How to Develop a Strategy For Success
Use a SWOT Analysis to assess your organisation's current position before you decide on any new strategy. Find out what's working well and what's not so good. Ask yourself where you want to go, how you might get there – and what might get in your way.
This article and video will help you to discover what a SWOT Analysis is, how to carry one out, and how to apply its benefits to the maximum.
What is a SWOT Analysis?
SWOT stands for Strengths, Weaknesses, Opportunities and Threats, so a SWOT Analysis is a technique for assessing these four aspects of your business.
You can use a SWOT Analysis to make the most of what you've got, to your organisation's best advantage. You can use it to reduce the chances of failure and better still, you can start to craft a strategy that distinguishes you from your competitors, and so compete successfully in your market.
How to Perform a SWOT Analysis
First, draw up a SWOT Analysis matrix. This is a 2x2 grid, with one square for each of the four aspects of SWOT. The example below shows what it should look like.
What do you do well?
What could you improve?
What opportunities are open to you?
What threats could harm you?
Use brainstorming techniques to build a list of ideas about where your organisation currently stands.
To clarify which section an idea belongs to, it may be useful to think of Strengths and Weaknesses as internal factors – that is, to do with the organisation, its assets, processes, and people. Think of Opportunities and Threats as external factors, arising from your market, your competition, and the wider economy.
Let's look at each area in more detail and consider what questions you could ask as part of your analysis.
StrengthsStrengths are things that your organisation does particularly well, or in a way that distinguishes you from your competitors.
Your strengths are an integral part of your organization, so think about what makes it "tick." What do you do better than anyone else? What values drive your business? Identify and analyse your organisation's Unique Selling Proposition (USP), and add this to the Strengths section.
Remember, any aspect of your organisation is only a strength if it brings you a clear advantage. For example, if all of your competitors provide high-quality products, then a high-quality production process is not a strength in your market: it's a necessity.
WeaknessesNow it's time to consider your organisation's weaknesses. Be honest!
Weaknesses, like strengths, are inherent features of your organisation, so focus on your people, resources, systems and procedures. Think about what you could improve and the sorts of practices you should avoid.
Think about how other people in your market see you. Do they notice weaknesses that you tend to be blind to? Take time to examine how and why your competitors are doing better than you. What are you lacking?
OpportunitiesOpportunities are openings or chances for something positive to happen, but you'll need to claim them for yourself!
They usually arise from situations outside your organisation and require an eye to what might happen in the future. Being able to spot and exploit opportunities can make a huge difference to your organisation's ability to compete and take the lead in your market.
Think about good opportunities you can spot immediately. These don't need to be game-changers: even small advantages can increase your organisation's competitiveness. What interesting market trends are you aware of, large or small, which could have an impact?
Government policy announcements, changes in social patterns, population profiles and lifestyles can all throw up interesting opportunities.
ThreatsThreats include anything that can negatively affect your business from the outside, such as supply chain problems, shifts in market requirements, or a shortage of recruits.
Think about the obstacles you face in getting your product to market and selling. Evolving technology is an ever-present threat, as well as an opportunity!
Always consider what your competitors are doing, and whether you should be changing your organisation's emphasis to meet the challenge.
Be sure to explore whether your organisation is especially exposed to external challenges. Do you have bad debt or cash-flow problems, for example, that could make you vulnerable to even small changes in your market? This is the kind of threat that can seriously damage your business, so be alert.
Make sure you set time aside to perform a SWOT analysis in your business to ensure sustainable business growth is a reality in your business! For help on crafting a robust financial strategy in your business don't hessitate to reach out to us.