideration of the topic without visual tools. The matrix in which all information is written down should be considered only with the help of visualization. Thus, there is a necessity to use digital tools, such as presentations. Fortunately, this is a common practice for the modern business environment. Thus, you do not have to spend lots of time creating every detail yourself. Today, it is enough to choose the right template and insert data.
Here, we want to offer some of them. Below, you’ll find the link to a site where hundreds of slides and templates for SWOT analysis are offered. All of them are of perfect quality. Their stylistics and design are thought out to the smallest details. These are useful elements for every manager or office employee.
This is a free PowerPoint SWOT template. Every site visitor can download it in a few clicks. The element is equipped with all the necessary tools to make your work effective, easy, and convenient. The slide looks perfect on all screens and can be displayed using any hardware.
A creative colorful slide will become an excellent decoration for your speech and presentation. In addition to its high functionality, a lovely visual element in the center of the slide will diversify a presentation. High quality, ease of use, and presence of the necessary built-in tools guarantee convenient and quick work. Moreover, absolutely every user can download the SWOT analysis template for PowerPoint for free!
This is a great pack in which 40 unique slides are gathered! All of them are designed for SWOT analysis. It is an excellent opportunity to get one pack and use slides for every new project or report. It is possible to choose colors and stylistics. Each slide of this SWOT analysis template for PowerPoint has its unique structure. The pack will definitely simplify employees’ work and help save time.
Although here, we provide the link to PowerPoint templates, on the site, SWOT templates for Keynote Mac and Google Slides are also available. Moreover, everyone will be able to download an appropriate Keynote or Google slides SWOT template for free. Generally, the site is a great library of premade templates for business and marketing digital presentations. Such a service will become a lifesaver for every entrepreneur, manager, or businessman.
We hope that our article is helpful for you and you do not have any questions anymore. Add the technique to your workflow if you still haven’t used it, and improve the position of your company. Good luck and high profits!