SWOT analysis is a tool that is used to determine the strengths and weaknesses of an individual or a business, to identify threats and opportunities arising from external environments, and to take action or action against them.
SWOT Analysis consists of the initials of four words, which are:
Internal factors: Strengths and Weaknesses,
External factors: Opportunities and Threats.
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Before start, we remember that Prosoftly Business Management Software helps you to look at the whole picture of your business and see all internal and external factors clearly.
Benefits of SWOT Analysis
SWOT Analysis is a tool that we apply to assist the senior management team. It helps senior business management in planning the strategy to be implemented in order to achieve corporate goals and objectives. It also helps in evaluating whether the current goals, objectives, policies, and strategies are in line with the corporate goals and objectives.
It is a strategic management tool that every organization should perform. It should also be updated periodically.
Questions such as “Where are we now?”, “Where do we want to go?”, “How can we get where we want to go?”, “How can we monitor and evaluate our progress?” can confuse the minds of managers. That’s why we apply SWOT analysis at this stage.
Importance of SWOT Analysis
Countries, organizations, and people should design and implement the measurements to keep up with the requirements of today’s world. Again with SWOT analysis; Countries, organizations, and people need to update their current status periodically under these changing conditions. In the strategic management process, it is also very important to prepare, implement and evaluate the steps to be done in this regard.
Although the SWOT analysis has been around for 60-65 years, it is still seen as a very useful technique. If it can be applied and analyzed correctly, it can help companies articulate their position.
How to Perform a SWOT Analysis?
First of all, you should organize a meeting with the marketing and sales team. Senior management should also participate in this meeting. Also, employees who have been working for a certain year may attend. Lastly, outside people may also be there to evaluate things from a different perspective.
As a result of this meeting, the company will decide the necessary actions to reach a goal. That’s why the involvement of senior management is a very important issue because this is a strategic analysis. Then, you can begin to evaluate the internal and external factors.
The purpose of internal analysis(internal audit) is to reveal the strengths of the business and the aspects that need improvement. In this way, you can see the potential of the business and play on the strengths. That way, you can prepare your company for future targets. Also, weaknesses may be assessed to improve.
For example, in determining strengths, you can ask questions like:
- What are the things that make us superior to our competitors?
- What are we doing well?
- What do our competitors think we are doing well?
Based on the answers, you may notice that;
- Turn-Over rates are low
- We have strong communication with customers
- Our profitability rate is good
- We have competent personnel
- Our stock management is ideal.
At this point, keep going and ask questions like
- What do we do badly?
- What are the points that need improvement in our business?
- What weaknesses do we have that prevent us from gaining a competitive advantage?
- In what ways are we not efficient?
- What should we avoid doing?
Based on the answers, you may realize that;
- We cannot measure customer loyalty.
- Employee satisfaction is low
- There is no social activity that will entertain employees
- The organizational structure is not clear
- There is no bonus system
External analysis, on the other hand, is to recognize the environment and external conditions in which the business operates. It also allows you to get information on competing businesses. While analyzing the external environment, opportunities and threats posed by environmental factors are determined.
You may ask questions like;
- What realistic opportunities do we have today?
- What kinds of developments are happening in your environment that we could benefit from?
- What repetitive approaches can we benefit from and how can we do this?
- What are the things that are not currently being done but can be done?
- What's missing in the market?
To determine opportunities.
To identify threats, you may ask;
- What are the negative attitudes towards us?
- What kind of obstacles do we encounter?
- Are the expected business, product, and service standards changing?
- Is changing technology threatening our position?
- Do we have economic problems?
- What are the obstacles in the competition that could hurt us?
- What obstacles are we facing with this business model right now?
You should write your answers to these questions in the matrix, which we mentioned at the beginning. And we start analyzing. With this matrix, we see the sentences and words that are always spoken but not written and remembered in a frame. Then, we list these items in order of importance.
Essentials of a Successful SWOT Analysis
Generally, people can talk about their strengths properly. But when it comes to weaknesses, they may not be that articulate. Here, having an objective external person could be very useful to analyze correctly. Therefore, we think it is not appropriate to do it only with senior management in SWOT Analysis. It is very important to have someone who works as an outsider but knows the company well.
To claim that you are good at everything or to say that everything is going well means to stop change and development. This can be seen as a setback for both the individual and the companies. There is no such thing as a perfect organization, but there are perfect strategies.
Just as we always keep our favorite applications on our mobile phones up-to-date, we must also keep our organization up to date in order not to fall back from new trends.
Therefore, what companies need; honesty, keeping up with the trends, following competitors, being able to criticize themselves without fear.
SWOT Analysis Examples
As we mentioned before, SWOT Analysis will be different for every company. Of course, there are common weaknesses and threats for many companies in general.
- The fluctuation of exchange rates,
- Strong communication with customers
- Economic weaknesses,
- High loyalty of clients and employees
- Political uncertainty,
- High turn-Over rates,
For example, a firm may suffer from not being able to attract competent staff. To solve this, they may give training to the current employees to increase their competencies. It would be quite useful instead of firing or looking for someone new.
By designing competency matrices for the recruited people instead of old-fashioned questions for the human resources department, they may be able to ensure that they choose the right person without losing much time.
On the other hand, you can match your strengths with opportunities or turn threats into opportunities with your strengths. For example, you can take action by matching the strengths that will provide financial power, market share, or reputation to the business with the opportunities in the market. If there is growth or a new opening in the sector where the business is still active and strong, you may immediately evaluate the opportunities (because the opportunities will not be long-term and these opportunities will apply to competing businesses.)
Secondly, there may be a threat to the market, but the business can take measurements with moderate risk. New restrictions, quotas, or regulations may come to a product in the market, but the business can overcome these threats with strong marketing activities or price flexibility.
In another case; Weaknesses and opportunities in the market can be matched. There may be an opportunity in the market, but the business may not have the competence to seize this opportunity. Then, you will be working towards increasing competence. In this extent, taking advantage of opportunities is very important in terms of revenue growth or the company's future existence. For example, there has been a demand for a new product in the market, but the business does not have a facility, capacity, or sufficient knowledge to produce it. In that case, the product in question can be produced by a specialized enterprise.
For example, with the quarantine process, healthy life has become very popular. Vegan and vegetarian diets increased, which pushed them towards legumes. There has been an increase in all kinds of vegan foods, from plant-based protein powders. Those who put them to opportunities with the early analysis made good profits and caught the trends.
Outputs of a SWOT Analysis
As we have already stated, SWOT analysis creates a matrix within the scope of Strengths, Weaknesses Opportunities, and Threats. And with this matrix, we actually have a good examination of the business. SWOT Analysis is not enough to detect 100% of the current status of businesses. But if done well it will be of great benefit.
SWOT Analysis an analysis of the current situation. After the current situation is examined, the decisions to be taken and the strategic road map will be determined. Different measurements can be taken according to each sector and each institution. In the end, you can give your competitors an advantage in at least one or a few issues. What you can get with a SWOT analysis?
- You can get an edge over your competitors.
- You can keep yourself updated and increase your awareness.
- You can reduce costs by taking accurate and timely actions.
- You can lower the turn-over rates with loyalty and loyalty measurements and actions to be taken according to the results.