In 2020, the US accounting industry was expected to generate revenue of $110 billion. Statista's report displays how accounting plays a great role in businesses. But, dealing with numbers…continue reading
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What Is SWOT Analysis?
For starters, SWOT is an acronym for strengths, weaknesses, opportunities, and threats. And companies investigate those four aspects of their business. Meanwhile, an analysis aims to break down data results and components for evaluation. Combine the two terms, and you form a SWOT analysis. It refers to organizing a company according to the four elements. Such analysis reports aim to keep organizations aware of essential factors to create wiser business-driven decisions. And it is commonly presented in a two-by-two grid.
In 2015, declining sales occurred to McDonald’s, and the managers realized that the public perceives their fast food products as unhealthy.
According to Statista, the fashion retail business in the U.S. had approximately $257.3 billion estimated sales.
On the other hand, Alistair Dodds stated, via Business.com, that his business (Ever Increasing Circles) has a rule of conducting analyses at least every six months.
Who Should Conduct a SWOT Analysis?
SWOT analysis should concern the most influential people in business, particularly the founders, leaders, or managers. As the process is expected to be a team effort, the outcome might be bad if you assigned the wrong people. A tip is to gather groups of professionals with different perspectives. You could appoint a representative from each department like one from sales, marketing, customer service, and manufacturing. Different inputs contribute to numerous ideas. If you work solo, do not hesitate to seek help from co-professionals and other experts. Many startup businesses even hire accountants and lawyers as a collaborative effort.
SWOT Analysis: Why Is It Essential?
Did you know that Albert Humphrey invented the SWOT analysis when he worked at Stanford Research Institute in the 1960s? And its primary objectives are to maximize the advantage of strengths and opportunities and conquer weaknesses and threats. When you release any product, campaign, or service, for example, you would need a detailed review of your business if it’s doing well or not. And with an analysis, an unbiased business report commences. Maybe you assumed that operations are successful, yet the report may show that there is something wrong with the management. There is still time to take action in improving processes after you learn from the overview.
What is even better? Both individuals and businesses can benefit from SWOT analysis in various circumstances. One, SWOT helps you identify yourself. On that note, you can determine your behavior or personal weaknesses, strengths, and so forth. Thus, you can make solutions to grow better as an individual. Second, SWOT benefits every student in school. If students have particular subjects marked under weakness, then they find the opportunity to overcome such subjects. Hospitals, hotels, and other establishments identify their goals through an analysis too. And if your objective is to explore new strategies, change policies, fix plans—your call, allow SWOT analysis to guide you to the right execution.
The Four Quadrants of SWOT Analysis
When you form strategic plans for your business, a SWOT analysis is a tool you can depend on. What does it contain again? First, strengths and weaknesses, which are the internal factors of your business. You can control and change it over time. Meanwhile, it should also have a list of opportunities and threats, which are the external factors that you cannot change. Aside from knowing its acronyms and the effects it contributes, know further what each quadrant means first. And most importantly, what questions and goals should you observe for every quadrant? Hence, learn the details of the SWOT analysis elements:
How to Do a SWOT Analysis
After the discussion of the four elements—strengths, weaknesses, opportunities, and threats, proceed to do the actual analysis. It is not enough to know the quadrants only since the crucial part of a SWOT analysis is to conduct the process carefully. And if you have been wondering if your business is in a good position or not, wait no more as you start familiarizing the steps in doing SWOT analysis:
Step 1: Gather the Right Team for Brainstorming
When we discussed who must conduct SWOT analysis earlier, you already know that team effort is essential. Thus, start gathering every needed representative or employee until effective planning starts. Begin by brainstorming the objectives for around ten to fifteen minutes. Assure that everyone has a voice or can at least contribute during the meeting. Next, note the crucial parts regarding what the goals for the analysis report should be. To decide these matters, allow everyone to vote.
Step 2: Ask the Appropriate Questions
After you and your team agree on the objectives, ask the proper questions according to the quadrants. Aside from the sample questions discussed before, make your original examples. Form a questionnaire with queries that are relevant to the objectives. After listing the questions, divide them according to their category or quadrant. You may use the typical two-by-two chart or grid for this method.
Step 3: Highlight the Important Takeaways
Is your questionnaire already complete? Great. Follow the next step, which is to experiment and slowly answer those queries. Bear in mind that guessing the answers is not how the analysis works. Gather results from research surveys, statistics, articles, and more. Be sure to trust only the credible sources, or your data might have inaccuracies. Of course, you need not use all resources since you only highlight or take the critical parts from the answers. Choose answers that shall help the analysis only.
Step 4: Analyze the Findings
The challenging step is analyzing and interpreting the data. Start by studying and evaluating the strengths down to the threats. Figure out ways on how to retain each strength and get rid of each weakness. Address the problems until you can come up with effective solutions in the end. And while analyzing from strengths, observe how your enterprise can combat threats. Furthermore, will time affect your opportunities? Know which opportunities are important and urgent as you need to handle those first.
Step 5: Formulate Real Strategies
Greg Githens, an executive from Catalyst and Cadre, once said, “Don’t confuse SWOT for strategy.” SWOT analysis is merely the beginning of a plan. Hence, an action plan follows. So when you build any strategy, calculate its success rate. There are trials and errors in business. And sometimes, experiencing failure gives the best lessons. As you make a decision, various factors come to play too. You consider the budget, time, market trend, and so much more.
Step 6: Track the Progress
As you slowly complete the strategies, evaluate if results are promising or the other way around. Evaluations are an eye-opener since the real data gathered may surprise you. Also, you can change particular factors when something is wrong while monitoring. While SWOT shows you the business roadmap and design for strategies, you are still responsible for how the strategies work. And speaking of progress, do not just conduct SWOT once. Alistair Dodds from Ever Increasing Circles even told us that the rule is to do analyses every six months.
How are SWOT analysis and SWOT matrix different?
SWOT analysis caters to many aspects of businesses with data useful for strategies and decision making. Although analysis determines threats, for example, the SWOT matrix delves further by analyzing threats rather than identifying only.
What makes SWOT analysis effective?
Effectiveness varies on how researchers plan and execute their analysis. But generally, SWOT analysis is effective when analysts determine the factors of each quadrant and formulate solutions from the data.
What is the WT strategy?
WT refers to weaknesses and threats. And the WT strategy is an effective defensive system under the TOWS matrix. Similar to SWOT analysis, it plans to prevent threats and weaknesses. However, WT works best when organizations are in peril already.
Preparing a SWOT analysis might seem tiring, but it is also crucial. In fact, it is not entirely complex after knowing what every quadrant signifies and how to conduct the process. While your company may not have the same success story as McDonald’s, it does not mean that there are no possible solutions and opportunities to uncover. When you add SWOT analysis to your plan, you discover the benefits of a thriving business rather than a struggling one.