Want a more efficient way to evaluate your business?
Look no further than the SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
In this article, I’ll walk you through how to conduct a SWOT analysis, and better yet, how to use it to improve.
What We’ll Cover:
What is a SWOT Analysis?
Essentially, a SWOT analysis is a process designed to help a business make better decisions.
Now let’s go over the SWOT analysis breakdown. It helps companies make better business decisions by evaluating all factors involved in the decision-making process, separated into strengths, weaknesses, opportunities, and threats (SWOT).
The goal of the analysis is to help determine and understand those factors and apply them to future business decisions.
But, the actual SWOT analysis is just your blueprint. It will help you collect the needed information, but it’s up to you to analyze the information and decide how best to use it.
When Should You Use a SWOT Analysis?
The cool thing about SWOT analysis: they’re flexible. They can be used to help in the planning of all things big and small, from major company initiatives to smaller tweaks in existing campaigns.
Truth be told, it should be used before making any kind of business action. Most often, you’ll see them for major activities, including:
- Possible new initiatives
- Implementing or deciding on new policies or strategies
- Altering or updating existing plans or campaigns
But you can also bring in a SWOT analysis when deciding things like your value proposition or even conducting a competitive keyword analysis.
Getting Started With Your SWOT Analysis
By now you’re probably wondering how to do a SWOT analysis.
SWOT analysis is usually collected grid-style, with a dedicated bullet list for each SWOT section.
But formatting aside, you’ll want to do a little prep work before jumping in.
First and foremost, have a clear objective. Are you considering expanding your company’s services? Or making a tweak to your existing email marketing strategy?
Whatever the reason, know what it is and inform anyone involved in the analysis beforehand to keep on track. Using team SWOT analysis only works if everyone is onboard with the plan.
You should also consider the following in your pre-SWOT planning:
- Put together a SWOT team (pun intended)- A team SWOT analysis isn’t a one-man job. To get the best information, you want multiple minds brainstorming and evaluating. Keep the team tight; enough people for solid information, but not too much that you’re bogged down.
- Be honest – Don’t let egos get in the way. Honestly discuss your weaknesses or areas that could use improvement; it’s the only way for the SWOT analysis to work.
- Be specific – Keep your list simple, but be very specific when listing your items. For example, “we’re ranked #1 in SEO Services by x magazine,” rather than “we’re good at our job.”
- SWOT your competitors – To gain the best edge in the biz, it’s a good idea to conduct a SWOT analysis test against your top 3 or 4 competitors as well. Obviously, you won’t have as much in-depth information, but it can be helpful to list out what you know to see where you have the edge and where you can improve relative to your competitors.
- Rank in order of importance – While every factor you list will likely be valid, it’s a good idea to go through and rank everything you compile in order of importance. For example, money. If you don’t have enough to accomplish what you’d like, that’s a major factor to consider. On the other hand, if you stand to get a sizable return, that could be a big deciding factor as well. Make sure you rank it accordingly.
SWOT Analysis: Strengths
In terms of a SWOT analysis, when we talk strengths we’re talking specifically about positive internal factors that you control.
What they are will depend on the objective of your SWOT analysis breakdown, but should include:
- Personnel – leadership or management skills
- Market position
- Resources – $$
- Value proposition
- Competitive advantage
- Quality of your product or service
- Growth potential
And the list goes on. Of course, this could vary widely.
For example, if you’re looking into something more specific like a potential new direction for your social media strategy, your strengths would center around specific achievements or personnel dedicated to that aspect of the business.
How to Identify Strengths Using SWOT Analysis:
You probably have a few of these in mind already, and there are plenty of questions to get things started.
The first thing you’ll want to do is revisit your goal: what part of your business is your SWOT analysis about?
So, if you’re looking at expanding sales, some questions to ask would be:
- What is your sales team best at?
- What benefits do your customers get from working with you?
- Do you have unique processes or services that separate you from the competition?
On the other hand, if you’re developing a marketing initiative, your questions would be geared more towards:
- What areas does your product or service beat the competition in?
- What are your highest profit margins?
- What are your most successful current marketing campaigns?
SWOT Analysis: Weaknesses
Okay, this is the part nobody likes.
But hey, it’s part of the process, and it requires (sometimes brutal) honesty. The good news? Getting those weak points out in the open is the only way to address and overcome them.
When you are conducting a SWOT analysis, your weaknesses – like your strengths – address internal factors you can control. But this time, it’s the negative factors.
This is where it’s especially helpful to have your SWOT team on hand, especially anyone who can address areas of the business you may not be as involved with.
Because your weaknesses also address internal factors, your considerations will fall under many of the same categories as your strengths, including:
- Personnel (any lack in training, specialization, etc.)
- Market position (where are you weakest)
How to Identify Weaknesses:
With SWOT analysis, you need to think broadly to start, along the lines of:
- What areas does your business struggle in the most?
- Where are your weakest points in regard to your competitors?
- Where are you losing sales?
- What reasons do customers select competitors over you?
Then, you can break it down to specifics. Take the sales example. If you’re looking to expand sales, you’ll have to take into consideration questions like: if you lost a sale, why did it happen? And, what do customers see as the biggest weakness in your sales process or product?
Similarly, if you want to expand your marketing scope but don’t have anyone who specializes in content creation, that could be a weakness to add to your list. Same goes if you have budgetary restrictions that keep you from being competitive in the YouTube space.
SWOT Analysis: Opportunities
Next up in the SWOT analysis breakdown: opportunities.
Both opportunities and threats refer to external factors. These may or may not be in your control (which will largely determine which category they fall into).
But first, the good news. Opportunities, as you can imply, represent the factors that you have a chance to capitalize on.
These could be things like:
- Emerging trends
- Economic trends
- New products or services
- Global influences
- New technologies
Remember, there’s always opportunity. You just have to know where to look for it (hint: SWOT team).
How to Identify Opportunities:
These will have a lot to do with your specific industry or niche. And again, it’s a question and answer game.
This time, your questions might look something like this:
- How can we improve our sales or on-boarding process?
- Are there any emerging trends?
- Which trends can benefit your business?
- Could you better allocate some of your resources?
- What kind of messaging and branding resonates most with our audience?
SWOT Analysis: Threats
And then come the threats. These are, as you likely guessed, the flip side of opportunities.
They’re also external factors, but they have the potential to have a far more negative effect.
Because these factors are often out of your control, it’s all too easy to ignore or disregard them. Don’t.
Instead, recognize them, and form a plan to minimize or deal with them in a way that impacts your business as little as possible.
How to Identify Threats:
The quickest way to find threats? Look at your competitors.
Are there any emerging competitors in your niche? Does one of them have a giant social following that dwarfs yours?
Also, it’s a good time to evaluate some of your weaknesses. Do any of these competitors pose a particular threat to your business?
Analyzing Your SWOT Analysis
At this point, you’re probably wondering what else factors into how to do a SWOT analysis.
So, you’ve successfully identified your strengths, weaknesses, opportunities, and threats.
Bad news? You’re not done with your analysis just yet.
Good news? You have a blueprint to form some solid strategies going forward.
To do that, you need to make the right connections between the quadrants in your SWOT analysis.
Generally, you want to:
- Maximize your strengths
- Use those strengths to take advantage of opportunities
- Use your strengths to minimize the threats to your business
- Eliminate your weaknesses to avoid possible threats
- Improve on existing weaknesses by taking advantage of opportunities
Using SWOT Analysis for Project Management
If you really want SWOT analysis to be a useful tool in your business arsenal, you need to apply it rigorously.
Here are a few tips to ensure that you are getting the most out of your SWOT analysis:
- Don’t accept vague statements – Make sure your statements are precise and can be verified.
- Trim down the factors – Edit your list of factors and prioritize them.
- See your options through – Don’t just talk about the options and strategies you come up with, make sure to execute.
- Apply options at the correct stage – Some strategies need to be implemented in the product production stage, whereas other strategies will only work in the marketing stage.
SWOT Analysis: Case Studies
Let’s take a look at a SWOT case study for reference.
First up: remember Blockbuster?
Well, your children probably don’t. Why? Because they had a relatively swift fall from grace – one that could have been avoided with a more serious look at their SWOT analysis.
Blockbuster failed to realize the threat of on-demand streaming. And because of it, they went out of business completely.
Additionally, they relied too heavily on revenue from a practice that was increasingly unpopular with their customers: high late fee charges.
What they should have done instead was embrace the opportunity of a changing market when it presented itself and used their strengths to stay on top.
Instead, they let Netflix swoop in with their low costs and user-friendly interface.
Blockbuster did eventually introduce a streaming service, but it was too little too late.
Had they taken the threat seriously and done more to address their customers’ dissatisfaction with late fees, they could have still taken advantage of their brand name recognition and massive customer base.
Instead, they stuck to their brick-and-mortar roots and, well the rest is history.
Now, let’s take a peek at another SWOT case study.
The same scenario goes for Kodak, the camera store that used to reside in malls over America. Their reluctance to accept the new digital camera format ultimately led to their demise.
On the flip side, competitors like Netflix saw an opportunity (streaming service) and used it to overcome their weaknesses and possible threats (no name recognition or physical locations).
Let’s dive even deeper into a SWOT case study by taking a long, hard look at McDonald’s.
As one of the most recognizable fast-food chain restaurants in the world, McDonald’s is a great example to follow for SWOT analysis.
Let’s do a basic SWOT analysis breakdown of the company as a whole.
- International Reach – McDonald’s has restaurants in 101 countries across the globe.
- Brand Identity – People all over the world recognize the golden arches and the Ronald McDonald clown mascot with flaming red hair.
- Partnerships – McDonald’s has joint ventures with many different companies including airports, amusement parks, and even Walmart.
- Cultural Awareness – The company changes their menu to suit the needs of the community. For example, McDonald’s restaurants in the Middle East do not carry pork products. Also, their restaurants in Hawaii are the only American locations that offer pineapple.
- Limited Menu – McDonald’s only offers variations of hamburgers, fries, and chicken nuggets. They are limited in that they don’t offer other popular items like hot dogs or pizza.
- High Employee Turnover – The company can’t seem to keep many employees for long. A high employee turnover rate means that training costs will also be high.
- Limited Healthy Options – McDonald’s does not offer organic or fresh products.
Using the information gained from this SWOT analysis, McDonald’s can determine what opportunities and threats are presented and how to adjust their marketing strategy to meet them head-on.
Opportunities may include:
- Added menu items
- Healthier menu options
- Joint ventures
Threats may include:
- Employees leaving for greener pastures
- Customers choosing a competitor with healthier choices
- Customers choosing a competitor with a bigger menu
Recently, McDonald’s has made the effort to execute some of the opportunities presented to them by offering healthier, varied menu items, which has allowed them to stay competitive in an increasingly crowded field.
Wrapping Up the SWOT Analysis
Bottom line: if you’re in any kind of business, you need to be conducting a SWOT analysis.
It could just save your business.