BUSINESS & LIFE: Swot Analysis

Last week, we looked at the need for reviewing our strategy and looked at two models of doing so: Porter’s Competitive Forces Model and Mintzberg 5Ps. This week, we continue taking stock and reviewing our position and operations, and look at the SWOT Analysis, as a method of review.  The SWOT Analysis is a tool in planning and risk management, which provides a comprehensive look at one’s business.

SWOT Analysis means the “Strength, Weaknesses, Opportunities and Threats of one’s business.  This analysis takes an internal and external look at the business.  The Strengths and the Weaknesses are internal factors, which are within the control of the organisation.  Opportunities and Threats are externally driven, and factors that are not within the control of the company

Strengths are the good things and competencies of the company.  Some of the questions include, What are the strengths of the business?  What is the company good at? What unique activities does the company provide and possess? What is the profile of the management and staff?  What is the company’s financial position/strength?  What is the asset base and condition of the assets? Does the organisation possess well-articulated procedural manuals? Are there written policies?  Strengths include a strong management team, staff with a strategic fit, financial soundness, alignment of policies with the company’s strategy, strong branding and good reputation. 

The Weaknesses are the areas where the company needs to improve and things, which are internally driven and hence can be addressed internally. Do you have the right and sufficient staff?  Do you have the resources you need to operate efficiently? What is the company’s financial strength? Are your products and services well promoted?  Do you have a social media presence?  If yes, is it effective? What are the things the company needs to enhance?   Weaknesses include insufficient staff, incompetent management and staff, poorly aligned policies and procedures with the company’s strategy, weak financial position, inadequate resources, poor branding, reputation for poor quality and service.

Opportunities are factors, which the company can use to its advantage generated externally and which are outside of the control of the company.  The sources of the opportunities may be generated by the economy.  Questions to be answered, What is the economic climate? What is the level of education of the workforce? What is the cost of labour?  What is the status of the infrastructure? What is the cost of electricity and other utilities?  Opportunities include a growing economy, a large pool of trained workforce, good infrastructure – roads, telephone network, cheap labour, utilities, large market, high disposable income.  They provide the conditions whereby the company can expand its market and strengthen its position. 

Threats are external factors, which may be potentially disadvantageous to the business.  The same questions for Opportunities are relevant here, and the answers are the opposite of those for the Opportunities.   Other questions include, How many competitors exist? How easy is it to enter the market?  Threats include a declining economy or recession, high labour costs, high costs of doing business in the country, many competitors, and low demand for the product.  Threats can potentially harm a business.

When the SWOT is completed, one then assesses the relative strength of the four factors and desirably the Strengths and Opportunities should outweigh the Weaknesses and Threats.  This is a simple yet powerful tool for assessing one’s ability to become or remain competitive.  This analysis identifies one’s areas of strength and what a company is doing well.  It helps identify opportunities for growing the company.  The Weaknesses reveal the areas the company needs to address and things change.  The identification of the Threats can serve as an early warning of potential difficulties.  The SWOT Analysis is like a lighthouse, guiding a company to safety in the face of the storm and rocky shores.

I can be contacted at [email protected] and 767 449 9649.

Until we meet again, May The Lord Continue to Keep Us in the Palm of His Hands.