Swot analysis chart. About SWOT analysis in simple words. Example of a SWOT analysis of an enterprise

SWOT analysis (translation from English swot analysis)- one of the most effective tools in strategic management. The essence of swot analysis is to analyze the company’s internal and external factors, assess the risks and competitiveness of the product in the industry.

The SWOT analysis method is a universal method of strategic management. The object of SWOT analysis can be any product, company, store, factory, country, educational institution and even person. There are the following types of SWOT analysis:

SWOT analysis of the activities of a company or manufacturing enterprise

SWOT analysis of the activities of a government or non-profit organization

SWOT analysis of the activities of an educational institution

SWOT analysis of a specific territory: country, region, district or city

SWOT analysis of a separate project or department

SWOT analysis of a specific market or industry

SWOT analysis of the competitiveness of a brand, product, product or service

SWOT personality analysis

Companies often conduct a SWOT analysis not only of their products, but also of competitors’ products, since this tool very clearly systematizes all information about the internal and external environment of any organization.

The advantages of SWOT analysis are that it allows a fairly simple, correct look at the position of a company, product or service in the industry, and therefore is the most popular tool in risk management and management decision making.

The result of a SWOT analysis of an enterprise is an action plan indicating deadlines, priority of implementation and the necessary resources for implementation.

Frequency of SWOT analysis. It is recommended to conduct a SWOT analysis at least once a year as part of strategic planning and when forming budgets. SWOT analysis is very often the first business analysis step when drawing up a marketing plan.

Elements of SWOT analysis

Explanation of SWOT analysis abbreviations: Strengths, Weaknesses, Opportunities, T=Threats.

S=Strengths

Strengths of a product or service. Such internal characteristics of the company that provide a competitive advantage in the market or a more advantageous position in comparison with competitors, in other words, those areas in which the company’s product feels better and more stable than competitors.

The importance of strengths for a company in strategic planning: due to strengths, a company can increase sales, profits and market share; strengths ensure an advantageous position of a product or service in comparison with competitors. Strengths must be constantly strengthened, improved, and used in communication with market consumers.

W=Weaknesses

Weaknesses or shortcomings of a product or service. Such internal characteristics of the company that impede business growth, prevent the product from leading the market, and are uncompetitive in the market.

The importance of weaknesses for a company in strategic planning: a company’s weaknesses hinder the growth of sales and profits, pulling the company back. Due to weaknesses, a company may lose market share in the long term and lose competitiveness. It is necessary to monitor areas in which the company is not strong enough, improve them, and develop special programs to minimize the risks of the influence of weaknesses on the company’s efficiency.

O=Opportunities

Company capabilities are favorable external environmental factors that can influence business growth in the future. Importance of market opportunity for a company in strategic planning: Market opportunity represents the sources of business growth. Opportunities must be analyzed, assessed and an action plan developed to exploit them using the company's strengths.

T=Threats

Company threats are negative environmental factors that may weaken the company's competitiveness in the market in the future and lead to decreased sales and loss of market share. The significance of market threats for a company in strategic planning: threats mean possible risks for the company in the future. Each threat must be assessed in terms of the likelihood of occurrence in the short term, in terms of possible losses for the company. For every threat, solutions must be proposed to minimize them.

Drawing up a SWOT analysis

It is advisable to adhere to the following sequence of actions when conducting a SWOT analysis:

This SWOT analysis technique allows you to assess the company’s risks and opportunities in the most complete and detailed manner, and plan a working product marketing strategy:

An analysis of the surrounding market environment of a product or service is carried out in the context of external and internal factors.

Based on the analysis, business strengths, business weaknesses, threats and market opportunities for business are formed.

The obtained parameters are entered into the SWOT matrix for ease of analysis

Based on the SWOT matrix, conclusions are drawn about the necessary actions, indicating implementation priorities and deadlines.

In the process of conducting a SWOT analysis, involve people interested in making a decision, experts in various issues. An outside opinion will allow you to create a more objective analysis.

Do you know the theory and just need practice?

Read our ready-made example of a SWOT analysis of an enterprise with a template in Excel.

Standard view of a SWOT analysis table

In the SWOT analysis table, it is advisable to indicate factors in order of priority.

Other articles on SWOT analysis

How to identify strengths and weaknesses in SWOT analysis? Using our universal methodology, you will clearly determine the main competitive advantages of the company's product and identify the key disadvantages of the product in comparison with competitors. More than 15 groups of factors will help you create a comprehensive analysis of the product.

Starting a business is hard work. There are so many little things you need to pay attention to that you can simply get lost in them.

The only way to ensure that your business will last is to periodically step back from it and look at things from a broader perspective.

This is what SWOT analysis is all about. A SWOT analysis will allow you to look at the potential of your online business. You will not only study how your company works today, but you will also be able to plan its development for the next week, month and even year.

What is SWOT analysis?

SWOT analysis sounds like the name of some scary accounting process. But that's not true. SWOT analysis is not complex, but it is very useful.

The abbreviation SWOT stands for:

S – Strengths
W – Weaknesses
O – Opportunities
T – Threats

This is a list of what needs to be assessed during the analysis. A SWOT analysis forces you to think about the future. Do you know how your business works today, but have no idea what will happen to it tomorrow? A SWOT analysis will allow you to understand this and plan your development process.

A SWOT analysis shows the strengths and weaknesses of your online business, from both an internal and external perspective.

Strengths and weaknesses are internal factors, while opportunities and threats are external. Internal factors relate directly to your business, while external factors concern the environment that surrounds it.

Strengths and weaknesses provide insight into the present state of affairs, while opportunities and threats focus on the future. What is happening and what could happen.

The strengths and weaknesses in a SWOT analysis are under your control. They can be changed over time.

For example:

company culture
reputation
list of clients
geography
employees
partnerships
intellectual property
assets

Conversely, the opportunities and threats of a SWOT analysis are usually beyond your control. You can try and plan for them or influence positive changes, but at the end of the day it is not up to you.

For example:

regulation
suppliers
competitors
economy
market size
trends
financing

Why do you need a SWOT analysis?

In any online business, both new and old, it is necessary to conduct a SWOT analysis.

Whether you're just starting a business or are still in the planning stages, a SWOT analysis will give you a competitive advantage. Completing it will allow you to conduct a break-even analysis and see a more realistic picture of the entire process. Both are necessary in order to obtain funding.

Existing businesses should conduct a SWOT analysis annually. This will allow you to keep your business running smoothly, anticipate problems, work on necessary changes or improvements, and make smarter decisions throughout the year. Basically, an annual SWOT analysis will prevent you from losing touch with your business, customers and production.

How to do a SWOT analysis?

There is no objective way to measure how well you perform a SWOT analysis. It depends on your ability to notice and remember the internal and external factors that may affect your business. SWOT analysis is needed not to make accurate predictions, but to correctly plan business development.

Step 1: Gather the right people

Although important business decisions should generally be made by the founders and managers of the company, a SWOT analysis requires the participation of as many employees as possible. Having more data, even from people who don't fully understand your business, will make your planning even more accurate.

You'll also find that many employees have good ideas and useful skills. Even your customers can provide valuable information.

Step 2. Brainstorm

Once you have your team together, organize a brainstorming session with everyone involved. You can either list strengths, weaknesses, opportunities, and threats together (for smaller teams) or ask participants to create corresponding lists separately (for larger teams).

Consider everything that falls into each category. At this point, don't worry about how important each observation is. The idea is to not miss anything. Just write it all down.

Step 3: Fill in the blanks

Once you've exhausted all the ideas and written four big lists, it's time to start filling in the blanks where more explanation is needed. This is an opportunity for you and your team to ask questions that will determine how important each item on the list is.

Ask everyone in the group to choose the three most important items on each of their lists. Chances are, a pattern will emerge that will show you what to focus on.

Even if you are working on the analysis alone, don't worry. In this case, you are involved in all parts of the business and should have a good understanding of what needs to be considered.

31 Example Questions for Conducting a Strategic SWOT Analysis

Whether you're working alone or in a group, starting a brainstorming session can be challenging. The following questions will help you move forward. We recommend asking yourself these questions so you don't miss important factors to consider.

Questions to identify strengths in SWOT analysis

These are positive internal factors that influence the performance of your business. Although they may be difficult to change, they should be under your control:

What are we good at?
What do we do better than anyone else?
What is our competitive advantage?
What do we do that no one else does?
What resources are at our disposal?
What are the advantages of our online business?
What benefits do our employees have?
What valuable assets does our company have?
What do our clients like about us?

How to determine weak sides when analyzing

These are negative internal factors that affect the performance of your business. Although they may be difficult to change, they should be under your control:

What are we doing wrong?
What are our competitors better than us at?
What complaints do our customers have?
What are our team's weaknesses?
What's holding us back?
What resources do we lack?
What can we improve?

Examples of analysis questions opportunities

These are external factors that can affect your business in a positive way. They may be largely out of your control, but you can use them:

What potential regulatory changes could help our business?
Are market trends favorable to us?
Can the current economy affect us in a positive way?
What possibilities haven't we considered yet?
What new features are becoming available?
Are the prices of our goods decreasing?
Can we acquire additional resources that we lack?

Questions to consider threats in SWOT analysis

These are external factors that can negatively impact your business. These may be largely out of your control, but you can take them into account to minimize the damage:

Who is our competitor?
What new market participants could threaten our business?
Is our market size shrinking?
Could industry trends negatively impact our business?
Is the cost of our goods increasing?
Are our partners' offers enough for us?
Are the rules changing that could harm our business?
Is our manufacturer reliable?

How to effectively use the results of a SWOT analysis

As a business owner, you constantly need to decide where to focus your attention. Tough resource allocation decisions are inevitable. No matter how successful you are, you always need to choose where to direct your attention. A SWOT analysis will help you determine which areas you need to focus your energy and resources on.

Step 4: Narrow down your lists

Take the lists you created during your brainstorming session. Now work on shrinking these lists so they can fit in a table on one page (like the example below). Narrow down lists based on two assumptions: how important the factor is and how likely it is.

For example, if you get the bulk of your income from one large client, this is a big weakness that leaves you in a vulnerable position, even if you are confident that this client will not leave you.

Even when you have created a table like the example below, save your lists. You're not going to focus on factors that aren't included in the table right now, but you can be sure that you won't miss any important issues if the situation changes. What is less important now may become critical in the future, and you should be aware of this possibility. You can always change the list and come back to it later.

Step 5: Create Strategies

For each of the factors on your shortlist, create a strategy to take advantage of the strengths and opportunities and to address the weaknesses and threats. These initial strategies don't need to be particularly complex or foolproof, although you can refine them later. For now, just create an action plan.

Also, keep in mind that different factors can work together to balance each other out. How can you use your strengths to eliminate your weaknesses? How can you take advantage of opportunities to neutralize threats? Can you use your strengths to better seize opportunities? Do you have any weaknesses that might prevent you from preventing the threat?

Example of a SWOT analysis table

Below is an example of a SWOT analysis table for an online T-shirt store. Although many other factors emerged during the brainstorming session, these were the most important.

Strengths: Local production allows for fast order processing Many regular customers who promote the business Good ranking by search engines, allowing you to get free traffic	Weak sides: Prices for locally made T-shirts are uncompetitive Higher costs mean fewer material options due to warehousing costs Clients do not like to take measurements themselves
Possibilities: Using technology to simplify the measurement process can increase sales New paid advertising channels like Instagram and Pinterest can be effective Buying clothes online is a trend nowadays.	Threats: Several competitors are currently undercutting prices Website is difficult to use on a mobile device, although mobile traffic is increasing Strong dollar could dampen international sales

Consider what strategies a business owner can implement based on this information. Remember that there is no right or wrong answer here.

6 Examples of SWOT Analysis Strategies

The most important part of a SWOT analysis is how you use the information obtained. Here are six example problems (with potential solutions) to help you start thinking strategically.

Example 1: Your lease is approaching the end of its term and you need to renegotiate the terms. Since the price of the neighboring premises has risen, you are afraid that the same will happen to yours.

Strategy as a result of analysis: start selling online to reduce your space footprint.

Example 2: You rely on raw materials that are in high demand, and prices rise quickly as they become more scarce.

Strategy: Participate in a five-year contract to ensure delivery at a lower price.

Example 3: You have excess cash.

Strategy: Set aside a fixed amount for emergencies and invest the rest for growth.

Example 4: Your employees are ineffective.

Strategy: Hire a work culture consultant to help you understand the situation.

Example 5: Most of your website traffic comes from search engines. If the algorithm changes and your site stops ranking, you could lose a lot of new customers. You need to diversify your traffic.

Strategy: Start using other traffic sources such as social media or paid advertising.

Example 6: Your entire business fits on your laptop, and if it's stolen, you'll lose everything.

Strategy: Purchase a program to automatically back up your files on a daily basis.

Working through a SWOT analysis on a regular basis will prevent you from losing touch with your business, your team and your clients. More importantly, it will help you stay successful in an ever-changing market.

Once you have time to think about the most important things on your list, make an action plan and get to work!

SWOT analysis: what it is and examples of how to do it correctly

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From this article you will learn:

What types of SWOT analysis method exist?

When should you not use the SWOT analysis method?

The SWOT analysis technique has become very popular due to its simplicity and wide applicability. With its help, you can assess the likely consequences of rational decisions in almost any area: both in business when developing a company development strategy, choosing a marketing policy, etc., and in private life. The SWOT analysis method assumes that the situation has been studied and understood before making a decision. Let's take a closer look at it.

What is the essence of the SWOT analysis method?

SWOT analysis is a way to assess the current situation in a business and the prospects for its development, identifying four key aspects: Strengths, Weaknesses, Opportunities, and Threats.

Two of them – strengths and weaknesses – characterize the state of the company’s internal environment at the time of analysis. The remaining aspects - threats and opportunities - relate to the external environment in which the business operates and which the entrepreneur or head of the company cannot directly influence.

The method of conducting SWOT analysis allows you to describe the situation clearly and structuredly, to draw a conclusion about whether the company is developing in the right direction, what risks should be protected from and how exactly to do this, what is the potential of the enterprise.

The SWOT analysis method is based on four main questions:

What can a businessman (organization) do?
What would he like to do?
What is even possible in the current conditions?
What actions does its environment – clientele, partners, contractors – expect from the company?

By answering these questions, you can determine:

the advantages of the company, its trump cards that can be used in the development strategy;
vulnerabilities that can be eliminated or compensated;
prospects, open paths for the development of the company;
dangers and ways to protect yourself from them.

Why do you need the SWOT analysis method?

SWOT analysis is a simple and universal method, widely used in business and beyond. In business, when planning and developing a strategy, it can be used either separately or in conjunction with other marketing tools, which makes it very convenient for company managers and private entrepreneurs.

Outside of business, the SWOT analysis method allows you to identify priority areas of effort (this applies to both professional and personal development), find your true life goals and priorities in work activities and relationships.

In relation to business, SWOT analysis is used to:

collecting, summarizing and analyzing information about competitors using Porter models, PEST and other marketing methods;
creating a step-by-step plan for implementing the business strategy, working out its main directions and appointing persons responsible for implementation;
competitive intelligence (searching for the strengths and weaknesses of competitors) to form an effective development strategy.

Thus, wherever it is necessary to highlight the strengths and weaknesses of something (commercial activity, enterprise, personality), there is a place for the SWOT analysis method. Its product can be either a business strategy or a program for professional or personal growth.

Types of SWOT analysis method

Express version of SWOT analysis. It occurs most often and is used to detect the main strengths of a company and its vulnerabilities. External threats and opportunities are also identified. This type of method is the easiest to use and gives a clear result.
Summary SWOT analysis. It focuses on accounting and systematization of the main indicators of business performance at the current moment and its prospects in the future. A summary SWOT analysis is good because it allows you to quantify factors that are identified by other methods included in the strategic analysis tools, and formulate a strategy and action plan aimed at achieving the main goals of the company.
A mixed SWOT analysis is an option that combines the first two. There are at least three varieties of it, in which the influencing factors are structured in the form of tables and form a cross matrix. However, the analysis of these types does not provide a quantitative assessment of certain indicators. Thanks to the summary SWOT, you can deeply explore the data obtained and come to an accurate result.

SWOT analysis method as an example

The main matrix of SWOT analysis is as follows:

Let's consider this situation: an individual entrepreneur is going to sell pies to grandmothers in small batches (and they, in turn, will resell them to the final buyer).

Here's how to apply the SWOT analysis method to it:

Note that if the target audience is, for example, schoolchildren buying pies for themselves (and not grandma-traders), then the SWOT analysis needs to be carried out again, since the source data has changed.

Project analysis using the SWOT method

First of all, decide what goals you are going to achieve through the method, what tasks are facing you. If the project is devoid of goals and is vague, the SWOT analysis will fail: there will simply be nowhere to get the source data.

Find potential strengths in your future (or existing) business. Make a complete list of them and start analyzing each of them. What characteristics and features make your idea realistic and promising? Are the means and tools with which you intend to implement your strategy effective, and in what way? How good an entrepreneur (or leader) are you? What resources and assets are available to you? What do you manage to do better than your competitors? In general, conduct an audit and assessment of your capabilities.

Then, using the same method, you need to analyze the shortcomings of the business project under consideration. What factors hinder the solution of current problems? What business skills do you personally lack and how can you “upgrade” them? What is the main vulnerability of your company and you personally as a person and leader? What factors should be avoided? What can prevent you from taking advantage of opportunities and advantages to achieve your goals?

The next stage of the SWOT analysis is to compile a list of available prospects for your project. You probably already actively use some of these favorable environmental factors to promote and optimize your business; list them. Don't forget about potential opportunities. Describe the market situation in your niche. Think about what tools, means, methods and advantages can be applied to make your project unique and in demand.

After this, proceed to a description of existing external dangers and threats. Which of these factors are preventing or could prevent you from achieving your intended result? How many of your competitors, enemies, ill-wishers are there that can harm your business and prevent it from developing? In the SWOT analysis method, threats and opportunities always relate to the external environment, while strengths and weaknesses always relate to the project itself.

When all the lists have been compiled, begin to form conclusions and conclusions. They must provide answers to a number of important questions about how to competently use their strengths, how to eliminate shortcomings and problem areas, how to take advantage of new opportunities in practice, how to minimize risks and avoid dangers.

Listing, cataloging and studying these four groups of factors is not the main part of the SWOT analysis method. All the most important things happen later, when the data has already been collected and structured: finding ways to turn problems into advantages, turn weaknesses into strengths, and make external threats serve to benefit your business.

If at this stage it becomes clear exactly what measures and steps need to be taken, be sure to plan them for the near future and actively begin to implement them.

One of the most popular methods of collecting the necessary information is SWOT analysis, which is widely used in practice today by serious and successful businessmen.

You will learn:

What is SWOT analysis?
What problems can be solved with its help?
What are the rules for conducting a SWOT analysis?
What is a SWOT table?
What method is used to carry out SWOT analysis?

Making a decision to launch a new one or choose the direction of development of an existing business is a difficult task. The correct application of SWOT analysis, which allows for an objective and comprehensive assessment of the enterprise, helps to correctly assess its prospects and increase the likelihood of achieving success.

The success of a business largely depends on making the right decisions in a timely manner. A prerequisite for this is to obtain comprehensive information both about your own enterprise and about the state of the market, as well as other external factors.

Definition of SWOT Analysis

To put it briefly, SWOT analysis is a method that allows you to assess the current situation by considering it taking into account several aspects, including: the strengths and weaknesses of the enterprise, as well as external opportunities and threats.

The first letters of the English words denoting each of the listed terms give the name to the method:

strengths – S trengths;
weak sides - W eaknesses;
possibilities - O pportunities;
threats – T heats.

An important feature of the method is the consideration of both internal factors, which include the strengths and weaknesses of the enterprise itself, and external ones, which are understood as opportunities and threats. It is an integrated approach to studying the current state of a company in the market and its development prospects that is the main reason for the popularity of SWOT analysis.

The term “SWOT analysis” was first used more than half a century ago – in 1963. It was used at one of the conferences held at Harvard by Professor Kenneth Andrews.

Just two years after its appearance, SWOT analysis began to be used in practice when developing strategies for various companies. Today it is actively used in all countries whose economies are developing according to market principles.

Objectives of SWOT analysis

The main purpose of applying the method is to develop a business strategy based on maximizing the use of the company's strengths and minimizing potential risks.

It is important to note that SWOT analysis is deservedly considered a universal tool that, when used correctly, is effective not only in relation to the enterprise as a whole, but also in relation to individual divisions or products. Moreover, the most important principles of analysis are often used when assessing a particular person and determining directions for his further professional or personal growth.

Despite this, the main area of application of SWOT analysis is still business. In addition to the task indicated above, it allows you to solve other important tasks, such as:

Analysis and assessment of competitors and their activities. In this case, the method in question is usually used in combination with others, for example, the Porter model, various marketing tools or PEST.
Development of a step-by-step action plan aimed at implementing the chosen company development strategy.
Formation of the concept, objectives and main goals of the advertising campaign.
Conducting competitive intelligence in order to compare a product planned for release with similar products already on the market, etc.

A characteristic feature of SWOT analysis is the absence of categories strictly tied to a specific type of activity. This allows the method to be successfully applied in a wide variety of fields and areas of business.

The popularity and widespread use of analysis based on the assessment of four key factors is explained not only by its universality, but also by the possibility of adaptation to the specific conditions of a business entity. As a result, an individual model is created based on general principles, which increases the efficiency of the analysis and the accuracy of the resulting estimates and forecasts.

How to conduct a competitive analysis: step-by-step algorithm

It’s not enough to follow competitors’ accounts on social networks and subscribe to newsletters. You need a strategy that will allow you to monitor your competitors on an ongoing basis and receive prompt information about changes in the market. Therefore, the electronic magazine “Commercial Director” has compiled a detailed algorithm for competent analysis of competitors and assessment of their activities.

Rules for conducting SWOT analysis

Before describing the essence of the method, which consists of the so-called SWOT table, it is necessary to consider the basic rules for its application. Following a few fairly simple and obvious recommendations for experienced specialists will make the application of the analysis more objective and competent.

The most important rules for the practical application of the method in question are as follows:

Selecting a specific area of research. It is much more correct to consider a product, division or a separate direction of development than to analyze the work of the enterprise as a whole. As a result, the conclusions and estimates obtained will be more accurate and more suitable for practical use.
Clear delineation of the constituent elements of the SWOT table. Their detailed description is given below. It must be remembered that the essence of the method is to separately consider each of the factors and combine the resulting estimates and forecasts.
Minimizing the factor of subjectivity. Despite the absence of a large number of quantitative parameters, the influence of personal opinion on the objects being assessed and analyzed should be reduced as much as possible.
Gathering information from as many sources as possible. Continuation and development of the previous rule. The purpose of its implementation in practice is to increase the objectivity of the analysis.
Specific and clear formulations of conclusions. There is no point in writing phrases like this based on the results of the analysis: “We need to work more.” It is much more correct and effective to set clear goals expressed in quantitative form.

SWOT Analysis Table

The basis of the method is the matrix, or SWOT table. It is conventionally divided into two parts - the internal environment and external factors. Each of them is positively influenced by the company’s strengths and existing market opportunities, and negatively influenced by the company’s weaknesses and potential threats. It is logical to consider each of the elements of the analysis and the parameters that influence it in more detail.

Internal environment and factors influencing it

The advantages of the SWOT method include the ability to adapt to the specific conditions of a company or an individual product. However, there are some general principles for studying the object of analysis, which are summarized in the table.

Internal environment
	Strengths	Weak sides
	Experience and duration of work in a specific market segment	Lack or shortage of own working capital
	Product quality
	Cost optimization and low production costs	Low qualifications and lack of cohesion of the workforce
	High level of consumer confidence	Lack of clearly defined business objectives and goals, as well as a strategy for its further development
	Detailed and streamlined business model	The presence of internal conflicts in the team between individual employees or departments of the company
	A permanent staff of workers who are a close-knit team	Lack or low effectiveness of employee motivation and incentive programs
	Large range of manufactured products	Lack of warranty for the goods supplied or work performed
	Availability of competent and well-trained personnel	A small range of services provided or goods produced
	Own channels of distribution and sale of goods
	Diverse and high-quality services offered to clients
	An efficient marketing department

An important feature of the analysis and assessment of the internal environment is the possibility of direct influence on it by the company's management. Therefore, one of the goals of the SWOT method is to develop measures to further develop strengths and minimize the impact of weaknesses in the operation of the enterprise.

External environment, including SWOT opportunities and potential threats

It is almost impossible for a business entity to influence the parameters of the external environment. However, a well-conducted analysis allows you to make the most of the company’s existing opportunities while minimizing the impact of existing threats and risks.

External environment
	Possibilities	Threats
	Development and launch of a new product or service	The emergence of new products on the market that can displace the company’s products
	Introduction of advanced technologies and use of modern equipment	Increasing the level of competition and the number of market participants
	The emergence of new needs among potential consumers who are the target audience	Disruptions in the work of suppliers and contractors of the enterprise
SWOT analysis: pros and cons of practical use Like any analytical tool, the SWOT method has both obvious advantages and certain disadvantages. The advantages of using it include the following: the ability to structure existing information about the company and its external environment; simplicity of the procedure and taking into account the individual characteristics of the business and a specific enterprise; the use of a large number of qualitative factors with a small number of quantitative ones (which does not require a serious computational and mathematical base, making the method publicly available); the presence of a serious array of information that acts as a source for SWOT analysis. The main disadvantages of the analysis method under consideration include the lack of a dynamic component and consideration of the time factor, as well as significant subjectivity of most of the factors under consideration. In addition, the small role of quantitative parameters and estimates significantly reduces the information content of the analysis results.

A monumental theory in marketing and planning, SWOT analysis, remains quite obscure to those who study the subject, and for many people not associated with advertising, finance and analytics, this thing is generally unknown. And in vain.

Today on the Econ Dude blog I will continue to cover basic economic terms, theories, objects and phenomena, let's talk about SWOT analysis. My article will, as always, be somewhat subjective; I write in my own words and give examples. In a more general and scientific form, you can read about SWOT analysis.

What is written there is all competent and correct, but boring. They’ll tell you something like this in marketing at a university, but you most likely won’t understand anything, just as many teachers themselves don’t understand what they teach. And I will try to help you understand this theory and give examples to make the learning process interesting.

If you don't need it for study, so much the better.

It will be useful in life in any case, for general brain development.

SWOT analysis is a very monumental thing, it can not only be applied to the analysis of commercial, private or public companies, it can be applied to almost any organization and even entire industries.

It works in politics, economics and social life.

Another theory in economics?

Many people do not consider economics a full-fledged science, and I, with an economic education, partly agree. If the subject is not science, then they will pull things out of thin air, invent theories, pour water and look for supposed dependencies of one on the other. This is done, for example, in topics that are not science.

But the education sector is also an industry, which means jobs are needed, and coaches and teachers need to teach something, which means you need to come up with all sorts of theories and concepts. SWOT is such a thing partly and is, like, for example, the theory about the life cycle of a product. But in general, these are beautiful theories that are useful to study to warm up your brain. Moreover, even if some thing is unscientific, but if, for example, this SWOT analysis is used by the directors of Google, Gazprom or, for example, Tinkoff Bank, then in fact the theory becomes practical; the practice of application makes it practical.

They study this thing in marketing, analytics and business planning.

It is from these four corners that an existing project, or a new and theoretical one, for example a new one, is considered.

Read my article at this link if you have time, where I tell you exactly how one small business company operates, and much of this is precisely the logic of SWOT analysis, I just don’t mention it directly there.

It’s quite easy to imagine everything visually and graphically:

What's unclear here? Picture (matrix) I've already told you everything.

Everything is beautifully divided into segments, while there is two global segments different colors, external factors (Wednesday Thursday) and internal.

I understand that it is useless to show beautiful or ugly pictures with graphs in an attempt to explain something; this is a big mistake of many teachers in schools and universities. You need to teach only with the help of cases and real examples.

They will be later in the article, but you need to understand that in the countries of the former CIS capitalism is young, so there are few cases in Russian, and in general SWOT analysis is partly a corporate secret, however, below I translate some things from English.

How is SWOT analysis done? Example

Example, analysis of a small restaurant ( from English articles ):

Great location with lots of traffic (force);
Good reputation among local residents ( force);
Higher price than competitors and large companies ( weakness);
Low marketing budget ( weakness);
Opportunity introducing food delivery through the application;
Threat supplier price increases.

If you studied economics, then you know that there are 5-10 very typical and classic points for any business for each element. That is, this is already a classic, either a good business location or a bad one - either it is a strength or a weakness. In many cases, you don’t even need to invent these points, you just need to analyze the situation of your company using ready-made questions:

Location and rent?
Staffing and salary costs?
Pricing policy in relation to competitors?
Marketing budget?
Tax regulation?
General economy of a region, city or country (changes)?
Reputation, brand awareness and customer base?
Staffing, salary costs and labor costs?

And further down the list. You answer questions like these and choose whether it is a strength, a weakness, an opportunity or a threat. Here it’s very possible to turn everything around in your head and present one thing as both strength and opportunity. Sometimes it happens that a feature can be described as a weakness or a strength, depending on what angle you look at. There is room for creativity and some imagination.

The ability to identify external and internal factors in your head is the most important skill in life; it greatly helps you change even your personal life for the better and, for example, not blame yourself for what you are not responsible for. At the same time, take responsibility if this is an internal factor and is already your essence, then you need to change yourself.

So, maybe such personal examples are more clear to you.

Another example, SWOT analysis Coca-Cola

Here is a simple example of analyzing a large company:

Any grandmotherevenin any African country knows.

What does this give? People always choose a more recognizable brand at the same price. That is, if in any market in the world there is Cola on the store shelf, it will be very difficult to enter this market with your new drink in the same price category.

How to get out? Put pressure on health, as an example.

What are Coca-Cola's weaknesses?

This is a difficult question, you won’t guess it right away, you need to think about it.

The weak point is margin. It's low and it's built into their business.

Beverages are part of the food market and even part of agriculture, as competitors include water, milk, and juices. In the niche there are low margins, well, relatively low, for example.

Although they can be understood due to the processing cycle and brand, about that here:

So, Kolya, in order to receive large gross revenues, needs to sell literally millions of cans and bottles of this poison. This means we need a huge logistics network, which means the purchases of aluminum and plastic are huge. Dependence on purchasing prices for raw materials is always a potential weakness in almost any business.

Why is this analysis needed and how to apply it?

You see what SWOT analysis does, he just forces you think, analyze and put the company in pieces. Some conclusions naturally follow from this, many of which are very practical and applicable.

Another weakness of Cola?

Competitor - Pepsi. What to do about it? Nothing really. The situation of a practically oligopoly is almost the best, because the monopoly will be crushed by the state, and with free competition there is no need to expect normal revenue.

The goal in business terms is to increase profits; this is generally the goal of any commercial enterprise. There may also be smaller tactical targets.

Let’s take some other example, from a different area.

SWOT analysis in politics

Let’s say the “Donald Trump” project, this is also a project of its own kind, already political, to which this analysis can also be applied.

Strength? Independence in the eyes of many from the US political elite and institutions. But as you know, our strengths are a continuation of our weaknesses. From any strength comes weakness, and vice versa.

He has no support from the US elite, no support from the media, all the Colberts and other John Olivers from the Democrats are hounding him every day.

Therefore, having promised something, pushing through the project is a difficult matter. People supported, ok. But power is not with these people, but with institutions.

His position now is such that he is a hostage to his strengths and weaknesses. Does he communicate with people directly using Twitter? This is a plus, but there is also a minus, a weakness. The media who are against him will suck up any Tweet and dig to the bottom. And if you write everything yourself without a press secretary, then of course you will blurt out something like that...

What are the opportunities and threats in his position? The threats are obvious. Impeachment, loss of trust of his nuclear electorate.

A lot here depends on the goals, and Trump’s long-term goals are not entirely clear; he plays more like Russia, somehow depending on the situation.

But if we assume that his goal, for example, is a second term, then based on this we can already think about how to take advantage of opportunities and avoid threats.

Any mistake by the Democrats is an opportunity to score points. Any puncture is a threat of attack from enemies. Each specific situation is analyzed very quickly and conclusions are drawn. At all, SWOT analysis is a method of thinking in general, many people do it automatically without even realizing it. It is logical, it’s just that not all people know how to distinguish between internal and external factors, and confusing them is a big mistake.

The acronym SWOT was first coined in 1963 at Harvard Business Policy Conference by Professor Kenneth Andrews.

In 1965, four Harvard University professors - Leraned, Christensen, Andrews and Guth - proposed a technology for using the SWOT model to develop a firm's behavioral strategy. The LCAG scheme has been proposed (according to the initial letters of the authors' last names), which is based on a sequence of steps leading to the choice of strategy.

As you can see, the term is no longer new, this concept is quite old, so during its existence and application it has already gained some practice.

Turn a feature into that? (Feature)

You can do this analysis for almost anything, even for example this blog of mine, Econ Dude. What is the feature of the blog? I write on many topics at once (topics in the header): economics, psychology, reviews, games, design, etc.

This is exactly peculiarity, not weakness or strength. Feature. Such blogs are called author's blogs. And from this feature, pros and cons already follow.

That is, if we found a feature (market diversification, for example), then you shouldn’t immediately and headlong try to write it down as a strength or weakness, you need to draw conclusions from this and now put the conclusions into a category. Example?

Let’s say if I write on different topics, if the market changes and, for example, if traffic on one topic is lost, I can calmly close it, continuing to write further on other topics. That is, we are writing this by virtue of formulated something like this:

"Reducing the risks of market fluctuations as a result of diversification"

A into weakness we write like this:

"Reduced project growth rate due to diversification"

This is how one thesis and one feature turns into both strength and weakness.

Gaining a deeper understanding of the project

Here you can ask, what’s the point? Ok, you've sorted it all out and classified it, what are the practical conclusions from this? Are you going to blog about one topic after this, or what are you going to do? Why disassemble everything using this analysis?

Friends, it’s just a matter of deep understanding of the essence of the project and that’s all.

If there is understanding, then you can avoid many mistakes.

These are the practical conclusions and this is just one small example.

Often in life we start some business and some project, and we just do it, maybe we have the desire and motivation, or maybe we don’t and we just want to earn money, everything is commendable. But you will be amazed at how many people waste their energy doing things that they would never do if they understood their weaknesses, their strengths, and saw the opportunities and threats in their situation.

Damn, such an analysis can even save a relationship if you are simply evaluating the project “and family with Masha”, at least in your head you note her strange quirks and write it down in your head as a threat.

If there is a threat, maybe you can ask Masha’s friend, Dasha, is Masha generally okay? And your friend will tell you that you are crazy if you decide to marry her. That's how it works, simple things that can have a big impact on the future.

These principles, that if there is something good, then there must be something bad, are almost philosophical principles, and they are also principles for assessing objectivity, for example in Wikipedia. These are also the principles of quality journalism and science.

SWOT analysis makes you look at the world more adequately and realistically.

There is always a threat, everything cannot be fine. There is always an opportunity, all is not lost. You have strengths, you underestimate yourself. You (or for a business, project) There are also weaknesses, don’t be naive and blind and don’t be arrogant.

Along with SWOT analysis, the works of Porter, For example five forces analysis. Several similar methods together give much more interesting results and you should not limit yourself to SWOT alone.

Porter's techniques are applied to the analysis of competition and external factors, as a result they provide a good understanding of the market and industry.

That's all, my other articles on economic topics can be found here.