Welp MagazineSWOT analysis (or SWOT matrix) is a strategic planning technique used to help a person or organization identify strengths, weaknesses, opportunities, and threats related to business competition or project planning.
What is Swot Matrix Strategy?
According to Investopedia, a SWOT matrix is a strategic planning tool used to analyse the strengths, weaknesses, opportunities, and threats that affect a company or project.
In detail, a SWOT analysis includes:
Strengths (S) – an internal factor within an organization or project that gives it an advantage over its competitors.
Weaknesses (W) – an internal factor within an organization or project that gives it a disadvantage compared to its competitors.
Opportunities (O) – an external factor within an organization or project that gives it a competitive marketplace advantage.
Threats (T) – An external factor within an organization or project that gives it a competitive disadvantage in the marketplace.
The Goal:
A SWOT analysis is a strategy management tool whose goal is to identify and understand all key internal and external factors that are critical to achieving desired results. Organizational strategies to achieve its goals are often developed based on an evaluation of the Strengths and Weaknesses of the organization or project and the Opportunities and Threats likely to confront them in the future.
Strengths and Weaknesses – Internal Factors.
Evaluating strengths and weaknesses of a project or organization can be an eye-opening experience. It can be easy to become complacent or even arrogant about the work that we do and the most remarkable products we build. In truth, most organizations have enormous room for improvement.
Ask yourself these questions:
- What do you do well? What do you do exceptionally well?
- What have you done exceptionally well in the past?
- What could you do better?
- What do you need to improve?
Don’t be afraid to take advantage of your strengths, but don’t be fooled into believing that the work you have already done is perfect, or that you don’t need to improve. Even NASA was not able to avoid failure completely. So, take the time to do a SWOT analysis and identify the strengths, weaknesses, opportunities, and threats related to your organization or project.
Opportunities – External Factors.
The opportunity section of a SWOT analysis is perhaps the most important. After all a strong organization or project is built on a combination of opportunities and weaknesses.
- What opportunities exist in your industry or marketplace?
- What new market has been identified?
- Are there new technologies or product features on the horizon?
Identifying opportunities is a systematic approach that helps you to develop plans to capture your advantages.
Threats – External Factors.
Executing a SWOT analysis also forces you to think about emerging trends, new technologies or competitor activity that could harm your project or organization. Identifying and understanding threats to your organization or project helps you develop strategies to reduce your exposure to these risks.
- Is your industry being threatened by new technology?
- Are there new competitors entering the market?
- Are your customers demanding new products?
SWOT analysis is a crucial part of strategic planning. It provides the organization leadership with information that it can use to make informed decisions to ensure that the organization achieves its strategic goals.
Examples of a SWOT analysis
Sony is a major electronics company. It has been producing innovative products for over 50 years. The company has a strong brand image. Sony divides itself into three different segments, such as electronics, entertainment, and financial services, and creates products in each segment. The company focuses on developing revolutionary products for the customers in each segment and achieve high profits. Sony has its own assets, such as infrastructure, good reputation, marketing excellence, strong internal systems, and long-standing experience.
On the other, Sony has weaknesses and threats, too. Sony after its restructuring is not as successful as it was once. The company has to now face the threat like lack of consistency in style, and old customers are no longer active. Also, the company is facing the threat of new and innovative products from competitors. If these threats and weaknesses get exposed in the future, Sony could lose its market share and eventually lose its profitability. So, Sony should make strategies and SWOT analysis and understand the threats and weaknesses that may harm to its business in the future.
SWOT Strategies.
Once you have completed your SWOT analysis, it is time to develop strategies to achieve your goals. Strategies must directly respond to the information generated by the SWOT analysis.
Based on the information revealed by a SWOT analysis, you should look for opportunities, develop plans to capitalize on these opportunities and eliminate threats. Opportunities and threats should be dealt with immediately.
However, when it comes to the SWOT analysis, the strategy development is trickier and requires a good amount of research and brainstorming.
Take as many sessions as needed to develop strategies. SWOT analysis is not something that can be done in a day.
An instance of SWOT Matrix Strategy:
Many large and small companies have successfully achieved their strategic goals by identifying their strengths and weaknesses, opportunities, and threats and using a SWOT analysis to develop strategies to capitalize on the opportunities and reduce threats to the organization and project.
SWOT Matrix Strategy Examples.
1: A small construction company is going to build a ramp to move the equipment from the parking lot to the basement of its new office building. The company uses a SWOT analysis and identifies its strengths and weaknesses, opportunities, and threats. The company has good knowledge of, but limited experience in building a ramp. The ramp construction project does not have a significant impact on the organization. The company has several weaknesses, such as lack of experience, limited manpower, and lack of knowledge. The organization has several opportunities, such as available funds to build the ramp, high profit potential of the extension of existing services or ability to get new contracts. The company is going to have some threats, such as competition with other companies, price of steel, availability of labour, and the time it takes to complete the ramp construction project.
The SWOT analysis clearly reveals that this company has the opportunity to rebuild his service in his market. The analysis also revealed that the company has to avoid the challenge coming from the competition and the challenges coming from acquiring building permit. Also, the opportunities and threats can help the organization to grow and can eliminate the time taken for obtaining permits. With this information, the company will develop a strategy for the ramp construction.
2: A large company manufactures and sells online education. The company conducts a SWOT analysis and identifies its strengths and weaknesses, opportunities, and threats. The company has a solid business plan. It has a solid team who is qualified and dedicated to carry out the company’s goal. The engineers generate the ideas and prototypes; the financial team closes the funding; and the leadership team executes well and present the projects to the investors. The company also has a significant amount of time to market. The company also has some challenges. It has very limited experience in manufacturing product and selling online. Plus, the competition is very stiff in the market.
The SWOT analysis reveals that the company has a lot of opportunities, such as the big market for the product, providing employment to the people, and developing a good reputation for the company. The analysis also reveals that the company has to avoid the risks coming from the technology sector, such as lack of experience in selling online and manufacturing. It also has to consider the opportunities that it is getting from the market.
The analysis also revealed that the company has to avoid the challenges coming from acquiring building permit and the challenges coming from competition. With this information, the company will develop a strategy for the ramp construction.
3: A student company has to build a ramp to move the huge equipment from the parking lot to the basement. The company uses a SWOT analysis and identifies its strengths and weaknesses, opportunities, and threats. The company has plenty of funds and available manpower to carry out the project. The engineering team does an excellent job of designing the ramp. The company also has some weaknesses, such as the lack of awareness about the company’s skill in building ramps. The company has some opportunities, such as the huge market for the ramp construction project, and the company is able to sell the additional services and benefit from the strong brand reputation of the company.
Q. What are the steps of a SWOT Analysis?
A. The steps of a SWOT Analysis are:
Identify your organization and strategic area (division, service or product) for which you need a SWOT analysis
Understand your company strengths and weaknesses through brainstorming.
Identify opportunities and threats in various markets.
Note down the above information under appropriate sections in a rectangular box called SWOT Matrix.
Review your SWOT analysis and develop strategies to make successful operations.
4: You are a leader of a big organization, and you want to build a ramp to help move the equipment from the parking lot to the basement. You are looking for a help from a service company. Also, you want to develop a business relationship with a company that has experience in building ramps. You are conducting a SWOT analysis to identify your strengths and weaknesses, opportunities, and threats. The company has some weaknesses, such as lack of experience and limited manpower. The company has some opportunities, such as good timing and a high profit potential. The company is facing some threats. The company is facing the competition from other companies and new competitors can make your company lose the market share. The company is going to have some opportunities, such as a good market to sell the ramps, a solid backing from the leadership team, and a solid team of engineers to deliver the product.
Once you have completed your SWOT analysis, it is time to develop strategies to achieve your goals. Strategies must directly respond to the information generated by the SWOT analysis.
Based on the information revealed by a SWOT analysis, you should look for opportunities, develop plans to capitalize on these opportunities and eliminate threats. Opportunities and threats can be economic, social or environmental factors outside your organizational control. Strategies must clearly focus on areas that have a positive influence on your organization.
5: You are a leader of an organization. You have decided to change the market strategy of your company and like to follow the Building and the sale of Ramps. You conduct a SWOT analysis and identify your organization’s weaknesses and strengths, opportunities, and threats. The company has some weaknesses, such as level of competitive nature of the current market, lack of manpower, and limited knowledge of ramp construction. The company has some opportunities, such as availability of funds to build the ramp, a big market for the opportunity, and having a good reputation in the market. The company is going to have some threats, such as having the competitors, availability of funds to build the ramp, and other uncontrollable market factors.
A SWOT analysis helps you to identify potential opportunities and ways to capitalize on these opportunities. Also, it helps to uncover potential threats that may be neutralized or turned into opportunities. All of this information serves as the platform for effective strategies. SWOT analysis provides a clear picture to develop strategies by eliminating any ambiguities or other unclear images.
6: There is an organization in the world of business. This company manufactures and sells the equipment ramp for different industries. The organization is looking for the opportunity to sell his product and has conducted a SWOT analysis by identifying its strengths, weaknesses, opportunities, and threats. The organization has some strengths, such as the advanced technology of his ramps; the high reputation of the company, and the availability of resources and manpower. The company has opportunities, such as a big market and building reputation in the market. The company has some threats, such as the high competition, the change in the price of steel, and the change in the availability of good quality resources.
The above information is used to develop strategies by a SWOT analysis. Strategies must respond to the analysis generated from the SWOT analysis. Strategies must focus on areas that have a positive influence on your company. Strategies must allow you to capitalize on opportunities and eliminate threats.
7: A leading construction company is looking for the opportunity to get contract for the demolition of a historic building. The company conducts a SWOT analysis and identifies the threats, opportunities, and strengths. The firm has a solid team and a strong experience in demolition service. The firm is going to be the lowest bidder for the project. The project is going to be completed as per the contract agreement. The renovation of the building is also going to be done successfully as per the desired time line. The company has the opportunity to generate profits in front of the greater popularity. The company has some threats, such as the increase in the price of steel as a raw material and the lack of experience in renovation of the building. The company is going to have some opportunities, such as increasing the profit and providing a higher job description to the manager and a profit-sharing scheme to the workers.
The above information is used to develop strategies by a SWOT analysis. Strategies must focus on areas that have a positive influence on your company. Strategies must allow you to capitalize on opportunities and eliminate threats.
8: A leading investment firm is looking for a way to improve its services to the customers. The firm conducts a SWOT analysis and identifies the threats, opportunities, and strengths. The firm has a strong brand value and a good reputation in the market. The company has the good customer relationship and availability of funds to expand the market. The company has some opportunities, such as adding new services and building a strong brand in the market. The company is going to have some threats, such as insufficient staff, shortage of funds, and the increase in wages.
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