What is SWOT analysis? A simple explanation of its benefits and how to put it into practice
Posted: Tue Dec 03, 2024 5:39 am
When analyzing a company's current situation, making decisions about its business direction, or formulating a marketing strategy, it is very important to comprehensively and systematically organize your company's strengths and weaknesses.
A widely used framework for achieving this is the SWOT analysis .
However, we often see cases where smaller companies are unable to make effective use of these frameworks when conducting corporate analysis or business planning.
In this article, we will explain SWOT analysis, which is useful for analyzing your company's current situation, in an easy-to-understand manner so that you can put it into practice within your own company, in the following order.
What is SWOT analysis?
Benefits and points to note about SWOT analysis
How to do a SWOT analysis
By reading this article to the end, you will vatican city business email list be able to comprehensively and systematically organize your company's strengths and weaknesses and enable effective analysis and strategy formulation, so please take a look.
What is SWOT analysis?
SWOT analysis is a widely used framework for business analysis.
By objectively analyzing the current situation from the perspective of four elements - strengths (S), weaknesses (W), opportunities (O), and threats (T) - it can be useful in a variety of situations, such as identifying areas for improvement in existing businesses and discovering future risks for new businesses.
Elements used in SWOT analysis
SWOT analysis is conducted from two perspectives: an analysis of the internal environment (strengths and weaknesses) focusing on the company's own situation, and an analysis of the external environment (opportunities and threats) focusing on the market, competitors, etc.
I will explain each one in detail.
Internal Environment
S: Strength/Positive factors in the internal environment, such as the advantages of the company's products.
W: Weakness/Negative factors in the internal environment, such as shortcomings of the company's products.
External Environment
O: Opportunity/A factor that is beneficial to a company due to changes in society or the market.
T: Threat/A factor that is negative for a company due to changes in society or the market.
The internal environment is something that can be controlled by a company since it is an element that is within the company.
On the other hand, the external environment refers to factors that a company cannot control on its own.
Three benefits of conducting a SWOT analysis
There are three main benefits to conducting a SWOT analysis:
Ability to objectively grasp and analyze factors that may affect business broadly
The diagrams are easy to understand, so anyone can intuitively understand
Since you can understand not only your company's strengths but also its weaknesses, it is useful not only for planning positive strategies but also for avoiding negative events such as risk hedging.
"3C analysis," which is often conducted in parallel with SWOT analysis, carries the risk of confirmation bias, in that it extracts only the aspects that are convenient for a company. On the other hand, SWOT analysis grasps the actual situation from both the positive and negative aspects, allowing for a more objective and rational analysis.
Points to note when conducting a SWOT analysis
There are a few things to keep in mind when conducting a SWOT analysis. Pay attention to the following four points.
1. Identify your purpose and goals
If you do a SWOT analysis haphazardly, the analysis will not go smoothly.
The analysis will only be meaningful if you clarify the purpose in advance and set specific goals to evaluate the progress of your analysis. Be careful not to make the analysis an end in itself.
2. Ensure a broad perspective
In order to make the most of the benefits of being able to analyze a wide range of factors that affect your business, gather members with various perspectives to ensure a wide perspective. It is essential to select the most suitable members, such as management, sales, and engineers, depending on the purpose and subject of the analysis.
In terms of having a broad perspective, it can also be effective to solicit opinions from all employees within the company depending on the situation.
3. Standardize assumptions
If the assumptions are different, the strengths, weaknesses, opportunities, and threats extracted will also be different.
Organize and share the assumptions such as the subject of analysis, objectives, customer attributes, and competitors, and ensure that all members are on the same page.
4. It's not a panacea
SWOT analysis also has disadvantages, such as the need to classify elements that are difficult to determine as "strengths" or "weaknesses." It is important to understand that it is not an all-purpose analysis method that can be used at any time, and to use other marketing frameworks in conjunction with it or separately depending on the situation.
When to Conduct a SWOT Analysis
Marketing has a basic flow that is divided into six main processes.
Market Analysis
segmentation
Targeting
positioning
Marketing mix (execution strategy)
Execution and Evaluation
A SWOT analysis is conducted during the first stage of the above process, market analysis.
It helps you objectively understand your company's position in the overall market.
In addition to SWOT analysis, you can also gain a multifaceted perspective by conducting 3C analysis, PEST analysis, Five Forces analysis, etc. in parallel.
From here on, we will explain in more detail how to put it into practice, including how to incorporate it with other analytical methods.
A widely used framework for achieving this is the SWOT analysis .
However, we often see cases where smaller companies are unable to make effective use of these frameworks when conducting corporate analysis or business planning.
In this article, we will explain SWOT analysis, which is useful for analyzing your company's current situation, in an easy-to-understand manner so that you can put it into practice within your own company, in the following order.
What is SWOT analysis?
Benefits and points to note about SWOT analysis
How to do a SWOT analysis
By reading this article to the end, you will vatican city business email list be able to comprehensively and systematically organize your company's strengths and weaknesses and enable effective analysis and strategy formulation, so please take a look.
What is SWOT analysis?
SWOT analysis is a widely used framework for business analysis.
By objectively analyzing the current situation from the perspective of four elements - strengths (S), weaknesses (W), opportunities (O), and threats (T) - it can be useful in a variety of situations, such as identifying areas for improvement in existing businesses and discovering future risks for new businesses.
Elements used in SWOT analysis
SWOT analysis is conducted from two perspectives: an analysis of the internal environment (strengths and weaknesses) focusing on the company's own situation, and an analysis of the external environment (opportunities and threats) focusing on the market, competitors, etc.
I will explain each one in detail.
Internal Environment
S: Strength/Positive factors in the internal environment, such as the advantages of the company's products.
W: Weakness/Negative factors in the internal environment, such as shortcomings of the company's products.
External Environment
O: Opportunity/A factor that is beneficial to a company due to changes in society or the market.
T: Threat/A factor that is negative for a company due to changes in society or the market.
The internal environment is something that can be controlled by a company since it is an element that is within the company.
On the other hand, the external environment refers to factors that a company cannot control on its own.
Three benefits of conducting a SWOT analysis
There are three main benefits to conducting a SWOT analysis:
Ability to objectively grasp and analyze factors that may affect business broadly
The diagrams are easy to understand, so anyone can intuitively understand
Since you can understand not only your company's strengths but also its weaknesses, it is useful not only for planning positive strategies but also for avoiding negative events such as risk hedging.
"3C analysis," which is often conducted in parallel with SWOT analysis, carries the risk of confirmation bias, in that it extracts only the aspects that are convenient for a company. On the other hand, SWOT analysis grasps the actual situation from both the positive and negative aspects, allowing for a more objective and rational analysis.
Points to note when conducting a SWOT analysis
There are a few things to keep in mind when conducting a SWOT analysis. Pay attention to the following four points.
1. Identify your purpose and goals
If you do a SWOT analysis haphazardly, the analysis will not go smoothly.
The analysis will only be meaningful if you clarify the purpose in advance and set specific goals to evaluate the progress of your analysis. Be careful not to make the analysis an end in itself.
2. Ensure a broad perspective
In order to make the most of the benefits of being able to analyze a wide range of factors that affect your business, gather members with various perspectives to ensure a wide perspective. It is essential to select the most suitable members, such as management, sales, and engineers, depending on the purpose and subject of the analysis.
In terms of having a broad perspective, it can also be effective to solicit opinions from all employees within the company depending on the situation.
3. Standardize assumptions
If the assumptions are different, the strengths, weaknesses, opportunities, and threats extracted will also be different.
Organize and share the assumptions such as the subject of analysis, objectives, customer attributes, and competitors, and ensure that all members are on the same page.
4. It's not a panacea
SWOT analysis also has disadvantages, such as the need to classify elements that are difficult to determine as "strengths" or "weaknesses." It is important to understand that it is not an all-purpose analysis method that can be used at any time, and to use other marketing frameworks in conjunction with it or separately depending on the situation.
When to Conduct a SWOT Analysis
Marketing has a basic flow that is divided into six main processes.
Market Analysis
segmentation
Targeting
positioning
Marketing mix (execution strategy)
Execution and Evaluation
A SWOT analysis is conducted during the first stage of the above process, market analysis.
It helps you objectively understand your company's position in the overall market.
In addition to SWOT analysis, you can also gain a multifaceted perspective by conducting 3C analysis, PEST analysis, Five Forces analysis, etc. in parallel.
From here on, we will explain in more detail how to put it into practice, including how to incorporate it with other analytical methods.