SWOT analysis- an integral part of market research- helps you to define the strengths, weaknesses, opportunities ahead, and possible threats to your business. It is presented in a two × two grid. It may look simple. But it is a standard analytical tool among companies for quite some time. It helps you come up with a sound business strategy.
A SWOT analysis is a comprehensive evaluation of your business. It digs into all the micro and macro aspects that may impact your venture. Strengths and weaknesses are the micro aspects of it. It means that they are factors from within the company that can be altered, for instance, employees, location, or intellectual property.
On the contrary, opportunities and threats are macro factors. You cannot change them, for example, consumer preferences, raw material prices, competition, etc.
The purpose of SWOT analysis is to aware you of all the variables that are impacting your business. So you can devise a strategy to capitalize on your strengths and opportunities. Similarly, you can plan on minimizing your weaknesses and threats. To be concise, SWOT helps you leverage micro factors to take advantage of the macro ones.
A SWOT analysis looks at a business from a unique lens. It can facilitate you to grow your business. Therefore, entrepreneurs should contribute as much as they can in it. They should be deeply involved because no one understands the venture better than them. However, the leadership should not conduct SWOT analysis just by them.
It is advised to include people from different functional areas from finance, marketing, product development, and sales to customer service. It will help to draw a bigger picture of the company. A pool of diverse perspectives on the business would improve the quality of SWOT ten-folds. Some businesses have also innovated to include customer opinion directly in SWOT analysis.
It should be mandatory for companies to conduct a new SWOT analysis bi-annually or update the older one. It is because the market dynamics are volatile. So you should adjust the SWOT as per the latest developments in the business environment. Moreover, startups can also conduct a SWOT analysis to codify a strategy to begin on the right foot.
A SWOT analysis can take up to a couple of hours. It is advisable to give each participant a sticky pad and ask them to begin generating ideas.
This will mean that no individual opinion is undermined or left behind. Now, bring different ideas to the table by sticking these notes in their respective fields. You can put identical views together. There may be a case where someone else’s idea might provoke thought in the other. Allow him/her to pen that thought down on the chart.
You must organize the ideas in ranks through voting after collecting them. You may give everyone a minimum of five votes to distribute. Many companies use sticky dots in different colors for this particular exercise.
You have prioritized the ideas now. This opens the floor for a constructive debate upon differing opinions. The Chief Executive Officer (CEO) or the Managing Director (MD) usually makes the final call. The process above can be followed as it is for each of the four quadrants in a SWOT analysis.
A business should carry out SWOT analysis regularly to self-evaluate. It will help in creating a sound strategy to gain a competitive advantage over others.
We, at Oak Business Consultant, are specialized in providing consultation on these matters. We have helped a number of companies in building a robust financial model and business plan along with Pitch Deck. Therefore, you can visit our website Oak Business Consultant to consult with us for free.