SWOT Analysis: A Powerful and Underutilized Tool

September 7th, 2010 by Rob Berman Leave a reply »

swot_imgphoto © 2008 jean-louis Zimmermann | more info (via: Wylio)
SWOT Analysis is a powerful tool for looking at your business.  Let’s take a look at how it works.  Then, you just might utilize it more.

SWOT Basics

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats.  The goal is to examine internal (Strengths & Weaknesses) and external (Opportunities and Threats) elements of a business.  If there are multiple product lines or lines of business the SWOT Analysis can be defined more or less narrowly as necessary.

Once the business to be examined is determined, start listing items that fall under each category.  I have performed SWOT Analysis by myself or with a group.  In a group, you may generate more items through serendipity.  For example, the merging of multiple ideas or the refinement of ideas through discussion.

Keys to Success

  • Each point under one of the four headings needs to be something that is clearly definable or achievable.  For example, saying you want more customers is perhaps achievable.  But, what is more?
  • Breakdown points to specifics versus broad sweeping statements.  Consider quality.  If you say you have a quality product, then how can you objectively compare it to your new, desired state or that of a competitor?

What Do I Do with My Chart?

The real work begins after you have created the chart.  Share it, as necessary, to get feedback and refine it.  Next you want to look at each category for action.

Strengths: How can I leverage them?

Weaknesses: How can I minimize or eliminate then?

Opportunities: How can I capitalize on these while possibly eliminating weaknesses or threats?

Threats: Evaluate opportunities that can address the threats.

What Do I Do Next?

Start to create actions and action plans to work on the items identified by your SWOT Analysis.  Assign tasks and hold staff or yourself accountable for making progress.

The Takeaway

SWOT ANALYSIS is a tool that lets you look internally and externally at your business for its Strengths, Weaknesses, Opportunities and Threats.

That is how it works. What do you think?  Please comment below.

  1. Have you used SWOT Analysis?
  2. Did you find SWOT Analysis helpful?
  3. Do you go to the extra level of work after compiling categories?

If you would like to contact me, you may do so by visiting my LinkedIn page or e-mailing me at rcberman2 (at) yahoo.com.

Be Sociable, Share!
Advertisement

43 comments

  1. D. Coyle says:

    Hi Rob, Do you have any questions with regard to each category of a SWOT analysis that would apply to putting on a fundraising event?

    Thank you. I appreciate your time.

  2. Przemek says:

    I use SWOT when developing a business plan and sometimes when evaluate some ideas. I don’t like do this on paper. I using http://www.i-swot.com I can save all analysis to file and return later.

  3. well actually im using SWOT to evaluate our school and im encouraging people to using it…..
    thanks:)

  4. Hello Rob. This is a fine article and much needed. SWOT, in practice, is far too often an academic exercise instead of a practical device for improving the business. I have sent it to my followers and I trust they will give it the attention it deserves.

  5. Hello, Rob. I used a similar tool while working as a project manager at Sprint — before my freelance writing days. When you’ve got a team, in particular, it’s a powerful tool at gaining group buy-in. I used it mostly in white paper exercises to nail down the entire process. When you’ve got a team throughout the US doing entirely different and separate processes, using this method was THE tool in drilling down to the granular and finding weaknesses and disconnects no one knew existed, or knew about them, but wasn’t sure how to resolve them. This will do it. Thanks for that blast from the past!

  6. Bruce Serven says:

    Ah, ye olde’ business school buzz word.

    It’s a good tactic though Rob, I agree, and one that is overlooked far too often by many people and businesses.

    Unfortunately, it also seems that when they do do it, that they fail to really dig deep in there and be thorough with their analysis. Like you said, saying you want quality doesn’t mean anything because it is not clearly defined, it is not measurable, and it doesn’t specify HOW/why it is point of differentiation. However, if you say “our strength is quality because we have failure rates less than one in a million, with twenty year durability standards, and with 95% or better customer satisfaction”, then you have a distinct and measurable definition from which to work from, track/measure, and adhere to. The same level of thoroughness (the more the better) should be applied to all areas of the analysis.

    Some further sample questions that people might consider:

    Strengths:
    What are your assets?
    What differentiates you from your competitors?
    Do you have immensely talented people on your staff?
    Is your business debt free or have a better debt structure than your competitors?

    Weaknesses:
    What areas do you need to improve on?
    What areas are your competitors more appropriate for?
    Are you relying on one customer too much (ie: if selling to walmart is 80% of your business and that contract is gone tomorrow – can you still survive? can you still make payroll next week?)
    Do you have adequate cash flow to sustain you?
    Do you have adequate profit levels?
    Do you have a well of new ideas?
    Are you over leveraged (too much debt)?

    Opportunities:
    Is there talented located elsewhere that you might be able to acquire (as in: hire someone)?
    Is a competitor failing to adequately service the market?
    Is there an unmet need/want which you can fulfill? Are there trends emerging that you can profitably service?
    If you package your product differently, can you extract a higher premium for it (such as if you have an ebook and you repackage it as a video, or if you have a blog and repackage some of the blog content as a published book)?
    Can you take advantage of the historically low interest rates to refinance your debt?

    Threats:
    Is there a better equipped (funding, talent, mobility, etc) competitor in your market?
    Is there an entity who may not be a competitor today which could possibly become one tomorrow (think Google and Apple entering the cell phone market against Nokia & RIM)?
    Are your key staff satisfied in their work? Could they be poached by a competitor? Could they burn out and move to Bora Bora?
    Is your intellectual property properly secured (trademarks, copyrights, firewalls, data security plans, etc) against theft & loss (both from internal & external sources)?
    Is your company adequately funded?
    Do you have to rely on third parties for critical steps in your development process that could possibly derail your delivery schedule (such as a crucial building permit being held up by the city council, or relying on a tech vendor that is always late, etc)?
    What if your supplier runs out of product and you experience an extended stockout or shortage?
    What if there is a natural disaster?
    What if your customers go bankrupt?
    What if your website is hacked?
    What if you are sued?

    Sometimes it’s not the obvious questions that need to be answered, but rather the ones off on a tangent that are the most enlightening in such an analysis – don’t be afraid to go off on those tangents to explore those. On the same token, don’t get overtaken with analysis paralysis (too much data, too much thinking, not enough action).

    Lastly, all the analysis in the world won’t make a lick of difference if you don’t take any action on what you’ve discovered and/or proven w/ your SWOT.

    • Rob Berman says:

      Bruce:

      Tremendous list. Thanks so much for all of the thought in your comment. I am going to save your questions to make sure I cover them next time I do a SWOT.

      Rob

  7. Wow, this sure gives a new perspective on how to harness your strengths and your weaknesses Rob. Thank you. I’m intrigued by the SWOT analysis tool, off to explore.

  8. Well, you’ve obviously hit a nerve. SWOT Analysis was a buzz word in business back in the day but you don’t hear much about it now. I think because everything is happening in nano-second time, individuals and companies feel they don’t have the time to undertake this kind of thoughtful analysis. But it works and thanks for the reminder.

    • Rob Berman says:

      Jeannette:

      Maybe we are all of the same generation that learned this tool. Perhaps, it is not taught anymore. This is the 3rd most popular post I have had this year and it is not a week old.

      Rob

      • Spencer says:

        Rob, I’m a current business student and entrepreneur. JFYI, we are still learning about SWOT in business school. Thought you might like to know! That, and your posts have been quite helpful. Thanks!

  9. SWOT Analysis! That’s one of those tools that’s rattling around in the back of my mind – (having had it ingrained at my last job). This is a good reminder that just because I’m working alone – that doesn’t mean that I shouldn’t be applying he same business practices and strategies that successful companies and organizations use. Thanks Rob.

  10. I took a few business course in which I was asked to conduct SWOT Analysis on companies. I find this tool useful to evaluate your core competencies and competitive advantages.

    I have a little different way of looking at weaknesses. It makes complete sense to use the weaknesses to try and minimize or eliminate them. But I would also like to add that they may help expose opportunities. Basically a weakness can be something that your company is not good at, but not necessarily something that needs fixing. It is important not to focus on weaknesses that have a high cost to fix/solve but generate little benefit. Is the weakness an area that if improved will add value to the company or lead to a competitive advantage?

    I have an example of a SWOT Analysis from a school project that is on my linkedin page. It is a pdf file labeled ERP Proposal (See page 32 which is actually page 34 of the file. There is an explanation that follows the chart).

    We also used the Porter Five Forces Model to Analysis the Industry and identify competitive forces.

    Another nice tool that can help decide what problems are important to fix is the Pareto Analysis otherwise known as the 80/20 rule. This will help identify 20% of the causes that are creating 80% of the problems.

    I hope my examples helps the discussion.

    Jason

  11. Lynn Garcia says:

    SWOT analysis is so practical for all kinds of apps. Your article is a good synopsis for everyday use. Businesses, particularly small ones, don’t need extravagant tools, sometimes the simpler tools work better & certainly faster.

  12. Hi Rob. Have you noticed that with all the hoopla surrounding the Internet and social media marketing, some of the basic business principles that still have tremendous value like word-of-mouth advertising and SWOT analysis are sometimes overlooked?

    Defining/understanding/analyzing and acting on a company’s strengths, weaknesses, opportunities and threats is almost a must in managing, strategizing, and marketing one’s business.

    Thanks for this clear and concise valuable post.

    • Rob Berman says:

      Julie:

      You nailed it. The hype over Social Media and electronic marketing of whatever type has obscured the basic tools that are still valid. Word of Mouth can be the driver for new clients. However, to get there lots of other activities have to happen to have happy customers.

      Rob

  13. I have never heard of this! I will have to take a look it at with this structure. I do look at the components now and then, but more as a side thought. Thanks!

  14. Rob,

    Excellent summary of a useful tool. I appreciate the reminder of a tool I need to put back in the toolbox. I’ve used it before and it is very helpful in determining actions you need to take over the next 90 days to support your longer range plans. One point I’d stress is that you need to prioritize the actions coming out of the SWOT Analysis. Less is more. It’s easy to get have too many action items so doing a few well is better than trying to do too much. Thanks for sharing.

    Best,
    Chris

    • Rob Berman says:

      Chris:

      Your point about prioritizing is excellent. I ran a SWOT with a business once and we came up with over 20 action items. Do you start with quick hits or spend time on the bigger opportunities? I advised doing both. Get the couple of quick wins while you are working on the bigger payoffs.

      Rob

  15. Rob,
    I’ve never heard of SWOT Analysis. I like what you’ve outlined and will implement the process for my own business. By all means, the extra level of work is a “must do” if one has gone through the compiling categories in the first place. How else would results take place? Thanks!

  16. Yes Rob SWOT analysis can be a useful tool for a business.

    Catch is threats are difficult to foresee. What businesses did for instance understand that the recent global crisis would happen before it started? Problems unfortunately happen when we least expect it and with something we wouldn’t in our wildest dreams have imagined.

    • Rob Berman says:

      Catarina:

      We cannot plan for everything. The business cycle is one that can be planned for. The challenge is to determine how long the business cycle will last.

      Rob

  17. I have used the SWOT analysis tool in the past. It was very helpful when developing a business plan. As I read it I wondered why I hadnt done it for this business! Thank you for reminding me.

    I particularly like analyzing the opportunities and threats. I think that is the part most people miss when developing a plan.

  18. Susan Oakes says:

    Hi Rob,

    I have have used a SWOT as a way of summarising after I have done a business and market review. If done properly it can actually be used for the foundations for your marketing objectives, strategies and tactics.

    You make a very good point about braking it down to specifics and I have found if you just have a maximum of 3 -4 it helps you to focus on the key issues.

© 2009-2017 Rob Berman's Blog All Rights Reserved -- Copyright notice by Blog Copyright