The acronym SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Performing a SWOT analysis involves defining the objectives of a business then identifying the internal and external factors that will favorably and unfavorably influence the ability to achieve those objectives. A realistic SWOT analysis will enable formulation of effective business strategies and objectives. Following are keys to building a SWOT analysis and how to make use of the information:
- Analyze Business Strengths – The strengths of a business are those characteristics that give it an advantage over its competitors. Taking an assessment of the strengths of your business requires that you have a realistic view of your capabilities as well as those of your competition … Read More>>>
- Identify Business Weaknesses – The weaknesses of a business are those characteristics that place it at a disadvantage relative to others. Areas in which competitors excel over your service offerings will be viewed as weaknesses by your target market and will most likely be exploited by the competition … Read More>>>
- Identify Opportunities – Opportunities are circumstances that a business can exploit to its advantage. They can be found in a number of areas but the purpose of identifying them is to support development of business growth strategies … Read More>>>
- Define Potential Threats – Threats to a business are circumstances that could prevent or limit the ability to achieve desired objectives. Recognizing potential threats before they become problems will allow their impact to be mitigated or at the very least minimized … Read More>>>
There are many ways to utilize SWOT analysis data but the basic objective is to exploit strengths and opportunities while mitigating or minimizing weaknesses and threats. Matching strengths to opportunities will increase the likelihood of success. Weaknesses can be converted to strengths or if not they can be minimized or avoided. When strengths can be matched to threats there is a strong likelihood that the challenge can be overcome. When a weakness and a threat are closely aligned the possibility of an adverse outcome is increased. So a risk assessment should be performed on all items in a SWOT analysis and they should be prioritized as to potential impact. The strengths and opportunities that will result in the greatest reward should be given the highest priority. The weaknesses and threats that are likely to have the most negative impact on the business should be considered the most important.