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Inside we will conduct a swot analysis table 4. SWOT analysis |
SWOT is an acronym for the words Strengths, Weaknesses, Opportunities and Threats. The internal situation of the company is reflected mainly in S and W, and the external situation - in O and T. In table. presents the main factors that should be taken into account in a SWOT analysis of commercial firms. Strengths are especially significant for a company’s strategic perspective, since they are the cornerstones of strategy and the achievement of competitive advantages should be built on them. At the same time, a good strategy requires intervention in weak areas. Of particular importance is the identification of the company's distinctive advantages. This is important for strategy formation because: Unique opportunities give a firm a chance to take advantage of favorable market conditions, Create competitive advantages in the market, Potentially could be cornerstones of strategy. It is necessary to distinguish between the favorable opportunities of the industry and the company. Prevailing and emerging opportunities in an industry are most suitable for a company that has a competitive advantage or other opportunities for growth. SWOT analysis helps answer the following questions: Are internal strengths used as differentiating advantages, and which of her potential strengths could become them? Are the company's weaknesses its vulnerabilities and/or do they prevent it from taking advantage of favorable circumstances? What weaknesses require adjustment based on strategy? What favorable circumstances give the company a real chance of success? Note: favorable opportunities without ways to realize them are an illusion. A firm's strengths and weaknesses make it better or worse suited to exploit opportunities than other firms. What threats should a manager be most concerned about, and what strategic actions should he take to ensure good protection? Features and stages of constructionSWOT matrix 1 – A list of the company’s weaknesses and strengths is compiled, as well as a list of threats and opportunities. *analysis of strengths and weaknesses characterizes research into the internal environment of a company, which has several components: finance, marketing, production. Each of the components has its own structure, a set of key processes, and together determines the potential. Separately, the culture of the organization should be highlighted: in this case, analysis may be difficult due to the fact that culture does not have a formal manifestation. But the analysis can be carried out using an expert assessment of the mission, values, motivation system, conflict resolution system, etc. *for success and maintaining competitiveness, a forecast of the external environment (opportunities and threats) is carried out (i.e. internal aspects are analyzed based on the external situation). 2– To successfully apply the methodology of SWOT analysis of an organization’s environment, it is important to be able not only to identify factors, but also to try to evaluate them from the point of view of how important it is for the organization to take into account each of the components in its behavior strategy. To assess internal factors, both qualitative and quantitative assessments are possible. (rating is possible on a scale). To analyze the external situation, parameters such as the probability of achieving an event (рj) and the significance of the factor (influence) (Кj) are used. This matrix is constructed as follows: The degree of influence of the opportunity on the organization’s activities is determined (strong influence, moderate influence, small influence); The likelihood of the organization being able to take advantage of the opportunity is determined (high likelihood, medium likelihood, low likelihood). The resulting nine opportunity fields within the matrix have different meanings for the organization. Opportunities that fall into the “VS”, “VU” and “SS” fields are of great importance for the organization, and they must be used. Opportunities that fall into the “SM”, “NU” and “NM” fields practically do not deserve the organization’s attention. For the opportunities that fall into the remaining fields, management must make a positive decision to pursue them if the organization has sufficient resources. A similar matrix is compiled to assess threats. Possible consequences for the organization that the implementation of the threat can lead to (destruction, critical condition, serious condition, “minor bruises”) are postponed at the top. On the side is the probability that the threat will be realized (high probability, medium probability, low probability).
Those threats that fall into the “VR”, “VC” and “CP” fields pose a very great danger to the organization and require immediate and mandatory elimination. Threats that fall into the fields of VT, SK and HP should also be in the field of view of senior management and be eliminated as a matter of priority. As for the threats located in the “NK”, “ST” and “VL” fields, a careful and responsible approach to eliminating them is required. Threats that fall into the remaining fields should also not fall out of sight of the organization’s management. In this case, their development should be carefully monitored, although the task of eliminating them first is not set. 3 – A matrix is constructed based on the proposed list. 4-It is necessary to link the selected components (establish connections between them). For example, there are opportunities, but we cannot take advantage of them due to our company's weaknesses (the ability to serve additional customer groups - but outdated technology). Scores are given based on the fields of the matrix, highlighting the significance and influence of a particular factor. Expert estimates aij are determined in the interval [-5;5], based on which: With a direct relationship, the assessment is positive In case of inverse dependence - a negative characteristic The stronger the dependence, the higher the score. 5 – Expert assessments in cells a ij are then transposed into complex assessments. 6- In each of these fields, it is necessary to consider all possible pairwise combinations and highlight those that should be taken into account when developing the organization’s behavioral strategy. According to the assessments of each expert, the level of specific favorable opportunities for the company, threats, strengths, and weaknesses is assessed. 7 - For each zone of the matrix we obtain our own basic strategies. For the “C and B” field, a strategy should be developed to use the organization’s strengths in order to capitalize on the opportunities that have arisen in the external environment. (for example, the best strategy would be to focus on growth and increasing sales) for the “L and B” field, the strategy should be structured in such a way that, due to the emerging opportunities, an attempt is made to overcome the existing weaknesses in the organization. (for example, typical strategies are aimed at compensating for the company’s weaknesses through good opportunities provided by the external environment (creating joint ventures for active work in a promising market) for the S and U field, the strategy must involve using the organization's strength to eliminate threats. (strategies aimed at using the strengths of the enterprise to neutralize threats from the external environment. The company has significant internal strengths, but the external environment is fraught with many threats. Here the most effective strategies will be those aimed at mitigating external threats in the market through diversification (development of new products and markets ) and business integration.) for the “Strength and L” field, the organization must develop a strategy that would allow it to both get rid of the weakness and try to prevent the threat looming over it. (The most reasonable thing is either concentration on a narrow segment of the market or leaving the market.) When developing strategies, you need to remember that opportunities and threats can turn into their opposites. Thus, an untapped opportunity can become a threat if a competitor exploits it. Or, conversely, a successfully prevented threat can create an additional strength for organizations if competitors have not eliminated the same threat. Therefore, when conducting a SWOT analysis, pay attention to the following points: 1. In addition to the standard SWOT analysis, it is necessary to conduct an “ANTI” SWOT analysis, which helps to identify actions in which the strategy will not be implemented. 2. SWOT analysis needs to be improved in the following areas: a. Determine at what values opportunities and threats are opportunities and threats b. Determine how strong and weak the areas are, respectively.
The name of the analysis of strengths, weaknesses, opportunities and threats - SWOT analysis, comes from the abbreviation of the words: Strengths- strengths, strengths; Weaknesses- weaknesses; Opportunities- possibilities; Treats- threats. SWOT analysis is a fairly simple and popular technique that allows you to assess the consequences of the decision you make, when making which you are guided by knowledge and understanding of the surrounding situation. And it doesn’t matter whether this decision lies in the field of marketing, choosing a company development strategy, or any of your decisions related to current activities, even not related to business. So, using the WSOT method, you can analyze whether you (or your friend) should wear that blue dress that she bought in a boutique last month. When choosing a profession, or this or that company for employment, we evaluate our strengths and weaknesses, the opportunities offered in a new place, as well as the threats of changing jobs. As for marketing, in fact, every marketer involved in making strategic decisions owns this technique, to one degree or another. Intuitively, we use SWOT analysis quite often, but few people independently bring such an assessment to its logical conclusion, stopping at a fundamental understanding of the situation and without delving into the analysis of marketing details. The following are two of the simplest methods, the use of which will allow a novice entrepreneur to independently conduct a SWOT analysis. There are in-depth options for SWOT analysis. Their use requires a more careful approach, preparation and elaboration of details. SWOT analysis methodologyIn principle, everything is simple, the analysis is carried out according to the following scheme: 1. Expert formulation of your strengths and weaknesses- these are internal factors. Their basis is only you. If we are talking about a company, then these are the strengths and weaknesses that are inherent in the company. For an expert description of this, it is enough to use the results of an express survey of enterprise management. Strengths and weaknesses must be assessed according to at least 3 vectors:
To analyze internal factors, I still suggest using a different model. For
2. We describe opportunities and threats- which are external factors, based on the situation outside the company, the company’s business environment. There is no need to invent threats, they are always the same. It is enough to assess the typical potential threats for your company (for you). There are threats:
3. We rank the strengths and weaknesses, opportunities and threats according to the degree of influence on the company, throwing out the far-fetched. 4. We put everything into the SWOT matrix (in a table). 5. Analyze the effect of factors 6. Having finished with the description and marketing analysis, define a strategy, based on the results of the description above, using the strengths, and compensating for the weaknesses of your (company). SWOT MatrixAll data is summarized in one table consisting of 4 main fields: strength, weakness, Analyzing the effect of factorsActually, what we have compiled above is not yet a SWOT analysis, but only a form (matrix) for a convenient description of the sides, opportunities and threats. Analysis is a conclusion about how much your “strengths” will help realize the company’s capabilities in achieving certain planned goals. Let’s try to rearrange what has been summarized in the table and answer the questions:
SWOT Analysis Strategies MatrixNext comes the most interesting part, the reason why everything was started. Based on the results of the analysis, we use the results of the SWOT analysis to develop certain strategy vectors along which we will work. The company, as a pravvilo, works in several directions (vectors) at once:
Analyzing the data in the table, we draw up a matrix of necessary actions to correct the company’s weaknesses, including at the expense of the strengths. We bring all the data into one table (matrix) consisting of 4 main fields: strength, weakness, opportunities and threats. This table is called: “SWOT Analysis Strategies Matrix”. Analyzing the data located in the table, a list of possible actions (marketing plan) is compiled to neutralize the company’s weaknesses, including at the expense of the strengths. Also, possible options for the company’s development when external factors change, ways to use strengths to reduce risks, etc. are being developed. Life forces us to make decisions every day. And every decision we make, one way or another, affects our future. Our fate for years and even decades depends on some decisions. To make any important decision, you need a thorough analysis of what is happening, this is necessary both in business and in everyday life. Qualitative analysis is a very difficult matter. And despite the fact that absolutely every person needs to be able to do it, this management function is not taught in school. Today we will talk about one of the most common methods of analysis - the SWOT method. What is SWOT analysisSWOT analysis is a method of primary assessment of the current situation based on considering it from four sides:
Strengths and weaknesses are your internal environment, what you already have at the current moment in time. Opportunities and threats are environmental factors, they may or may not happen, it also depends on your actions and decisions. The acronym SWOT was first used at Harvard in 1963 at a conference on business policy by Professor Kenneth Andrews. In 1965, SWOT analysis was proposed to develop a company's behavior strategy. SWOT analysis helps to create a structured description of a specific situation, based on this description, conclusions can be drawn. This allows you to make correct and informed decisions. SWOT analysis plays a significant role in business and should be mastered by everyone involved in personnel management and marketing. Rules for conducting SWOT analysisBefore you begin drawing up a SWOT analysis, you need to understand a number of rules.
Using these simple rules, you can proceed to compiling a SWOT matrix. SWOT matrixSWOT analysis is usually used by drawing a table, it is often called a SWOT matrix. This method of use does not depend on the global nature of the problem being solved. It doesn’t matter whether you’re deciding who to spend the weekend with or what business to invest your millions in, the essence and appearance of a SWOT analysis will remain the same. The SWOT matrix looks something like this: The first line and first column are indicated simply for ease of understanding; they are not necessary to draw if you understand the SWOT analysis method well. How to use SWOT analysisSo, you are faced with a certain task and you need to understand how to solve it. First of all, you need to draw a SWOT matrix. You can do this by dividing a sheet of paper into four parts. In each part you need to write as much available information as possible. It is advisable to write the more significant factors first, then move on to the less significant ones. We analyze strengths and weaknessesIt is not surprising, but it is with the description of strengths that the most problems arise for people who take up SWOT analysis for the first time. In general, you can ask your employees, friends and acquaintances for help in assessing, but it is better to learn how to analyze yourself. Strengths and weaknesses are assessed using the same parameters. In business, strengths are assessed primarily based on the following parameters:
When conducting a SWOT analysis of your personality, you can rely on the following criteria:
When analyzing your strengths, you should focus on what you like to do and what you are good at. As a rule, what we don’t like turns out worse for us. Analysis of opportunities and threatsOpportunities and threats are created by changes in the environment and those changes that you can make personally. It is worth noting that to analyze the external situation on the market, and even more so to predict the future market, you need to have serious qualifications. It is very difficult to predict what will happen and it is worth relying primarily on current facts and trends. At the same time, when making long-term planning, it is necessary to take into account the most pessimistic scenario for the development of the situation. Opportunities and threats in business are primarily assessed according to the following parameters:
Every field of business has its own experts and professionals; to compile a high-quality SWOT matrix, you can turn to them for advice and expert opinion. SWOT analysis methodologySo, we have a completed SWOT matrix that contains: strengths and weaknesses, as well as opportunities and threats. Based on this matrix, you need to work according to it. To do this, perform the following steps:
Based on the work done, you draw up the main vectors of development. SWOT analysis is primarily a tool for descriptive assessment of the situation. It does not analyze large amounts of analytics and does not compare indicators over past years. SWOT does not measure quantitatively the parameters. And that is why the SWOT method will always be a rather subjective analysis tool. Application of SWOT analysisThe simplicity of SWOT analysis makes this tool very versatile; as we wrote above, it can be used both in life and in business. SWOT analysis is used both separately and in combination with other analysis and planning tools. SWOT analysis is most widely used in management, primarily for strategic planning of an organization's activities. SWOT self-analysisSeparately, I would like to talk about the use of the SWOT analysis method to determine priorities in personal development. You can use this tool to determine goals both at work, for example, what area of activity you should pursue, and in personal relationships. I strongly recommend that middle and senior managers ask their subordinates to do a personal SWOT analysis at least once a year. It is also an excellent tool for determining management abilities when hiring a new employee. I first read this idea in Igor Mann’s book Number 1. Mann recommends giving SWOT to everyone who came for an interview. Accordingly, the question “how to do a SWOT analysis” is of particular importance in the life of an entrepreneur. Today we will talk about how to do a SWOT analysis. Or rather, we will develop such step-by-step instructions - a questionnaire, after which the same question () will be completely closed for you. First, let's look at what a SWOT analysis is (I apologize in advance to those for whom this is unnecessary). SWOT analysis is a tool for planning and comparing four business elements. These elements are: Strengths, Weaknesses, Opportunities, and Threats. A properly done SWOT analysis provides an entrepreneur with a huge amount of useful information necessary to make the right business decisions. Learning to do swot analysis SWOT analysis - 4-step instructionsFor greater clarity, we will divide the SWOT analysis process into steps, each of which is represented by several questions. Answering these questions is, in essence, the process of conducting a SWOT analysis. So. Step 1 — Scanning the business environmentIn this step, by looking at our business environment, we must identify the factors that influence or may influence our business. All factors can be divided into internal and external. To determine these factors, answer the following questions: 1. What legal factors (laws and other regulations) affect (or may affect) my business? 2. What environmental factors affect (or could affect) my business? 3. What political factors affect (or may affect) my business? 4. What economic factors affect (or may affect) my business? 5. What geographic factors affect (or could affect) my business? 6. What social factors influence (or may influence) my business? 7. What technological factors affect (or may affect) my business? 8. What cultural factors influence (or may influence) my business? 9. What market factors influence (or may influence) my business? The answers to the first 9 questions give you information about external factors, i.e., those impacts on your business that exist in your environment, regardless of the existence of your business. All of these questions, one way or another, are worth asking yourself in order to fully understand what could have any impact on your business. Of course, different factors will have different effects in different business areas, but this is exactly what you will understand by answering these questions. 10. Does (or can it influence) the competition factor affect my business? 11. Does (or can it influence) the management and business management factor affect my business? 12. Does the chosen business strategy factor (or can it influence) my business? 13. Does the business structure factor affect (or can it affect) my business? 14. Does the employee factor affect (or can it affect) my business? 15. Does the factor of my business goals influence (or can influence) my business? 16. Does (or can it influence) the leadership factor affect my business? 17. Does the operational management factor affect (or can it affect) my business? 18. Does the technology factor in business affect (or can it affect) my business? Answers to questions 10 to 18 will give you information about the overall impact of your business's entry into the marketplace. The list may not be exhaustive; a lot depends on the field of activity, but these are the main points. And so, having answered the above questions, you will have an almost complete set of factors on which your business depends to one degree or another. Next, you should analyze them and draw the right conclusions for yourself. In this regard, we move on to the next step of our instructions on how to do a SWOT analysis. Step 2. Analysis of the business environmentIn this step of the SWOT analysis, we must analyze in more detail all the factors listed above and understand what they actually represent for us and our business. Let's do this, as you guessed, in a few questions. Here they are: 19. Which legal factors could be a threat to our business and which could be an opportunity? 20. Which political factors could be a threat to our business and which could be an opportunity? We present a simple and convenient method for conducting a SWOT analysis with ready-made examples for a manufacturing and trading enterprise, as well as a template in Excel format. The SWOT analysis method described in the article is universal and is suitable for a company of any profile: an industrial company, a non-profit organization, a retail store or a separate department. After reading the article, you will definitely be able to create a SWOT analysis for your product or an entire enterprise from scratch, even if you are conducting it for the first time.
The essence and main elements of SWOT analysisBriefly about the swot analysis method, we can say the following:
You can learn more about the theoretical foundations of SWOT analysis of a product in the article:. How to prepare for a SWOT analysis?Remember that the SWOT analysis method is only a convenient tool for systematizing available information. Therefore, an effective SWOT analysis must begin with two steps:
Step One: Identify the Product's Strengths and WeaknessesThe first step in conducting a SWOT analysis is to identify the strengths and weaknesses of the product or service. To do this, make a comparative analysis of the internal resources of the company or product with key competitors:
Table 1 Example of analysis of strengths and weaknesses
Be sure to check out. The methodology contains more than 14 areas of various internal environmental factors that can become strengths or weaknesses of the company. Step Two: Identify Threats and Opportunities for Business GrowthThe second step of a SWOT analysis is to identify the opportunities and threats to the business's future growth. To do this, an analysis of external environmental factors is carried out, the level of influence of each factor on the company’s sales, and the likelihood of occurrence are assessed.
Illustrative examples of SWOT analysisMost of the concepts and tools used in strategic planning are difficult to use for the first time without clear examples. For those who doubt the correctness of drawing up a SWOT analysis, we have prepared ready-made solutions:
Quantitative method of SWOT analysisIn modern literature, a quantitative example of SWOT analysis is often found: a model in which it is necessary to evaluate the analyzed factors of the external and internal environment on a point scale. The quantitative approach is undoubtedly effective, as it allows us to demonstrate the significance of factors, but it is too time-consuming. It would be more effective to evaluate each factor of the company’s internal and external environment in terms of importance and priority expertly, without resorting to complex quantitative scoring. The accuracy of this approach will be close to the quantitative method of assessment, since in both cases you yourself, and therefore expertly evaluate each factor of the SWOT matrix.
Detailed video courseFour detailed video lectures on the SWOT analysis methodology provide concise and fully structured information on: how to do a SWOT analysis “from scratch”, how to find the strengths and weaknesses of a company’s product, identify opportunities and threats for a business, how to write the correct conclusions on SWOT analysis and effectively present the results of the work done. Part one: SWOT analysis, determining the strengths and weaknesses of a product Fully. Ready-made samples, templates and casesYou can download a ready-made template - a sample of compiling a SWOT analysis from scratch in Excel, as well as an example of presenting the results of a SWOT analysis in PowerPoint format in the section. |
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