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When planning a new business strategy or venture, businesses find it quite helpful to conduct a SWOT analysis. Basically, it’s a thorough evaluation of the strengths, weaknesses, opportunities and threats currently faced by your business which provide an insight of the internal and external factors which either help or keep your business from reaching its goals. SWOT is a useful tool and is easy to understand. However, there are certain things that should be kept in mind for SWOT analysis in business. If you want to know more about them, read on.
Start with External Factors First
Always begin by assessing the external factors of your business before working on the internal factors. Opportunities include your ability to grow in the market and provide better value to clients, whereas, threats are the factors which are putting your business at risk. By identifying potential threats before they escalate, you will be able to prepare yourselves with a stronger plan to counter them.
Make Each Strength & Weakness an Opportunity
Identify the strengths and weaknesses of your business by sitting and having a discussion with your staff. Go through each strength and weakness individually and evaluate whether or not they can be turned into new business opportunities.
Timeframes & Opportunities
Discuss the timeframe for each business opportunity you list. As opportunities are an external factor, your business can take advantage of them to grow. So, by assigning timeframes, you will know the time required to gain maximum benefits from these opportunities.
Threats Are Outside Your Control
Threats are factors which exist outside your business and mostly are outside your control. However, since they put your business and its plans at risk, view it as challenges you have to overcome.
Utilize Real Data
In order to create strategies which are realistic and will properly guide your business, it is important that your SWOT analysis is based on real data. For example, if a business proclaims customer service is one of its strengths (without any data to validate that belief) and builds a strategy accordingly, the strategy is designed to fail. This is why a SWOT analysis in business should be based on real data (like in Nokia’s example), not presumptions. Similarly, if important data is not considered in the SWOT process, it is most likely you will miss out on opportunities.
Focus & Prioritize On the Important Items
Identify the most important items in each category so your lists can be prioritized. Since those items will be most profitable for your business, it will lay the foundation for the development of effective strategies.
Through your SWOT analysis in a business, you will be able to derive strategies directly, focused on influencing strengths and opportunities to overcome threats and weaknesses. This is the area of strategy development where you can be most creative and many innovative ideas do emerge, but they will be of no use if the SWOT analysis in a business has not been prepared properly in the first place.
So, by keeping these following points in mind, you will be able to conduct a proper SWOT analysis in a business which will not only identify your current position, but also provide the insight you need to develop effective strategies to meet your business goals.