SWOT analysis

What is SWOT?

SWOT analysis is a management tool used to assess the  strengths  ,  weaknesses  ,  opportunities,  and  threats  of a scenario. In Portuguese it can also be known as the FOFA matrix.

Its objective is a diagnosis of the business environment. It is applied during strategic planning in the form of a matrix that helps the manager to think about these four elements and see the bottlenecks or the paths to follow.

Due to its simplicity, it is also common to see that SWOT Analysis is applied to the management of small initiatives and not just large companies, or even personal life.

SWOT analysis example

The SWOT Analysis is divided between the internal environment (Strengths and Weaknesses) and the external environment (Opportunities and Threats).

Internally, we consider the competitive advantages of the business (better product, better technology, skilled labor, etc.) as Strengths. The weaknesses are the sensitive points that are known internally, which are in a lower position than the competitors.

Externally, the threats are things like the market, seasonal problems, even political and economic problems. And the opportunities are these same factors, but on the other hand, they can offer a potential path for the company and not a problem.

One by one, these factors need to be filled in in the matrix, as in the following example:

How to do a SWOT analysis

It is applied during the strategic planning stage, before launching a new product or business, or during a period of reassessment and repositioning of the company. It is interesting to bring together the group of decision makers and key figures of the company for a moment of brainstorming, that is, a meeting in which everyone can collaborate equally, and preferably in an environment that allows the reduction of filters in the speaks. For a well-composed SWOT Analysis, you need as much information about the company as possible, with sincerity and without pride or feelings that can cover up the data.

The group will complete a model like this from the SWOT Analysis. Each of the points can be thought of as follows:

Cash

  • Internal elements (under company management control)
  • Positive factors
  • What the company does best
  • Advantages over the competition.
  • Intangible resources: knowledge and qualities of human resources, company reputation, brand image, etc.
  • Tangible resources: availability of capital, customers, distribution channels, registered patents, etc.

Weaknesses

  • Internal elements
  • Negative factors
  • Internal problems that harm competition.
  • Difficulty and underperforming areas.
  • Is there a fault in the business?
  • Obsolete technologies in production, or something like that?
  • Limited resources
  • Location issues (distribution difficulties, poor location, and problems with the workforce due to this, etc.).

Opportunities

  • External elements, outside the control of the company.
  • Positive factors
  • Market opportunities that can benefit the company.
  • External perception of the business.
  • Changes in competition and in the market in general.
  • Is the opportunity valid and permanent, or just a window?

Threats

  • External elements
  • Negative factors
  • Competitor qualification
  • Anticipation of future external risks.
  • Market challenges analysis: are they trends or are they always on the business side?
  • Situations that can damage marketing strategies.
  • Relationship with suppliers
  • Consumer behavior
  • Political and economic issues.
  • Market news