Importance of SWOT analysis:
Every business owner knows that in relation to business goals his / her enterprise has certain strengths and weaknesses. There are opportunities at the Marketplace, at the same time there are threats. In strategic management there is a huge importance of SWOT analysis. Therefore, it is imperative that a business owner must do a proper SWOT analysis along with the senior members of the team to analyze the situation properly. SWOT analysis in entrepreneurship is a very important tool and helps a business owner to take an objective look at the business situation and build a growth strategy accordingly. As a sales and business coach in India, I help my clients to use this tool very frequently. While working as a sales coach, I have personally found out that SWOT is an amazingly effective strategic tool.
SWOT analysis will help the leadership team to identify the issues in the business very clearly so that they can take some corrective actions.
“Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different.” Michael Porter
Scope of SWOT analysis:
The scope of SWOT analysis is large and that is why it acts as a particularly important tool to improve operational efficiency and produce better results. It is a very low-cost tool which if used effectively, will give lots of benefits to the organization. The best thing about this tool is that it can be used with the existing internal resources without any additional resources.
Strengths and Weakness in SWOT analysis:
The strength in SWOT analysis is the internal strengths of organization and the weakness in SWOT analysis represent the internal weaknesses of the organization. To clarify further the Strengths and weaknesses are the internal characteristics of organization which give them distinct advantages at the Marketplace and impede the growth, respectively.
Opportunity and Threats in SWOT analysis:
As a sales and business coach, I regularly draw the attention of my clients towards the opportunities of SWOT analysis. The opportunities in SWOT analysis are opportunities available to an organization at the marketplace. The opportunities are external to organization. The opportunities can be present currently or they may be coming up in near future. The idea is that organization must be ready to avail these opportunities at the right time. The opportunities force the leadership team to see through the distant future and spot out trends which are otherwise not so obvious. The threats in SWOT analysis are the external factors. They are business risks which are currently present or may arise due some factors external to organization.
The business must evaluate what opportunities exist at the Marketplace today and what are the threats presently there or likely to emerge. The Threats are external factors for situations which maybe impeding the growth of the organization today or may create a business risk in future.
Guidelines of SWOT analysis:
How to conduct the swot analysis? As mentioned above the SWOT analysis is an amazingly simple to use tool. But enormously powerful at the same time. You can use the following guidelines for SWOT analysis given below.
1. Organize a management meeting, invite all the members of the team who are familiar with your business very well and have been experienced hand in the business for quite some time.
2. Appoint a facilitator for the meeting to play a significant role for conducting the meeting. The facilitator should encourage the meeting attendees to do the brain writing and then brainstorming and must start writing down the strengths first as spoken by members of the meeting. Starting with the strength creates a positive environment in the team and encourages each other.
3. The objective of writing down the strengths is to write down all the important points which provide your organization a distinct advantage at the Marketplace. Do not write down small strengths rather focus on significant and important ones which help you in delivering higher level of performance and desired business results.
4. While documenting weaknesses do not create a huge list. Ensure to create a list of weaknesses which are creating issues related to operational efficiency, customer complaints, profitability, business growth employee’s dissatisfaction, process deviation, manufacturing rejections, waste generation etc. Weaknesses are the distracting factors and must be taken care immediately as they are retarding the growth of the organization.
5. The opportunities are external factors for the organization. The team must look out and discuss what opportunities exist, but organization is not currently utilizing them for the growth of business or resolving the operational issues. Discuss what opportunities might arise tomorrow because of new emerging trends of economic or political conditions in the country. The other factors which may create opportunities for an organization are new markets, New technology, New products or product enhancement, New investments, factors affecting competitors, commercial agreements or strategic partnership, regulatory environment, and trade development.
6. Threats are the forces which might impede the growth of the organization or put the business continuity at risk. The threats may be related to technological changes, turbulent political or economic environment, trade factors, new market entrants, natural disasters, crises including health, safety, product quality, liability, key staff going away from the organization, supply chain problem, distribution system problems, etc. The SWOT analysis.
Benefits of SWOT analysis:
Benefits of SWOT analysis are many and that is why it is a powerful strategic tool. If utilized properly it can be a particularly good help for the senior management to develop the growth strategy and eliminate the business efficiencies issues. It can help you prepare for future Business risk and can motivate you to do well by using the opportunities at the Marketplace.
“Execution is the ability to mesh strategy with reality, align people with goals, and achieve the promised results.” Larry Bossidy
Limitation of SWOT analysis:
Limitations of SWOT analysis: The swot analysis also has certain limitations as mentioned herewith. The most important one is that SWOT analysis does not prioritize the issues. It only enlists them. So, we can say that it gives you an overly broad picture. You cannot use SWOT analysis only to come up with detailed strategic document. Sometimes the swot analysis can generate lots of information but most of it may not be relevant and useful.
SWOT analysis does not give any idea on solutions. SWOT analysis is the only the first strategic step towards improvement and growth. After SWOT analysis the senior management must set up team for strategic solutions for growth.
Template of SWOT analysis
The template of SWOT analysis is amazingly simple. I am giving you an example of a SWOT analysis of a company I consulted.
Example of SWOT Analysis for ABC Ltd.
Strengths
- Focused Vision in terms of quality and deliverables continuously for the long time.
- Leadership in logistics and inventory support (On-time delivery always. “Round the Clock Stock Availability for all Sizes”
- Strong financial (sustaining)
- Strong Technical team supported by certified systems and processes.
Weaknesses
- Instability of new employees.
- No presence in the media
- Lack of brand strength (productvs. organization)
- Price Viability Challenge
- System and Process Manual with Accountability and Escalation Matrix is not in Place
Opportunities
- Diversification in terms of product variation possible (600D, 650D)
- Build a huge sustainable strong brand equity for company.
- Export Opportunity in Srilanka , Maldives and Myanmar Market
Threats
- Unhealthy competition (financially weak competitors)
- Govt policies
- Covid -19 effect on economy
