Intro to SWOT Analysis

An acronym for the four parts of the analysis, SWOTs are a review of your company’s Strengths, Weaknesses, Opportunities, and Threats. SWOT is a standard business planning tool that acts as a guide to the direction your company should take based on the advantages and disadvantages it has or may yet have. The purpose of a SWOT is not simply to list concerns or advantages; it’s to consider how to take advantage of these.
Far too many strategic plans and worse--overpaid strategic planning consultants--end their SWOT analysis with nothing more than a short list of a few good and bad points about a company. This is one of the biggest mistakes I’ve encountered in the strategic plans I’ve seen.

Strengths: Strengths are relative to your competition. It’s not a strength if everyone is as good or better at it than you are. One of the primary goals in business is to develop a solid list of strengths in order to gain advantages. So don’t be too discouraged if your current list is short. You use your strengths in order to develop new strengths and to take advantage of opportunities. They are also a way of balancing weaknesses and avoiding threats. Write down some examples of how you might do this beside each listed strength.


Weaknesses: Is anything you do worse than the competition or which might derail your entire industry if everyone does it poorly? Depending on how serious a weakness is to your core purpose, you may need to determine how to improve upon it or how to adjust it.
You don’t need to be great at everything of course, you just need a plan to deal with your weaknesses in such a way that they don’t impact your business in such a way that it fails to earn as much money as it could.


Opportunities and Threats

Opportunities and threats come from anything that exists outside of your company’s reasonable control; from social movements to the political environment, the economy, new technologies, your competition and more can provide opportunities and threats.
Remember that in all things part of what you’re doing is comparing yourself to your competitors not to what you think provides advantages or disadvantages. If your customer base is changing, then there’s a good chance that your competitors’ customer base is changing as well. This in turn can provide both an opportunity and a threat because such changes give you the chance to adapt faster than your competitors, thus allowing you to take market share from them. At the same time, your competitors gain the same opportunity to adapt faster than you do. What you need to do is determine how you might take advantage of or avoid damage from your opportunities and your threats.