- Summary
SWOT analysis
is a tool commonly used in the field of marketing, strategy and project management. It is a very powerful tool created in 1950 by Christensen and Smith, two professors at Harvard. It is designed to identify strategic options and define objectives based on internal and external factors to achieve them.
The term SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
- Why conduct a SWOT analysis
The SWOT analysis allows us to provide solutions and define areas for improvement in the short and medium term.
- It provides an overview of the current situation ;
- It suggests paths to follow for the future, in the short and medium term ;
This approach is fairly easy to implement. It will quickly give you a clear picture of the situation without you having to spend much time on it.
You will then be able to create relevant strategies to exploit a new potential or develop an existing market. This SWOT analysis also allows you to anticipate threats to your business and you will be able to improve your ability to analyze and evaluate your business. With practice, you will end up asking yourself the right questions that will allow you to find relevant answers.
- When to use the SWOT analysis?
SWOT analysis is usually done before a project begins. Whether it is to create a company or to determine the competitive advantage of your company or project, to identify improvements or development opportunities.
The SWOT analysis is also used in strategic planning. The SWOT matrix allows you to question the issues to be addressed and the response to be made.
In other cases, SWOT analysis can be used to prepare a business plan, to question a business model, to elaborate a strategy, etc.
In marketing, SWOT analysis is also used to evaluate the competitive environment in which a company, a brand, a service or a product is located. In marketing, it allows to define the basis of the strategy (marketing) and to build an action plan in line with its context.
- The criteria of a SWOT analysis?
The key is to understand what you are putting behind the terms of the SWOT Matrix.
There are :
- internal factors: strengths and weaknesses
- external factors: threats and opportunities
Strengths and weaknesses only concern internal resources and capabilities. They do not concern external events that could potentially impact the company or the project.
Opportunities and threats are only about what is outside the company or project that could have an impact on it. Opportunities and threats can be identified in terms of competition, politics or technology for example. The PESTLE analysis allows to identify external elements that could have an impact.
In addition to the internal and external aspects, the SWOT can be read as follows:
- The advantages for the company, for the project, are made up of strengths and opportunities;
- The handicaps of the organization or project are composed of weaknesses and threats;
INTERNAL ANALYSIS
S trenghs
Strengths represent what your company or project does particularly well. They are features or functionalities that represent a real added value to your customer offering.
They can be tangible strengths, such as a geographic location, a product or specific know-how, or intangible strengths, such as your reputation, your network or a service offering that is unique to you.
They can be more organizational strengths such as your human resources, the motivation of your employees, the agility of your organization.
For example, it could be your capacity to innovate, the possession of highly qualified resources or your ability to adapt to new technologies.
W eaknesses
This element of the SWOT takes into consideration potential weaknesses in relation to competitors or innovations in your industry. An example of this is the case of a strong competition that would prevent the possibility to develop a clearly defined Unique Selling Proposition (USP). Too many players make it difficult to differentiate your business.
This could be due to a lack of awareness, which could be the result of a poor communication strategy. An inappropriate HR policy to recruit senior experts in the case of a startup, for example.
The internal analysis includes everything related to the organization, the field of activity, the product, etc. The questions that must be asked in an internal analysis concern
- The product, its quality, its price…
- Its notoriety, its image, its location (company or product/service)…
- Its sales force, distribution channels…
- The marketing, the communication…
- The management, the organization, the partnerships…
- The human means, technical skills…
- The equipment, the financial means…
EXTERNAL ANALYSIS
O pportunities
A strategy is also based on the opportunities that are offered to us and the risks to be taken. Opportunities and threats are elements of the environment external to the company, elements and/or events over which the company has less influence, but which it must take into account to develop.
Opportunities (some say Possibilities) are external elements that could contribute to the development of the business. An opportunity represents an identified development possibility that has not yet been implemented.
For example, if you are not able to correctly process all the contacts generated by your site, you have a clearly identified business development opportunity: improve the management of my lead portfolio.
Another example, a startup that develops an innovative product that allows to conquer new markets represents another opportunity.
In the SWOT analysis, opportunities should cover everything that can be done to develop a project, a business activity or sales. This includes a set of steps to develop the business, grow the company or achieve strategic goals.
T hreats
Threats can affect your business or project. Threats are composed of everything that brings a risk for the growth of your company, its possibilities of success or commercial growth. For the project it is the same thing, it concerns everything that would prevent it from reaching its objective. For a project, the threat is the first brick of the risk analysis.
The field of investigation can be wide and include diversified factors such as the emergence of new entrants in the market, changes in regulations, external financial risks as well as anything that could compromise the future of the company or your project.
In the external analysis, we find everything that concerns the external environment of the company. Its macro-environment (see also PESTLE analysis) and its market:
- Market / General trends in supply and demand (market research)
- The technologies
Regulations (standards, etc.) - Societal factors
- The economic environment
- Political environment
- Competition
- Suppliers
- Stakeholders
- Implementation in 4 steps
Start by clearly defining the goals and objectives you have in mind when using this tool. Are you facing challenges in the marketplace and want to find ways around them? Do you want to make SWOT analysis a recurring process? Do you want to invest in an innovation project? Do you want to expand your customer segmentation?
Build an effective team. You will certainly need to acquire additional skills to do this work. Executives may be involved initially, but you will certainly need to call on expertise in sales, finance, technology, logistics, etc… These resources can be internal or external.
Put in place a knowledge base to perform the analysis. Internal or external resources must allow you to do this work. It is for example :
- Sales results (in statistical form, on a given market or segment for example)
- Results of a customer survey
- Marketing data (market share, market research, growth rate, potential volume…)
- Results of internal or external studies…
From the elements collected, classify them as strength, weakness, opportunity or threat. Then create a matrix that will cross-reference the different internal and external elements. The idea is to put your capacities in perspective in relation to the opportunities and threats of the environment.
In order not to risk spreading yourself too thin, I suggest you place reminder cards concerning your goals and objectives. And it is in relation to these that you will list the elements in the 4 keys of SWOT analysis with relevance.
Make a note of the questions you will ask yourself, in order to research them later, so as to make your study as complete as possible.
In the analysis, avoid qualitative indicators and focus on quantitative factors as much as possible.
Prioritize the factual elements in order to be able to prioritize your decisions. Always compare the final result with your goals and objectives. It is very easy to get lost and to lose the thread of the objective of the process.
Project manager since 1998, Agile since 2001 then PMO since 2009, I accompany companies in the realization of their projects/programs, in the construction and management of the PMO, in the improvement of processes and I help managers to improve their performance.