To run a business successfully and efficiently, business analysts need to regularly analyze a number of things and processes. There are a number of ways a business analyst assess a business, but one of the most effective methods out there is to conduct a SWOT analysis for business.
What Is SWOT Analysis?
A SWOT analysis is a planning technique used to determine a business’ strengths, weaknesses, opportunities and threats. The primary objective of performing a SWOT analysis for business is to help organizations overcome challenges and decide what new leads to pursue.
SWOT analysis was created by Albert Humphrey of the Stanford Research Institute during the 1960s to identify why corporate plans fail. Ever since its inception, it has become one of the most useful tools used in the growth of any business.
SWOT Analysis Process
SWOT analysis involves four main areas - Strengths, Weaknesses, Opportunities, and Threats. It includes both internal and external components, which are equally important for the success of a business. Here is a brief summary of the SWOT analysis process:
In a SWOT analysis, strength refers to the attributes within an organization that are necessary for the success of a project and ultimately, the success of a business. It can comprise all resources and capabilities that can be used at a competitive advantage. Some example of strengths of a business include:
- Good company reputation
- Strong social media presence
- Skilled and knowledgeable staff
- Qualities that make you stand out from your competitors
Any factor that could prevent successful results within a project are called weaknesses. You need to enhance these weaknesses in order to beat your competitors. Some examples of weaknesses of a business include:
- Lack of appropriate funding
- Rivalry between departments
- Weak internal communication system
- Unclear unique selling proposition
Opportunities of a business are those external elements that could be potentially helpful in achieving the goals of a project. They might come in the form of developments in the market you are in, the technologies you use, etc. You need to be able to spot and seize these opportunities for the long-lasting success of a business. Some examples of opportunities of business include:
- Media coverage for your company
- Emerging need for your products or services
- Few competitors in your market
- Overflowing leads
Threats can be anything that poses a potential risk for the success and growth of a business. It is important to anticipate threats and take action against them before they become a more serious problem. Some examples of threats of a business include:
- Negative public image
- Cheaper and better products and services
- Changes in laws and regulations
- Lack of vendors to supply raw materials
How to Do a SWOT Analysis for Your Business?
SWOT analysis for business is best conducted among a group of people with different perspectives and stakes in a business. Upper management customer service, sales, marketing, and even customers can provide valuable insights.
SWOT analysis matrix
Traditionally, a SWOT analysis is conducted by using a four-square SWOT analysis template where there is a box for each of the four components - strengths, weakness, opportunities, and threats. This makes it easier to have a glance at all the components in one go. However, you can just make a simple list as well for each component. The best method is the one which will make it easier for you to organize and understand the results.
These are the various steps that you can take to perform a SWOT analysis for business:
Step 1: Identify Your Strengths
Strengths are internal to your company and within your call. The first step is all about identifying all of your best assets. Here are some questions to get you started.
- Why do your customers stay?
- Why does your business do well?
- What is your unique selling point (USP) that sets you apart from competitors?
Step 2: Evaluate Your Weaknesses
Weaknesses are also internal factors that can break your business or leave you at a competitive disadvantage. The questions you can ask to identify some of your main weaknesses are:
- In which areas does your business struggle?
- Why do customers select your competitors over your business?
- What stops you from performing your best?
Step 3: Look Out for New Opportunities
In order to find new opportunities for your business, you need to do a lot of research. For this section of the SWOT analysis, you can think outside of the box for any possible thing that would be good for the business. One of the most important things you need to do is market research to gauge new and upcoming changes.
Step 4: Identify Threats
The most difficult part of SWOT analysis for business is to come up with a list of potential threats because you never know what can hit you. It may also cause some anxiety to think about threats, but it’s better to identify them before they turn into bigger problems in the future. List out all the threats, no matter how minor you think it might be. Even though it may not have severe consequences to watch out for, it is always better to have it on your radar so that you are ready whenever it becomes a major problem.
Step 5: Develop Actionable Strategies
Once you’ve come up with a list of each of your strengths, weaknesses, opportunities and threats, you can start developing actionable strategies from them using a technique called TOWS analysis.
Strength- Opportunity strategies
Which of the company’s strengths can be used to maximize the opportunities you identified?
Strength- Threat Strategies
How can you use the company’s strengths to minimize the threats you identified?
Weakness- Opportunity Strategies
What action(s) can you take to minimize the company’s weaknesses using the opportunities you identified?
Weakness- Threats Strategies
How can you minimize the company’s weaknesses to avoid the threats you identified?
TOWS analysis is an extension of SWOT analysis and involves matching up your strengths, opportunities, threats, and weaknesses to develop actionable strategies.
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SWOT Analysis for Business Analysts
A business analyst needs to know the working knowledge of SWOT analysis and its applications. A business analyst can utilize SWOT analysis in a number of ways:
- To ascertain the viability of a proposed solution
- To identify new opportunities in a domain or sector
- To find better alternatives for an existing solution
- To analyze a system undergoing change
- To study and research about business competition
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