Most probably you have heard about SWOT analysis, you might even have started one, but you know exactly what it is used for? Have you used in an efficient way? Do not worry, Lexington will help you to learn all you need to know about SWOT analysis to use it properly and apply it efficiently to your business.
Starting from the beginning, what is SWOT? SWOT analysis is a management tool that helps you to analyze your business current situation. From that you could define your future strategies, as well as appropriate and efficient decision-making for your business growth.
The acronym means Strengths, Weaknesses, Opportunities and Threats. The analysis is made in a matrix and is divided in two sections:
1. External analysis
This section analyses the Business environment, the market, competitors and compile both opportunities and threats from them. You should check every area affecting the environment (legal and political issues, economic situation, social and cultural factors, technology trends and environmental requirements); your target, characteristics and behaviour; special features in your market; assessment of your competitor’s marketing-mix, current and potential; Summarizing, any aspect of your environment that could impact in your business
2. Internal analysis
Both positives (strengths) and negatives (weaknesses) aspects should be evaluated: organization and corporate culture; hiring, training, motivation and remuneration policies; fixed and variables costs, such as facilities, raw materials cost and technology systems
What do we have to take into account?
Now that you know what SWOT analysis is about, do not make the most common mistakes. Here you have some tips to avoid them:
- Everything in place. To perform the SWOT analysis is easy, but precisely because its simplicity, we can mistake concepts, placing them in a wrong quadrant. Make sure you include every analyzed item in its relevant quadrant.
- Do you know what the entrepreneur’s blindness is? It is the situation in which a business owner does not want to see the weaknesses in his/her business. You must be realistic and sincere. Only that way you will be able to implement efficient strategies towards a better future of your business
- And now what? What to do when I have gone through the SWOT analysis? Very simple: use it. Correct weaknesses, take advantage of market opportunities and strengths; face threats, controlling weak points. If you do it correctly, you can turn your negative aspects around and make them an advantage.
- Business is a continuum test. Analyze, set strategies, implement them, assess and change. It is extremely important that you have a long-term view. SWOT analysis is not something you do once and then leave it aside forgetting about it. Use it and from time to time, review it adapting it to the new situation. Most probably many aspects have change from last time.
Still some doubts about how to approach a SWOT analysis? This Inditex example will help you to clarify ideas
So now, are you ready to proceed with your SWOT analysis and see the improvement in your business performance?
Nothing happens without a reason. Everything in life is a succession of facts that, under a close analysis, are perfectly explained by cause and effect relationship.