Secrets of Writing a Successful SWOT Analysis
What you don’t know about your market can kill your business. Companies like Sears and Blockbuster at one point dominated their market have died and disappeared.
There are countless reasons that a brand might die, from failing to keep up with market trends to a shift in the market landscape. Even brands that enjoy decades of popularity and impressive sales are not safe from extinction. If your goal is not just to open a business, but to make it successful, profitable, and competitive, you need to learn to make objective and informed decisions. For this purposes, you can use a SWOT analysis, which gives you an understanding of Strengths, Weaknesses, Opportunities and Threats related to your enterprise or start-up plan. SWOT analysis is also called a strategic balance.
The strategic balance is a particular combination of factors that negatively and positively affect the activity of the enterprise and threats and opportunities that objectively exist in the external environment of the enterprise. They should be subjectively evaluated by managers, paying attention to the comparatively strong and weak points in the functioning of the enterprise.
Before we start — the greatest threats arise when the negative development of the situation in the environment is imposed on the weaknesses of the enterprise; opportunities are situations in the external environment, a positive process is a phenomenon in which the company is able to demonstrate its strengths. Threats need to be identified in a timely manner to prevent the crisis of the enterprise, and knowledge of potential opportunities makes it possible to prepare in advance and use them efficiently.
SWOT-Analysis Writing Algorithm
1. Determine the purpose of conducting SWOT analysis.
2. Develop the SWOT-analysis matrix in the standard form:
- Internal environment: S – strengths, W – weaknesses.
- External environment: O – opportunities, T – threats.
In each column, the factors are specified in the order of priority (the optimal number of factors – 6 – 8).
The SWOT-analysis matrix is very peculiar. It does not contain the final information for making managerial decisions, but it allows streamlining the process of considering all available information using our own opinions and evaluations. For any manager, this is a useful characteristic, because it requires anyone who applies SWOT-analysis to reflect on the current situation and think about the prospect. Under these conditions, the role of the strategic manager, who develops specific measures to build a strategic balance, increases, because inexperienced planners can develop inadequate measures that “quench” opportunities, for example.
3. Justify environmental factors.
The reality and fairness of each factor should be reflected by the relevant data (including those in comparison with competitors).
- Checking strengths:
For each strong point define 2 questions:
- How does the strength improve the end result?
- Does the strong side have a competitive edge?
Factors that have come to the forefront, but do not improve the end result, or do not affect the competitive advantage should be excluded.
- Checking for weaknesses:
Do we indicate how the factor influences the final result or the competitive advantage for each element?
Factors that are known but do not affect the end result or the competitive advantage should be excluded.
- Testing opportunities:
For each opportunity we define:
- How does this feature improve the end result?
- Are there enough resources to implement this opportunity?
- If the answer to the first question is absent, then we rule out the possibility. If resources are not enough, the opportunity is excluded.
- Inspection of threats
For each threat we define:
- How does the threat worsen the end result?
- What is the timing of the threat?
- If the answer to Question 1 is missing, or the possible term is too remote, the threat is excluded.
4. Fill in the factors table
Key findings are written in the form of strategies to improve the end result at the expense of strengths and opportunities, as well as the weaknesses and threats.
5. Build a strategy table
The table indicates measures to implement strategies in order of their priority from greater to smaller. Measures aimed at solving issues:
- How to use the strengths to maximize end-points and competitive advantages?
- Is there a plan to turn weaknesses into strengths? How to hide weaknesses if they can not be changed? Is there an action plan to turn threats into opportunities? How to protect yourself from threats in the shortest possible time?
- How to realize opportunities in a short time?
- How to minimize weaknesses and mitigate threats?
6. Prepare a plan of activities with specified dates and resource requirements
Structure of the plan is as follows: a measure to implement the strategy; validity; financial costs; the number of performers; term of execution; responsible ones.
7. Construct the Pareto chart
Ultimately, a detailed SWOT analysis allows you to get an optimized plan for meeting your goals with the specified timeframe, the number of executors, the cost, the need for other resources, and more.
Writing a successful SWOT analysis from scratch is a challenging task, and sometimes it is better to make professionals do it. If you decide to write it on your own, make sure to keep all the factors balanced. Good luck!