What is SWOT analysis?
SWOT analysis is a simple framework for considering the areas that you are strong and weak on relative to other firms, and the opportunities and threats presented.
Strengths are the areas that you are superior relative to your competitors. It requires both an understanding of your internal resources and capabilities, as well as an understanding of your competitors. Consider where you have a competitive advantage – areas that you perform better on than other companies.
In the same way as you have identified the areas that you are strong on relative to other firms, examine the internal resources and capabilities where you are weaker than competitors. It is not always easy to admit to areas where you are not as strong as other firms, but taking a critical look is important to make the first steps in addressing your current weaknesses.
Once you have considered the internal capabilities relative to others and identified where you are strong and weak, you can start to consider the opportunities presented. What are the new possibilities that you can pursue to take advantage of your capabilities – potentially in areas that others would have a hard time competing.
Identifying potential threats are also important – the areas where other firms could potentially pose issues for the business. Beyond aware of the threats is important in helping you counteract them in advance. The better you are to anticipate competitor actions, the better placed you can be to respond to such actions.
Approaches for conducting SWOT analysis
You can treat SWOT analysis as a brainstorming exercise. The approach looks to collate together existing understanding, as well as identifying new areas to focus on. Getting all of your understanding on paper can help get a status check of the current state of play – helping you to prioritize areas to further develop or capitalize on.