About SWOT Diagrams
A SWOT diagram is simply a visual representation of the SWOT business analysis. The diagram is a powerful tool for any business, and can determine strengths, weaknesses, opportunities, and threats. The SWOT analysis diagram can help a business formulate a strategy to differentiate a product line or service from that offered by a competitor. Create a SWOT diagram using a Word document or spreadsheet application.
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History
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An important component of any company business plan, the SWOT analysis is credited to Albert Humphrey, a business consultant for the Stanford Research Institute in California, USA. During the 1960's and 70's, he developed the SWOT analysis diagram with his research team while studying data from Fortune 500 companies.
Significance
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The SWOT analysis is an essential element of the marketing analysis portion of a business plan. Developing a SWOT analysis during the planning stages of a business helps to identify ideas and issues that the company may face now and/or in the future.
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Features
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The SWOT anaylysis diagram is a useful and informative way to identify four types of information about a business. The "S" and "W" represent the strengths and weaknesses (the internal analysis of a business), while the "O" and "T" represent the external opportunities and threats that may affect a business.
Examples of a company's strengths and weaknesses may include name recognition, location, and experience. Opportunities and threats may include the overall economic situation, competitors' market share, and the financial resources of the competition.
Identification
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There are several way to create a SWOT diagram, but all are basically composed of four quadrants. Each quadrant represents one letter of S, W, O, and T. A business planner fills in data applicable within each quadrant. For example, the business's strengths should be placed in the upper left quadrant; the business's weaknesses in the upper right, the business's opportunities in the lower left, and the business's weaknesses in the lower right.
Benefits
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By researching external factors such as the market and competition, a business owner can identify opportunities to explore internal strengths or weaknesses that may be advantageous to the business. Without careful study of the environment through a SWOT analysis, a company may fail to see trends in the marketplace. A SWOT analysis diagram captures these observations in an easy to read format.
Considerations
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As with all parts of a business plan, the SWOT analysis diagram should be reviewed and updated on a continual basis since a business inevitably changes throughout its existence. Likewise, external threats and opportunities are constantly evolving, and businesses would be wise to manage their businesses in response to its environment. Such prudence is beneficial to the success of any business.
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Resources
- Photo Credit Marichelle Rocha
