A SWOT analysis is a type of strategizing that many businesses use to understand the way forward on a project or identify and solve for problems that may arise on a launch or development of a new project. The simplicity and thoroughness of a SWOT analysis are a few reasons it is so common for companies to use and why so many have adopted it as their first line of business strategy.
How creating a SWOT analysis can help elevate your business.
The history of the SWOT Analysis
SWOT analyses have been used by businesses to answer questions and develop strategies for years. It is a method taught in many business classes and is considered by some to be foundational to the success of many business plans. Most people believe that the SWOT analysis was first developed sometime in the 1960s or 1970s by Albert Humphrey, a researcher at Stanford University. Humphrey and his original research team used the categories “What is good in the present is Satisfactory, good in the future is an Opportunity; bad in the present is a Fault and bad in the future is a Threat.”
Once this analysis was used beyond the walls of Stanford, it was picked up by both large and small businesses to help them shape their strategy and think critically about their business development.
What is a SWOT analysis?
SWOT stands for:
Strengths
This refers to any positive ways that the business is positioned. These can be tangible or intangible, such as an excellent financial standing, leadership structure, positive culture, product market share, and more. Strengths are things that are inside of a company’ s control.
Weakness
These are factors that could negatively affect a business. Debt, low employee morale, production problems, and ineffective marketing are examples. Like strengths, weaknesses are areas of the business that the company has some control and influence over.
Opportunities
Opportunities represent attractive external factors that could positively affect the business if realized. A publishing business may see acquiring an author with an extensive blog and social media following as an opportunity for their business. Having the opportunity to invest in new technology is a potential opportunity, as is finding out a competitor is experiencing production problems.
Threats
These are factors that could cause harm or damage to a business, either physically, financially, or reputationally. Threats are outside of a company’s control and can include natural disasters that take out the electrical power and hence, bring production of a product to a halt. These threats could also be cyber threats that end in a data leak or data breach that damages a company’s trustworthiness. For some companies, a competitor buying out the organization could be an opportunity, but for other companies, this could be considered a threat. Every business has different circumstances labeled differently, which is one reason the SWOT analysis is so interesting and vital. It helps businesses identify what will affect them and how. Threats to business, once established, should have resources dedicated to managing the threat should it come to pass and mitigating any potential damage to the business.
What can a SWOT analysis be used for?
A SWOT analysis was developed to help businesses understand better why their corporate plans are unsuccessful, but it can be used for several projects and plans. Here are some of the most common ways that businesses use SWOT analysis matrices:
- Implementing marketing campaigns
- Finalizing start-up strategies
- Assessing position in competitive landscapes
- Acquiring a new company
- Launching a new product
- Understanding and addressing staffing issues
- Improving business culture and image
- Assessing financial resources
- Improving operational efficiencies
A SWOT analysis of a company is a helpful tool in understanding the strengths and weaknesses of your business and projects and assess the risks and opportunities that you face. To examine all the necessary angles of a project’s potentials and pitfalls, you need a thorough way of approaching the planning, which is what SWOT analysis provides.
