SWOT analysis is a requirement to create effective business plan or strategy.
SWOT analysis is a simple framework for generating strategic alternatives from a situation analysis. It is applicable to either the corporate level or the business unit level and frequently appears in marketing plans.
Because it concentrates on the issues that potentially have the most impact, the SWOT analysis is useful when a very limited amount of time is available to address a complex strategic situation.
The following diagram shows how a SWOT analysis fits into a strategic situation analysis.
The SWOT analysis classifies the internal aspects of the company as strengths or weaknesses and the external situational factors as opportunities or threats. Strengths can serve as a foundation for building a competitive advantage, and weaknesses may hinder it. By understanding these four aspects of its situation, a firm can better leverage its strengths, correct its weaknesses, capitalize on golden opportunities, and deter potentially devastating threats.
Internal Analysis (within the company’s control)
The internal analysis is a comprehensive evaluation of the internal environment's potential strengths and weaknesses. (in the company)
Factors should be evaluated across the organization in areas such as:
1. Company culture
a. How people behave in the company?
b. Is it individualism or collectivism?
c. Is it local minded or broad minded?
2. Company image
a. How people think about the reputation of the Company?
b. Do people know it well or unpopular?
3. Organizational structure
a. Is the organization chart flat or high Pyramid?
b. How fast the information can flow up and down?
4. Key staff
a. What are the qualifications or personality of the key people in the office?
5. Access to natural resources
a. Is it easy for the company to get natural resources such as water, oil and so on which are required to run a business?
6. Position on the experience curve
a. Are the people experienced or expertise in the office?
b. Is it at the optimal level or still need to grow?
7. Operational efficiency
a. How efficient the working people are?
b. Are they qualified enough to compete in the market?
8. Operational capacity
a. Do they have enough power to undertake their job independently when required?
9. Brand awareness
a. How well-known is the brand?
b. Is it new to them? What do you need to create brand awareness?
10. Market share
a. How big is the market share in terms of customer base or revenue or profit?
11. Financial resources
a. How about finance?
b. Do you have enough finance to support the operation?
c. Is it easy to get loan? What about the interest rate?
12. Exclusive contracts
a. Do you have any long term contract with big customers?
b. Or with the government? How long?
13. Patents and trade secrets
a. How good is your trademark or the secret of your product or service?
b. It is hard or easy for competitors to copy?
c. How long is your patent?
Answering the above questions “Yes and No” with brief explanation and list them on the Strengths or weakness accordingly is a perfect internal analysis.
Don’t ever say, your company is perfect, there is no weakness. There is no such a company in the world yet. If you do not know your weakness, you will not know how to avoid your competitors attack. The enemy always attack on the weakness of its rivals. Use your strength to gain competitive edge over your competitors and correct or protect your weakness from being attacked.
SWOT analysis is a simple framework for generating strategic alternatives from a situation analysis. It is applicable to either the corporate level or the business unit level and frequently appears in marketing plans.
Figure (1) Diagram for the meaning of SWOT
Because it concentrates on the issues that potentially have the most impact, the SWOT analysis is useful when a very limited amount of time is available to address a complex strategic situation.
The following diagram shows how a SWOT analysis fits into a strategic situation analysis.
Figure (2) Diagram for overall SWOT analysis
The SWOT analysis classifies the internal aspects of the company as strengths or weaknesses and the external situational factors as opportunities or threats. Strengths can serve as a foundation for building a competitive advantage, and weaknesses may hinder it. By understanding these four aspects of its situation, a firm can better leverage its strengths, correct its weaknesses, capitalize on golden opportunities, and deter potentially devastating threats.
Internal Analysis (within the company’s control)
The internal analysis is a comprehensive evaluation of the internal environment's potential strengths and weaknesses. (in the company)
Figure (3) Diagram for Internal analysis
Factors should be evaluated across the organization in areas such as:
1. Company culture
a. How people behave in the company?
b. Is it individualism or collectivism?
c. Is it local minded or broad minded?
2. Company image
a. How people think about the reputation of the Company?
b. Do people know it well or unpopular?
3. Organizational structure
a. Is the organization chart flat or high Pyramid?
b. How fast the information can flow up and down?
4. Key staff
a. What are the qualifications or personality of the key people in the office?
5. Access to natural resources
a. Is it easy for the company to get natural resources such as water, oil and so on which are required to run a business?
6. Position on the experience curve
a. Are the people experienced or expertise in the office?
b. Is it at the optimal level or still need to grow?
7. Operational efficiency
a. How efficient the working people are?
b. Are they qualified enough to compete in the market?
8. Operational capacity
a. Do they have enough power to undertake their job independently when required?
9. Brand awareness
a. How well-known is the brand?
b. Is it new to them? What do you need to create brand awareness?
10. Market share
a. How big is the market share in terms of customer base or revenue or profit?
11. Financial resources
a. How about finance?
b. Do you have enough finance to support the operation?
c. Is it easy to get loan? What about the interest rate?
12. Exclusive contracts
a. Do you have any long term contract with big customers?
b. Or with the government? How long?
13. Patents and trade secrets
a. How good is your trademark or the secret of your product or service?
b. It is hard or easy for competitors to copy?
c. How long is your patent?
Answering the above questions “Yes and No” with brief explanation and list them on the Strengths or weakness accordingly is a perfect internal analysis.
Don’t ever say, your company is perfect, there is no weakness. There is no such a company in the world yet. If you do not know your weakness, you will not know how to avoid your competitors attack. The enemy always attack on the weakness of its rivals. Use your strength to gain competitive edge over your competitors and correct or protect your weakness from being attacked.
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