Ever felt the need of a tool that could analyse your business and suggest what changes you should make to maximize your profit? Well, there might not be a computer program as of yet that can help you with that but there surely is a technique. The name of such a technique is SWOT Analysis.
SWOT Analysis helps a business achieve the following objectives:-
- Highlight strength
- Recognize weaknesses
- Grasp opportunities
- Identify threats
What does one mean by SWOT Analysis?
SWOT is an acronym that stands for S: Strength W: Weakness O: Opportunities and T: Threats. This technique could help to shine a spotlight on all the crucial aspects of a company’s current situation. SWOT Analysis is done to understand the niche of a business and to get a step ahead of the competition by targeting that niche. Strength and weakness are internal to an organization, which point to the current state of the business whereas opportunities and threats are external factors that point to the future of the company in the market. Understanding the strength of a company helps to capitalize on the opportunities that may arise in the future is known as Matching. Whereas understanding the weaknesses to make it less vulnerable to its threats is known as Converting.
For example, at a point of time Blackberry phones were very famous but due to the release of the Android operating system they became obsolete so much so that their sales took a huge hit. After a huge loss to Android, the company management decided to release a new line of products. One line of products were aimed at its older customers who constituted their big market share at one point of time and had features similar to their very popular older phone and the other line was aimed at the newer generation who was slowly going towards something else. This is a clear example of conversion.
How to conduct a SWOT Analysis?
The first step towards a successful SWOT Analysis is the S i.e. the strength of a business. All the strengths and advantages of a business should be pointed out and noted carefully. Analyse your product and services, think about what you do the best, what is the most unique thing about your product/services, how are you better than your competitors and make an elaborated list of all your strengths.
Our second step involves taking a good hard look at yourself and identifying what is it that you don’t have perfection on, on what areas are you lagging behind your competitors, what is it that your customers complain about etc. This might not be that much of a fun but these could be the areas due to which you are unable to reach your market objectives .These are your company’s weaknesses and they can be tackled only if you know they exist. There is nothing one can do to improve his product/services if he doesn’t know what his weaknesses are.
Now in the third step it is time to have a look at the opportunities that may be present in your market or those which you might be able to create through the means of new products and services. The market you are in might be getting into a time of explosion of customer demands due to reasons like approaching holidays, change in fashions trends etc. and you want to be able to capitalize on that. Think about what are the great new ideas you have regarding new products that could you help you capture a new niche or fulfil the needs of the customers of your current niche.
Finally, the last step is to identify the threats that could push your company off the track to achieving its market goals. The threats may appear as changing technology, which might make your product/service obsolete, or there may be factors like rising competition in the niche you are present in. It is only through overcoming your weaknesses that you can eliminate or reduce the threat and have a prosperous future ahead for your business.
Points to be noted :-
- A SWOT analysis is never unique in the sense that if two persons of the same organization undergo the process of SWOT Analysis they may have different things on their list in the categories of strength, weakness, opportunities and threat due to a difference in perspective of how they have a view of the organization. Therefore, SWOT Analysis is subjective rather than objective.
- Be honest to yourself because only by being honest can you get the most out of the analysis and help get a stronger foothold in the market. Never overemphasize or underemphasize anything and just portray it the way it is.
- Be as specific as you can to get the most out of your analysis. Consider the tiniest of details into list.
- Keep your competition and time frame to achieve your goals in mind. Never let them get the best of you. Organize your plan to get the most out of it.
- Last but not the least KEEP IT SIMPLE! Do not let yourself go with the flow and over analyse everything. This is a very common mistake that people do which should be avoided.