For the development of a business, it is necessary to take into account its strengths, risks and even the situation of the country. This is what the SWOT analysis serves: to assess growth opportunities and external barriers.
What is a SWOT analysis?
SWOT analysis is a strategic planning method. It is used to help an individual or organization identify their strengths, weaknesses, opportunities and threats related to competition or project planning.
To sum up, the essence of this analysis is that a person or group of specialists captures all the factors that affect the business and activities. On their basis already, conclusions are drawn about the prospects for the development of a company or situation.
This tool allows you to streamline decision processes related to your project and highlight key aspects of your business. It also helps you make decisions and prioritize that you need to focus on from time to time, so as not to waste your resources and energy on multiple fronts.
What are the components of a SWOT analysis?
SWOT is an acronym consisting of the following concepts:
- S (strengths): strengths, characteristics of the company that distinguish it from its competitors.
- W (weaknesses): weaknesses that make the company vulnerable to other actors.
- O (Opportunities): opportunities, elements of the environment that the company can use to grow.
- T (threats): threats, elements of the environment that can harm the business.
Forces
The strengths are the tangible and intangible benefits your business has. Some useful examples:
- Experience in the market for more than N years;
- High competence of the team;
- Leader of the niche, according to the ranking, statistics, etc;
- Winner of the niche competition;
- Modern and powerful equipment;
- Extensive and well-established distribution network;
- The product requires qualities that competitors do not have;
- Competitive salary and employee motivation system;
- Staff training system;
- Advantage in terms of price.
Weaknesses
These are the areas where we find a wide margin for improvement.
- Outdated equipment and its frequent breakdowns;
- High production cost;
- Lack of staff;
- Inadequate funding;
- Low employee motivation system compared to competitors
- Staff rotation;
- Restricted assortment;
- Poor quality, noticed by buyers: for example, unpleasant taste, fragile fabric, unstable paint on the product, etc;
- Impractical delivery and payment terms, the absence of a loyalty system.
opportunities
These are favorable external aspects of your business that you can use to your advantage.
- Favorable exchange rate developments;
- Absence of powerful competitors;
- Cheaper raw materials;
- Circumstances favourable to promotion and public relations: invitation to participate in a competition, ranking, conference, sponsorship, etc.
- Advantageous location of production or store;
- Changes in the tax system that are more favourable to businesses.
Threats
These are conditions beyond your control that affect your chances of success.
- Unstable political situation in the country
- laws restricting your area of activity;
- The emergence of a powerful competitor
- Innovations in the product of a competitor that “exploded” the market;
- Dumping by competitors;
- The tightening of customs legislation;
- Increasing the price of raw materials;
- Piracy when it comes to an intellectual property product.
