In business, we make decisions that have effects in the long run. To make sound decisions that have a good effect on the organization, one needs to perform a SWOT analysis.

Swot analysis is strategic planning and management technique used to help a person or organization evaluate their business projects and competition. It helps in identifying those factors that affect a business’s productivity and feasibility. Swot analysis uses internal and external factors for the evaluation of business plans to help organizations achieve their goals and have growth in the long run.

What do you mean by SWOT Analysis?

The word ‘SWOT’ stands for Strength, Weaknesses, Opportunities, and Threats. It means the strengths and weaknesses of that organization and the opportunities and threats it faces. These four factors affect your company so it’s necessary to know about them. The swot analysis gives a thorough insight into a business, its products, and brand identity at present. This, then helps in planning the next strategy. It further helps in differentiating you and your rivals.

A good swot analysis is the one in which the entire team of the organization participates. As each person has a different perspective, their involvement in the analysis will help cover every aspect. If you have a big company with many individuals working for you, you can ask each department to select their representative for this analysis.

Ideally, a swot analysis should be performed every 6 to 12 months. New businesses and startups should make swot analysis a part of their planning and strategic process. This will help them to get on the right path.

SWOT Analysis Template 01

SWOT Analysis Template 02

What is the importance of a SWOT Analysis for any organization/business?

Any organization needs to look for the internal and external factors that affect its performance. A SWOT analysis is important as its the part of business planning, market analysis, project management, organizational change, individual development, or any situation requiring strategic planning to reach an objective. It is useful for any type of business or startup. It provides a straightforward and true opinion about issues the company can control and what it needs to fix.

With the help of swot analysis, one can examine ways to avail the opportunities and strengths to overcome the side effects of their weaknesses.

Factors of SWOT Analysis:

The four factors of swot depend upon the internal and external environment of the company. The internal factors are those which are in the hand of a company to control while the external factors are unpredictable and to some extent, uncontrollable.

Internal factors:

1. Strengths: In a business’s internal environment, one of the factors to be identified is the strength of the organization. The strength of any company is the domain where it excels. This may be an internal domain like its products/services it is selling, production methods, supply chain, or even public relations. But mostly, the strength of any business is the product or service it sells.
2. Weaknesses: It is another internal factor of any company. It is where the company is struggling or failing. This weakness/struggle may be due to changes in technology, customer preferences, demographics, etc.

External factors:

1. Opportunities: The opportunities for any company depend on its external environment. It is not in the hands of any organization. Because of these factors, the company has chances to gain new customers and grow its business.
2. Threats: It is the last factor of a swot analysis. Though the threats are unpredictable, if you have planned for them and taken appropriate measures in advance, your company will soon be able to recover.

How to perform SWOT analysis?

To make a swot diagram is not something very difficult. If you want to draw the SWOT yourself, you can use the simplest and most traditional approach. Make a table or grid for each of the 4 factors of it i.e. strength, weakness, opportunities, and threats. Once done with this, you can start with relevant findings beneath each factor. Do not write complete sentences. You can just write the main finding in bullet points. Another way to perform the swot analysis is through the internet. There are tons of online templates available. You can simply download and use them.

What are the steps to follow for swot analysis?

1. Step 1: Start with your problem or question which is to be solved. Know the barriers as well as special characteristics of your business or product.
2. Step 2: Begin with strengths. This can be anything that you can use in your favor. You may have a good supply chain, HR team, or even a strong social media presence.
3. Step 3: List down all the opportunities the marketplace will offer you. You can conduct market research to know your competitors and your edge over them.
4. Step 4: Know the weak areas that you need to either work upon or cover with something better. Come up with ways to turn your weaknesses into your favor.
5. Step 5: Acknowledge the threats you face in the market and think of ways you can avoid them.

Questions for swot analysis:

Some of the questions that may help you in developing each factor of Swot analysis are as follows:

Strengths:

• What are the company’s internal resources?
• In what domain your company performs well?
• What edge your company has over its competitors?

Weaknesses:

• What factors eliminate your advantage over competitors?
• What points do you need to focus upon to achieve your goals?
• Is there any limitation/hindrance your business is facing?

Opportunities:

• What opportunities your market offers to make a profit from?
• Are there any recent changes in the market? If yes, can you take advantage of it?
• Are your business opportunities improving or not?

Threats:

• Who are your potential/existing rivals?
• Are there any factors you can’t control that can put your company at risk?
• Is there any event, market, or government policy change that can decrease your revenue?

Benefits and limitations of SWOT Analysis:

Benefits:

• Provides a systematic approach to solve problems
• It’s easy to understand and use
• Addresses weaknesses and threats
• Helps in achieving business goals

Limitations:

• It doesn’t help in prioritizing issues
• Doesn’t suggest alternate solutions to any problem
• Produce a lot of information but not all of it is of use
• Sometimes, it’s ambiguous.