A SWOT Analysis is a simple and commonly used analysis tool with four distinct parts that examine the things that can affect a business.
There are two parts that are internal-facing. Therefore, the business has greater control over what can be done about the specific issues that emerge.
The next two mainly take an external view of things that affect the business, therefore, the business is much less in control over the issues:
You can also take the perspective of what is helpful vs. harmful to the business.
- Strengths and Opportunities are helpful
- Weaknesses and Threats are harmful
SWOT Analyses can often be used within business plans, marketing strategy plans and other business planning documents.
Despite their simplicity, SWOT Analyses can often contain insights that can make or break a business. But many businesses either don’t bother to complete one, don’t periodically update, or don’t use the output of their SWOT Analysis.
Why complete a SWOT Analysis
The benefit of completing this analysis as part of a planning process is that it gives a view of the business situation at a glance, which helps think about how to engineer the strategy, taking account of everything in the SWOT.
For startups, or for example a business launching a new product or service, it’s far better to complete a SWOT Analysis before developing a marketing strategy and tactical plan, than to begin executing the marketing tactics and having to react to things that could have been anticipated.
Businesses, products and service offerings that are further along should also absolutely use a SWOT Analysis. They can help make some vital changes that help the business survive and hopefully perform at its best, by taking a step back to keep an eye on the bigger picture, especially the changing external environment.
Many businesses and entire industries have been wiped out because of things that could have been anticipated, or were anticipated but ignored. These businesses could have made strategic adjustments to mitigate the risks.
I’ll let you decide whether that’s irresponsible, short-sighted, complacent, arrogant, silly, or something else.
How to complete a SWOT Analysis
The image below plots out a typical SWOT Analysis. Recreate the table using your favourite document or presentation software, pen and paper or my favourite, a whiteboard.
You should be specific rather than generic by focusing on whatever you want to complete the analysis for, such as your business as a whole, your product or service, etc.
Then begin to brainstorm, perhaps with a colleague and add issues as they spring to mind.
You don’t have to complete it in any specific order. Just keep going until you can’t think of anything else worthwhile adding.
How to use the insights from a SWOT Analysis
You’ve done your SWOT Analysis. Now what? This is the most important part, and where most go wrong.
You don’t want to be one of those businesses that fails to use the insights and pays the ultimate price.
The output from a SWOT Analysis can be used across an entire organisation. It really depends on what the issues are, their importance for survival and performance and the size of your business.
Let’s use the world-famous Tesla cars as an example. I’ve made up one point for each SWOT quadrant and added my thought on what actions they could take.
- The leading all-electric motor company to disrupt the goals and direction of Governments and the entire motor industry for sustainability.
- Action: Hold the leading position by continuing to innovate within the motor industry and beyond with sustainability at the core.
- Action: Facilitate deals to attract corporate fleet buyers to capitalise on Government contributions towards all-electric vehicles.
- High entry price point for drivers to own a Tesla.
- Action: Prioritise product development in the lower market price points (Model S and X = High, Model 3 = Mid).
- Action: Build partnerships to drive conversion through finance deals and rental, attracting drivers that aspire to drive a Tesla but can’t/won’t purchase outright.
- Growing worldwide pressure and hard deadlines on vehicle manufacturers to be ‘clean’.
- Action: Use Tesla’s reputation and expertise to help the industry, by becoming an exclusive outsourced partner for battery tech for the next xx years, thus continuing to associate the brand with being no. #1 in ‘clean’ vehicles.
- Reputable competitor brands (e.g. BMW) are speeding up product development of their all-electric offerings and will combine their brand heritage with ‘clean’ offerings for a compelling proposition.
- Action: Use Tesla’s reputation and expertise in battery tech to enter new markets that support sustainability, such as power storage, domestic energy, etc. and create an integrated offering that isolates vehicle competitors to their primary industry (motoring) and positions the Tesla brand more broadly in peoples’ daily lives.
- Action: Build out the product range to attract the budget and small-car consumer segment.
SWOT Analyses are one of the most simple and powerful analysis tools for businesses.
If used properly, they can help a business stand the test of time and everything else that challenges a business.
They help you shape your overall offering, differentiate, optimise your operation, stand out against competitors, be a driver of change, work around legislation, and many other things that affect each individual business.
The planning process is extensive and a SWOT Analysis is a small but important part of it. If you need help with your planning and want expert advice on marketing strategy, get in touch.