Strategy

What SWOT analysis is and how to do

SWOT analysis is an incredibly simple but powerful tool to help you develop your business strategy, either by creating a new business or by guiding an existing business. What is SWOT SOWT analysis means Forces, Weaknesses, Opportunities and Threats and, therefore, a SWOT analysis is the technique used to evaluate these four aspects of [...]

August 26, 2022 · Dudu Gentil · 9 min read

SWOT analysis is an incredibly simple but powerful tool to help you develop your business strategy, either by creating a new business or by guiding an existing business.

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What is SOWT Analysis

SWOT means Forces, Weaknesses, Opportunities and Threats and, therefore, SWOT analysis is the technique used to evaluate these four aspects of your business. The term comes from English: S=Strengths, W=Weaknesses, O=Opportunities, T=Threats and was Brazilianized for FOFA.

This is a well-known tool for marketers and can help in analyzing what your company does best now and outline a successful strategy for the future. SWOT can also discover areas of business that are disrupting you or that your competitors can exploit if you don't protect yourself.

A SWOT analysis also examines internal and external factors, i.e. what is happening inside and outside your organization. So some of these factors will be under your control and others will not. In both cases, the wisest action you can take in response will become clearer when you discover, record and analyze as many factors as you can.

Strong points: factors that give the company advantage over its competitors.

Weak points: factors that can be harmful if used against the company by its competitors.

Opportunities: favorable situations that can bring competitive advantage.

Threats: unfavorable situations that can negatively affect the business.

See also:

Why do a SWOT analysis?

By deciding to do a SWOT analysis, you will be equipped with a solid strategy to prioritize the work you need to do to expand or improve your business.

You may think you already know everything you need to do to succeed, but a SWOT analysis will force you to look at your business in new ways and mainly in new directions. You will examine your strengths and weaknesses and how you can take advantage of them to seize the opportunities and threats that exist in your market.

Who should do a SWOT analysis?

For a SWOT analysis to be effective effectively, founders and company leaders need to be deeply involved. This is not a task that can be delegated to third parties, since there will be a dip in the guts of the business.

But the company's leadership should not do the work on its own either. To achieve better results, teamwork should be a priority and bring together a group of people who have different perspectives on the company.

Select people who can represent different aspects and areas of your company, from sales and customer service to marketing and product development. Everyone should sit down at the table.

Innovative companies even look out of their bubble when they perform a SWOT analysis and get information from customers to add the view of who helps the business to keep up.

If you are starting or running a company on your own, you can still do a SWOT analysis. Recruit additional views from friends who know a little about your company, your accountant or even sellers and suppliers. The key is to have different views.

Existing companies can use a SWOT analysis to assess their current situation and determine a strategy to move forward to the next level. But remember that things are changing constantly and you should reevaluate your strategy, starting with a new SWOT analysis every six or 12 months. It can for example include in planning for next year, which usually starts to be built in October.

For startups, the tool is well known and a SWOT analysis is part of the business planning process. This will help you code a strategy so you can start on the right foot and know the direction you plan to take.

Benefits

The Swot tool has 5 main benefits:

Simple to do and practical to use;
Of course to understand;
Concentrates on the main internal and external factors affecting the company;
Helps identify future objectives;
Starts a deeper analysis.

How to do SWOT analysis the right way

As I mentioned earlier, you should gather a team of people to work on a SWOT analysis. You don't need a whole day retreat to do it, though. An hour or two should be more than enough.

1. ♪ Gather the people who make sense ♪

Gather people from different parts of your company and make sure you have representatives from all departments and teams. You will find that different groups within your company will have totally different perspectives that will be critical to make your SWOT analysis successful.

2. Throw your ideas on the wall

Doing a SWOT analysis is similar to brainstorming meetings, and there are right and wrong ways to run them. You can start by giving everyone a notebook of sticky notes (post-its) and getting everyone to generate ideas on their own to start things. This avoids group thinking and ensures that all voices are heard.

After five to 10 minutes of private brainstorming, place all the adhesive notes on the wall and group similar ideas. Allow anyone to add additional notes at this time if the idea of someone else awakens a new thought.

There are some virtual tools that help in this task,like the Miro.

3. Rate ideas

After all the ideas are organized, it's time to classify them. I like to use a voting system where everyone gets five or ten “votes” that they can distribute in any way they want. Adhesive spots in different colors are useful for this part of the exercise.

Based on the voting exercise, you should have a list of prioritized ideas. Of course, the list is now under discussion and debate, and someone in the room should be able to make the last call about priority. It's usually the CEO, but it can be delegated to someone else responsible for business strategy.

You will want to follow this process of generating ideas for each of the four quadrants of your SWOT analysis: Forces, Weakness, Opportunities and Threats.

Questions that can help inspire your analysis

Here are some questions you can ask along with your team when building your SWOT analysis. Questions that can help explain each section and stimulate above all creative thinking.

Strength

The strengths are internal and positive attributes of your company. These are things that are under your control.

Which business processes are successful?
What assets do you have in your teams? (i.e. knowledge, education, network, skills and reputation)
What physical assets do you own, as customers, equipment, technology, money and patents?
What competitive advantages do you have over competition?

Weaknesses

Weaknesses are negative factors that harm your strengths. These are things you may need to improve to be competitive.

Are there things your company needs to be competitive?
Which business processes need to be improved?
Are there tangible assets your company needs, such as money or equipment?
Are there gaps in your team?
Is your location ideal for your success?

Opportunities

Opportunities are external factors in your business environment that will likely contribute to your success.

Is your market growing and there are trends that will encourage people to buy more than you are selling?
Are there future events that your company can take advantage of to expand business?
Are there future changes in regulations that can impact your company positively?
If your business is working, do customers think of you well?

Threats

Threats are external factors that you have no control over. You can consider implementing strategic plans to deal with them if they occur.

Do you have potential competitors that can enter your market?
Will suppliers always be able to provide the raw materials you need at the prices you need?
Can future developments in technology change the way you do business?
Is consumer behavior changing in a way that can negatively impact your business?
Are there market trends that can become a threat?

Conclusion

With your SWOT analysis complete, you are ready to convert it into a real strategy. After all, the exercise is about producing a strategy in which you can work for the next few months.

The first step is to analyze your strengths and find out how you can use these strengths to take advantage of your opportunities. Then see how your strengths can fight the threats that are on the market. Use this analysis to produce a list of actions you can perform.

With your stock list in hand, look at your company's calendar and start putting goals (or milestones) on it. What do you want to accomplish every quarter (or month) of the calendar from now on?

You will also want to do this by analyzing how external opportunities can help you fight your own internal weaknesses. Can you also minimize these weaknesses to avoid the threats you identified?

Again, you will have a list of actions you want to prioritize and schedule.

Dudu Gentil · Nacionalvox

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