What is SWOT analysis

We are accustomed to believing that ‘Zeroes’ turn into ‘ Heroes’ in almost the blink of an eye. In a fantastical world, all it takes is a single moment of magnificence that turns around the fate of a subject. If only, that could be true in the real world, but it is not!

No success of any magnitude was ever attained without planning for it. Planning and Analysis are essential to all fields of life. The need for Analysis is really strong in the Business sector. To make any Business related decision, a variety of relevant factors need to be taken into consideration.

“SWOT is cool, but strategic thinkers know that there is a point where:

– Strengths become weaknesses
– Weaknesses become strengths⁣⁣⁣⁣
– Opportunities become threats⁣⁣
– Threats become opportunities ⁣⁣

Strategic entrepreneurs and leaders find the greatest insights hiding behind SWOT.
⁣⁣― Richie Norton⁣⁣

It is the comparison and analysis of these factors that form the backbone to any decision-making process and are instrumental to the success of a venture. SWOT Analysis is the exact yardstick that a business needs to hold to make informed decisions.

What Is SWOT Analysis?

The success of a Business is dependent on factors about the company as well as out in the Market. SWOT analysis is one of the most commonly used terms in Business planning. SWOT analysis is a strategy tool that assists in understanding the scope of a business and planning accordingly.

SWOT is an acronym for Strengths (S), Weaknesses ( W), Opportunities ( O ) and Threats (T). A proper understanding of all four factors allows being at the face with the reality of the Business’s current position and allows better utilisation of the available resources.

Performing an assessment of the positives and the negatives that a business has to offer helps to prepare and overcome the lackings and prevents a probable failure from happening.

Moreover, SWOT analysis also helps a business or an individual to identify what is unique to a business and then invest well in that uniqueness to the maximum interest of the business.

How To Do SWOT Analysis?

SWOT analysis, as a technique,  is often used by startups or beginners to get started with a venture. It is the immediate step they take after an idea pops up. Established and profitable businesses to use SWOT analysis as a formal tool to help expand themselves and to strengthen their hold of the market. 

SWOT analysis can be performed by a team of individuals belonging to different levels and ranges intercommunicating ideas that present a real ‘report card’ of the business’s recent performance. These ideas can be broadly contained within sections of Strengths, Weaknesses, Opportunities and Threats.

The playwork of SWOT Analysis is a 2×2 grid structure where the four square boxes represent the four aspects of SWOT.

The aspects of SWOT are categorised into 

• Internal factors include Strengths and Weaknesses as these are aspects of the company. The company has some control over these factors and can change them to enhance performance.
• External factors include Opportunities and Threats which are aspects of the Market and are beyond the control of the company. They cannot be changed and a business can only adjust itself according to them.

We need to look into all 4 aspects of the SWOT Table in greater detail : 

Strengths (S)

Strengths are internal factors of a business, referring to the advantages and positive attributes that a company possesses to give itself an upper hand in the Market. These are critical success factors and the strengths of a company are related directly to the enhancement of performance of a business in the market. These factors are within the control of the business and are utilised effectively.

Strengths can be identified as everything that a company does better than its competitors. Strengths include factors like :

• The good reputation of the company in the Market.
• The successful business processes held by the business 
• Education, knowledge and skill of the team 
• Physical assets and capital possessed such as technology, cash etc 

Weaknesses (W)

The shortcomings of a company or aspects that could either be improved or avoided by the company in its running are termed as Weaknesses. Like strengths, weaknesses to are internal aspects that a company has control over and can overcome. 

These are aspects for which a business receives complaints or faces criticism over. A company can track its weaknesses through honest and realistic analysis of itself. 

Weaknesses include :

• Business processes that need improvement 
• Gaps and fissures within the team
• The advantages that the competitors have over the company 
• Assets that the business lacks or are not sufficient with.

Opportunities (O)

Opportunities are factors external to the company, that have the potential to contribute to the success of the business if claimed wisely. A company should possess the ability to spot these opportunities and put them into best use. 

 It is very much these ability to seize opportunities that provide an edge to a company over its rivals. Opportunities are available to services that a company is using or the market that it is feeding. Possible opportunities that a business should look out for are : 

• Growing market trends 
• How customers perceive  the business 
• Regulations that can advantage the company 
• Upcoming events 

Threats (T)

If the market provides opportunities that help the business grow, it also imposes threats that are likely to slow down or hamper the growth of a company. These are external hurdles to a company’s growth and are problems that a company must expect to face and prepare to tackle.

The opportunities and strengths of the competitors add to the threats that a business has to face. Hence, a business should be constantly aware of its competitor’s progress and their running, to minimise the risk, threats have to offer. 

A company has to keep up with the growing trends of the market to hold the lead that it has over its rivals. Threats to a company’s success include : 

• The entry of new competitors in the market
• Customers’ changing behaviour for the company 
• Not being able to adapt to technological advancements
• Inability to meet supplier’s price demands 

It is very important to understand that the content of the aspects may vary between different divisions of the same business. For instance, The legacy and reputation of a company is a potential strength, to one division but may be perceived as outdated to another division and hence be termed as a weakness. Therefore, SWOT Analysis should be performed on different levels and fractions of a business.

How To Use SWOT Analysis?

Once the SWOT Analysis is ready, a company comes at the face with everything that it is furnished with and all that it needs to work on. But the next step after preparation of the Analysis is, not to just rush into action, but to again carry a proper derivation of the Analysis. It is important to check whether the positives outweigh the negatives.

Further, one needs to check possible relations between different aspects and see if the strengths have the potential to open up more opportunities. 

The next step to use the SWOT Analysis would be to reach the most significant ideas about the growth of the company. Make comparisons within the divisions and prioritise the course of action.

At all times, keep the SWOT Analysis accessible and update it at regular intervals. Allowing the SWOT Analysis to stagnate can result in an expansion of weaknesses and threats to the company’s growth.

SWOT Analysis Example – Starbucks

https://m.facebook.com/1100063170173519/posts/starbucks-swot-analysis/1512598625586636/

To understand the scope of a SWOT Analysis, it would be immensely helpful to go through an example. 

Starbucks is one of the most powerful brands on the face of the earth. Established in Seattle, the US in 1971, Starbucks has grown to become a global phenomenon with over 30,000 stores across the world. More than just a coffee house chain, Starbucks has become significant to the American dream and hence any aspiration to anyone who wants to be related to the American dream.

Below, we take a look at an example of a SWOT Analysis for Starbucks.

The table presents the advantages that Starbucks has over the competitors that help it in being successful as a brand. Also, the positive attributes outweigh the negatives, which is significant to any profitable business. To keep its growth consistent, the team needs to focus on the weaknesses and threats they need to overcome along with capitalising the positives.

Businesses need effective planning and efficient utilisation of its available resources to keep compounding their growth over some time. SWOT Analysis is a useful tool to form in-depth research of the company’s performance, potential and risk.

SWOT Analysis lets you, a vision of new ways and directions that the company can enroute. In the present market scenario which is highly competitive and it’s almost as if rivals are breathing down the neck, it is a SWOT Analysis and its perfect utilisation that gives an additional boost to the company’s position in the market.

Remember, it is always wise to measure the pit, before a leap is taken. You can time your jumps to perfection once you have known the pit well. SWOT- Analysis helps businesses to leap over pits and land on eventual cushions of success.