The purpose of a SWOT analysis (strengths, weaknesses, opportunities, and threats) is to help produce a good fit between your company’s resources and capabilities and your external environment. Your SWOT analysis is a balance sheet of your strategic position right now.
In the analysis, you bring together all your internal factors, strengths, and weaknesses, as well as your external factors, opportunities, and threats. Strengths and weaknesses are factors that you can control and affect. Opportunities and threats are out of your control; you can either try to take advantage of them or try to minimize them. Follow these steps to complete your SWOT analysis grid:
Construct a grid similar to the one shown in the figure, with columns for internal and external factors.
Develop your lists of strengths, weaknesses, opportunities, and threats.
Condense similar factors. Eliminate nonessential ones. You want to be able to see a clear picture of your strategic position. If too many factors exist, drawing any conclusions is impossible.
Place your company’s strengths and weaknesses in the left side of the grid.
Make sure to include only the factors that are internal and controllable.
Place your opportunities and threats in the right side of the grid.
Make sure to include only the factors that are external and out of your direct control.
Be careful not to oversimplify the strength, weakness, opportunity, or threat descriptions. Saying that poor communications is a weakness is easy and too broad a comment. Instead, identify specifically which communications cause problems. Is it with customers through the call center, information on pricing disseminated to staff, or something else?
Getting specific leads to a solution. This level of detail issue is one reason a skilled facilitator can improve the output of the team.
Before you move on, consider pulling in other people to get an objective perspective of your opportunities and threats. Here are a few approaches to consider:
Hold a SWOT meeting. Bring in your key employees and managers to help you complete your SWOT. You can either facilitate the meeting by asking them to think about the areas explained earlier in this chapter, or you can have a free brainstorming session.
At the end, get your groups to come to a consensus on what the top five strengths, weakness, opportunities, and threats are. You can use the results to guide your short-term goal development for your strategic plan.
Form a SWOT team. Pull together a group of employees and outsiders, such as advisors or industry experts, to do a SWOT analysis. Ask this team to pull in ideas not only by talking to co-workers but also by assessing the competition and your industry to see what you may be missing.
Go stealth. Not everyone feels comfortable sharing ideas in front of a group, especially if the opinion isn’t a widely shared one. Develop a web-based survey, such as Zoomrang or Survey Monkey, with open-ended questions about the strengths and weaknesses of your company. Make sure that the survey is anonymous and that everyone knows it.
The information people provide is invaluable. You couldn’t pay a consultant enough to give you the same ideas.
A well-thought-out SWOT helps you weigh factors against each other to determine what your company should do and when you should do it. Your next step is to use your SWOT analysis to developing goals and objectives around your findings. In the meantime, if you want to take action now, here’s how to use your SWOT today:
Build on your strengths.
Shore up your weaknesses.
Capitalize on your opportunities.
Recognize your threats.
Change is the only constant in business. Therefore, assessing your strategic position is as dynamic as the environment you operate in. Know that your SWOT just captures a moment in time, like your balance sheet. Take this tool out every time you go into your strategic planning cycle. It never gets rusty.