The Steps to Performing a SWOT Analyis
A SWOT analysis stands for strengths, weaknesses, opportunities and threats. It's an analysis tool you can use to compare your strengths and weaknesses, or internal factors, against certain external factors, including key opportunities and threats that exist in the marketplace. These opportunities may come from competitors or technology. Threats may exist because of certain government regulations. Whatever the case, the objective of a SWOT analysis is to properly align your strengths and weaknesses against these external factors to exploit your strengths and minimize your risks.
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Define Your Objectives
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Define your objectives in a clear and concise manner, according to Idaho State University's Office of Academic Affairs. Write down what you want to accomplish from the SWOT analysis, such as a successful new product launch. Include specific ways you want to improve operations, or indicate whether you need to hire more experienced employees. Keep all of your objectives in mind as you work through the various stages of the SWOT analysis.
Identifying Strengths and Weaknesses - Internal Analysis
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Make a list of all your strengths and weaknesses. Include strengths related to your corporate culture, organizational structure or management team. For example, you may have a flat organizational structure that allows departments to better communicate with on another. You may also have greater flexibility in implementing marketing strategies with your flatter organizational structure. Decisions may come more quickly because you don't have multiple layers of management. Operational efficiency can also be a strength, as can financial resources, engineering and distribution. Recognize your key weaknesses, too. You may be new to the market and lack market share. Also, you may pay higher average unit costs to your supplier because you lack the financial resources to buy products in mass quantities.
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Identifying Opportunities and Threats - External Analysis
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List all the factors that impact your company externally: competitors, partners, customer needs, suppliers, new technology, new markets, government regulations or international trade barriers. You may have 10 other competitors in the market, for example. New technology may threaten your existing product line. List which of these key external factors represent potential opportunities. Include loss of competition as an advantage, for example, if one or more competitors decides to exit the market. List the external factors that represent key threats. New government regulations may impact the way you package or produce your food products.
Create a Matrix Grid
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Divide a piece of paper into four quadrants. Label your top two columns, from left to right, "Strengths" and "Weaknesses." Name your first row, "Opportunities" and your second row, just beneath it, "Threats." Match your key company strengths against any foreseeable opportunities in the top-left quadrant. For example, your new product features may be perfectly aligned with what your customers want. Indicate which weaknesses you can turn into opportunities in the upper right quadrant. You can increase your relatively low brand awareness through advertising, for example. Use the lower-left quadrant to identify how certain company strengths may be threatened. For example, a key competitor may be hiring new engineers that may match the talents of your own. Indicate which of your company's weaknesses may be particularly threatening to your business in the bottom-right quadrant. For example, your relatively weak customer service department may be hindering your service capabilities. Use your findings from the matrix to develop new business strategies.
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References
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