SWOT Analysis, Strategic Decision Making Tool

For times and particularly post-pandemic situations, businesses need to make strategic decisions to improve their performance, meet the challenges and achieve their goals. These long-term policy decisions can only be fruitful if made in light of extensive research to gain the right information

 

       SWOT analysis is a managerial tool to have a clear picture of internal as well as external factors of the business in any current situation to reach the right decision for the future specific tenure. It helps you to derive a powerful strategy for your business growth while considering almost all internal and external factors.

What is SWOT Analysis?

SWOT stands for Strength, Weaknesses, Opportunities, and Threats your business faces in the marketplace. Strengths and Weaknesses are internal factors of a business (like HR, Plants, Working Environment, etc) you can change them over time, while Opportunities and Threats are external factors (like suppliers, competitors, Govt policies, etc) you cannot change them whether you like or not.

SWOT analysis is a process to list down these internal and external factors with full sincerity and confidence in an organized way. An existing business can use SWOT analysis at any time with changing market environment to review its business strategies. New businesses should use this analysis at the time of planning. In both cases, SWOT will help you to make the right decision, formulate the right strategy and save your business from future headaches.

In our discussion, we will understand the following:

Process of doing a SWOT analysis

Points of discussion for SWOT analysis

Derive strategies for your SWOT analysis (TOWS analysis)

Process of doing a SWOT analysis

The process of SWOT analysis is teamwork, which consists of the most relevant personnel from all the departments of your business. Invite the experts from Management, Sales, Production, Customer care, and even the customers (if possible) of your business. This process also could be an opportunity to bring your team together and encourage their participation in the formulation of the best future strategy for your business.

After finalizing your team member, assign the task to each team member to list down the four categories of SWOT (Strengths, Weaknesses, Opportunities and Threats) carefully of their relevant departments. Then arrange a meeting with all members to discuss and compile the list of SWOT. At this stage, it is not necessary to elaborate the list content, but just to compile and organize the list on a priority basis.

Points of discussion for SWOT analysis

Let’s know the necessary points under the four factors of SWOT analysis,

Strengths / Weaknesses:

Discuss with your team members about their knowledge, background, skills, expertise, and capabilities. Ask them about the working environment, intra and inter-department interaction procedures, and their views about the business itself and its products or services.

Ask your team members about what are the hurdles they face in achieving their tasks.  In which areas of your business there is a need for improvement, where your business has a competitive disadvantage over your best competitors.

Remember all the positive or negative attributes of your business under your control are the strengths or weaknesses, such as working capital, business location, production capability, use of technology, research, and development, distribution, or sales network. You can increase your strengths more or overcome your weaknesses as the strengths or weaknesses are the internal factors of your business

Opportunities / Threats:

Opportunities or threats are external or uncontrollable factors to your business. It includes market growth or decline, government policies or duties, the perception of your business in the market. In almost every business the pricing is also considered an external factor.

Existing or potential competitors, market trends, and customer behavior, many times availability and price of raw materials have also become an opportunity or threat to your business. Some time technology advancement may obsolete your product or service. 

The opportunities ensure the prosperity of your business while the threats bring your business at risk, if not making contingency plans in time.

Derive strategies from your SWOT analysis

Now we will discuss what strategies we can derive from the results of SWOT analysis. After SWOT analysis you would have the right view of the internal and external factors of your business. You can use these SWOT findings in deriving the short-term as well as long-term strategies.

S-O strategy:

In this attacking approach, businesses design ways to use the strengths identified in SWOT to maximize the opportunities in the market.

S-T strategy:

In this defensive approach, you can use the same strengths to minimize the impact of threats on your business. 

W-O strategy:

This is the pre-attacking approach. In this approach, the businesses overcome their weaknesses according to the opportunities in the market.

W-T strategy:

This is the pre-defensive approach. In this approach, the businesses design contingency plans to overcome the weaknesses and build strengths to face the threats in the market.

Once you have reached a conclusive strategy with the participation of your team. It is very important to schedule regular meetings to review the results of the adopted strategy. If the results of your strategy are different from what you had planned then make extensive discussions and redesign the approach.