What is SWOT Analysis? How to use it in your Business

What is SWOT Analysis? How to use it in your Business

What is SWOT Analysis? How to use it in your Business

Business needs to be constantly improved and adapted to changing market conditions. But, before making changes, it is necessary to analyze and identify strengths and weaknesses, threats and opportunities for development.

SWOT analysis sounds like the name of some terrible accounting process. But this is not so. A SWOT analysis does not involve complex operations but is very useful.

The abbreviation SWOT means:

S – Strengths
W – Weaknesses
O – Opportunities
T – Threats

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A SWOT business analysis allows you to evaluate a company’s business by four factors:

S – strength.

Competitive advantages of your enterprise:

  • a low cost of production,
  • a close-knit community of brand fans,
  • high KPI email newsletters.

W – weakness.

Internal factors that impede business growth reduce your competitiveness.

For example-

  • insufficient number of support staff,
  • lack of configured trigger mailings,
  • the high cost of attracting a client.

O – opportunities.

External factors that can positively affect business growth.

For example-

  • Improving the position of the site in organic search results,
  • “Leaving” a competitor from the market.

T – threats.

Negative external factors that may adversely affect the further development of the enterprise.

For example-

  • market size-reduction,
  • entering a large competitor with a lot of advantages

For companies, it is important to conduct a SWOT analysis of the enterprise at least once a year, even when things are going well.
The analysis will help determine the company’s development strategy under current market conditions.

At the same time, knowing the weaknesses, you can make every effort to level them.

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Why do we need a SWOT analysis?

This method solves several problems at once:

  • helps to better understand what business processes are going on in your company;
  • facilitates the vision and conduct of business,
  • gives an impetus to changes for the better;
  • makes you make important, and most importantly,
  • informed decisions;
  • helps to better understand the needs of customers, suppliers, staff.

In a word, it makes the life of a businessman easier and doing business more consciously.

How to conduct a SWOT analysis?

1. Find like-minded people. It is better to carry out the analysis not alone – but with the team. The ideal option is at the joint training of the company. This will kill not even two, but the nth number of birds with one stone: make an opinion about each employee, evaluate the degree of his involvement in the business, hear new ideas and versions. If your business is only in the project so far – call a potential partner or, if nothing can be done, analyze it yourself.

2. Brainstorm.

3. Fill in all four components. Write as many factors as possible – even the most unusual ideas, then you filter it and leave the most important. In the meantime – write! Either in a table or lists in a notebook or on a blackboard.

Let’s dwell on each of the components

Intrinsic factors

Analyze your resources, put a rating of “plus” or “minus” – so you will classify them as strengths or weaknesses.

1. Organization. How is the interaction between departments, employees, employees, and customers organized, how convenient is it for people to work, does anyone complain about the poor organization of business processes? Maybe something sags, but something works like a clock?

2. Production. It doesn’t matter what you produce – spare parts for foreign cars, websites, and landing pages, postage stamps – this factor takes into account the quality of the goods produced, their cost, the depreciation of existing funds.

3. Finance. Evaluate your annual turnover and profit, capital turnover rate, capital availability, available valuable assets. Here, the accounting department will provide invaluable assistance.

4. Innovation. That is the degree of novelty of manufactured goods, the number of new products. How often do you release new products or at least product updates?

5. Marketing. Evaluate how famous your brand is, how full the range is, what your prices are above or below market. Do you invest in advertising, how much and which?

6. Customer focus. How much does your company care about customers? Does he try to help everyone or lives according to the principle “one will leave – the other will come”? In what ways do you increase customer loyalty – hold promotions, give bonuses, arrange personal meetings?

Let’s go further. External factors

1. Demand. How much your products are in demand for consumers, how fast the market is growing. What exceeds is supply-demand or vice versa. If you have a little-known startup, you can be the first to shoot. If not, think about how you can increase customer demand.

2. Competition. Analyze how intense it is, how successful competitors are, whether there are substitute products (alternative), whether there are barriers to entry into the market.

3. Sales. Evaluate how efficiently your intermediaries work, what are the delivery conditions, whether the logistics work well, how quickly the goods reach the buyer.

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