A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.
What is SWOT analysis?
Is a SWOT analysis useful?
A SWOT analysis is an effective exercise to get to know a business and look at it from several angles. However the business world is highly impredictable, thus the SWOT analysis is useful as long as it promotes action, or it prevents actions that might lead to the business going in the wrong direction.
What are the steps to undertake a SWOT analysis?
The SWOT analysis is comprised of four building blocks:
- Strenghts: what are the key assets, resources and value propositions that give you a competitive edge and promote substantial growth?
- Weaknesses: what resources, assets or value propositions are lacking or preventing the growth of the business?
- Opportunities: based on the context, what are some available opportunities that can unlock the growth of the organization?
- Threats: based on the context, what threats might jeopardize the business in the future?
Internal vs. external
One thing to notice about the SWOT analysis is how it can be broken down in:
- Internal factors: strenghts and weaknesses are strictly tied to your business are internal factors which matter for the growth or decline of the organization.
- And external factors: opportunities and threats are external, market or industry-driven factors which matter for the growth or decline of the organization.
Therefore, while performing a SWOT analysis it’s critical to keep this distinction in mind.
Controllable vs. non-controllable
Another element of the SWOT analysis is how those same building blocks can be broken down in controllable and non-controllable:
- Controllable: strenghts and weaknesses which are primarily internal-driven are also the building blocks which an onrganization can control more easily in the short-term.
- Non-controllable: opportunities and threats, as they are primarily driven by the market or industry are harder to control in the short-term.
However, the more as a business you grow or limit the controllable building blocks (strenghts and weaknesses) the more you might able to improve your influence over the non-controllable (opportunities and threats).
The classic example if that of Apple who worked hard to improve its brand, by creating new hit products which defined whole new industries thus, creating opportunities that didn’t exist before and by posing new threats to those players who operated according to new rules.
Based on the context, what are some available opportunities that can unlock the growth of the organization?
Based on the context, what threats might jeopardize the business in the future?
Apple SWOT analysis example