SWOT Analysis

SWOT Analysis

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Generally, strengths and weaknesses relate to issues within the company while opportunities and threats relate to the broader market in which the company operates.

  • Does your company have strengths that are not currently being utilized?
  • Are weaknesses unnecessarily holding you back?
  • Are there opportunities within your market that you might pursue or some unknown threat to your company that you need to address?

SWOT Analysis Frames Company Strengths

Every organization has certain strengths, such as dominant market share, unique technologies and a strong balance sheet. Not every strength is quite as evident, such as a company that is very small but its size allows it to innovate on a much faster pace. Every company, even those which are not experiencing success, has strengths. Some of the questions to ask to determine company strengths are listed below.

  • What is the company's market share?
  • What are the company's major lines of business?
  • Does the company have a pool of skilled employees?
  • Are the company's sales & marketing functions effective?
  • Does the company have a strong financial position? Can it raise capital?
  • What are the company's historical operating results?
  • Has the company demonstrated the ability to adapt and change?

Pinpoint Company Weaknesses

Every organization also has certain weaknesses, such as a strict regulatory environment or lack of skilled employees. Not every weakness is as evident, such as bad morale or key employee turnover. Every company, even those that are dominant in their markets, has weaknesses. How much these weaknesses will affect the company is a matter of analysis. Some of the questions to analyze this are listed below.

  • What are the company's least profitable lines of business?
  • Are any of the company's lines of business losing money?
  • Is the company able to hire and retain talented employees?
  • Are the company's sales & marketing functions effective?
  • Does the company have a strong financial position? Can it raise capital?
  • Is the company innovative? Has it brought new products or services to market?
  • Does the company have high levels of corporate governance?

Analyze Opportunities & Threats in the Marketplace

All organizations have opportunities within the marketplace that they reside and, conversely, no organization is immune to threats. A thorough review of the company's market will provide the answer to the questions below and help to determine the opportunities which the company should pursue as well as the threats it must avoid.

Opportunities

  • Are there new technologies that the company can use to innovate?
  • Are there opportunities to extend brands into related areas?
  • Are there reasonable acquisition opportunities?
  • Can the company move up the value chain?
  • Are there opportunities for strategic partnerships with non-competitive businesses?
  • Are there money-losing ventures that can be divested to increase profitability?

Threats

  • Does the company have adequate reserves to withstand a down cycle?
  • Is there trade union activity that could have an adverse effect?
  • Are competitors eating away market share or driving down prices?
  • Does the internet pose a threat to the company?
  • Does lack of access to capital limit the company's ability to invest?

 


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