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SWOT Analysis
- Understanding Strengths, Weaknesses,
Opportunities and Threats
by James
Manktelow
Why use SWOT Analysis?
SWOT Analysis is a very effective way of identifying your
Strengths and Weaknesses, and of examining the Opportunities and
Threats you face. Carrying out an analysis using the SWOT framework
helps you to focus your activities into areas where you are strong
and where the greatest opportunities lie.
How to use tool:To carry out a
SWOT Analysis write down answers to the following questions. Where
appropriate, use similar questions:
Strengths:
- What advantages do you have?
- What do you do well?
- What relevant resources do you have access to?
- What do other people see as your strengths?
Consider this from your own point of view and from the point of
view of the people you deal with. Don't be modest. Be realistic. If
you are having any difficulty with this, try writing down a list of
your characteristics. Some of these will hopefully be strengths!
In looking at your strengths, think about them in relation to
your competitors - for example, if all your competitors provide high
quality products, then a high quality production process is not a
strength in the market, it is a necessity.
Weaknesses:
- What could you improve?
- What do you do badly?
- What should you avoid?
Again, consider this from an internal and external basis: Do
other people seem to perceive weaknesses that you do not see? Are
your competitors doing any better than you? It is best to be
realistic now, and face any unpleasant truths as soon as
possible.
Opportunities:
- Where are the good opportunities facing you?
- What are the interesting trends you are aware of?
Useful opportunities can come from such things as:
- Changes in technology and markets on both a broad and narrow
scale
- Changes in government policy related to your field
- Changes in social patterns, population profiles, lifestyle
changes, etc.
- Local Events
A useful approach to looking at opportunities is to look at your
strengths and ask yourself whether these open up any opportunities.
Alternatively, look at your weaknesses and ask yourself whether you
could open up opportunities by eliminating them.
Threats:
- What obstacles do you face?
- What is your competition doing?
- Are the required specifications for your job, products or
services changing?
- Is changing technology threatening your position?
- Do you have bad debt or cash-flow problems?
- Could any of your weaknesses seriously threaten your
business?
Carrying out this analysis will often be illuminating - both in
terms of pointing out what needs to be done, and in putting problems
into perspective.
You can also apply SWOT analysis to your competitors. This may
produce some interesting insights!
Example SWOT: A start-up small consultancy
business might carry out the following SWOT analysis:
Strengths:
- We are able to respond very quickly as we have no red tape, no
need for higher management approval, etc.
- We are able to give really good customer care, as the current
small amount of work means we have plenty of time to devote to
customers
- Our lead consultant has strong reputation within the market
- We can change direction quickly if we find that our marketing
is not working
- We have little overhead, so can offer good value to
customers
Weaknesses:
- Our company has no market presence or reputation
- We have a small staff with a shallow skills base in many areas
- We are vulnerable to vital staff being sick, leaving, etc.
- Our cash flow will be unreliable in the early stages
Opportunities:
- Our business sector is expanding, with many future
opportunities for success
- Our local council wants to encourage local businesses with
work where possible
- Our competitors may be slow to adopt new technologies
Threats:
- Will developments in technology change this market beyond our
ability to adapt?
- A small change in focus of a large competitor might wipe out
any market position we achieve
The consultancy might therefore decide to specialize in rapid
response, good value services to local businesses. Marketing would
be in selected local publications, to get the greatest possible
market presence for a set advertising budget. The consultancy should
keep up-to-date with changes in technology where possible.
Key points:
SWOT analysis is a framework for analysing your strengths and
weaknesses, and the opportunities and threats you face.
This will help you to focus on your strengths, minimise
weaknesses, and take the greatest possible advantage of
opportunities available.
Carrying out a personal SWOT Analysis is an important step in
finding life and career direction.
You can take this much further by working with a Mind Tools
coach. Our coaches help you think through the things that are
important, set the sharp goals that define what success means for
you, and then guide you in setting up the routines that make success
a habit.
Click here to find out more about our coaches.
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planning. The tools on these pages help you find and develop
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- See the next article in this series, Cash
Flow Forecasting, to see how to fuly understand the financial
viability of a project...
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