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The Shireburn Business Masterclass 1: SWOT Analysis

April 6, 2015

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Setting up and operating a business is one of the most exciting and rewarding ventures anyone can undertake. And whilst the business world can be rough at times, there are a number of tools that can help us assess situations, plan the way forward and execute strategies. These business tools are built to help us understand the market temperature, strategise accordingly and develop a more robust entity, whether it’s commercial in nature or not-for-profit.

In the Shireburn Business Masterclass series we aim to look at some of the most commonly used tools, dispel myths and provide an in-depth analysis of what these tools are used for and how you can utilise them to gain a competitive advantage.

In this article we will be looking at SWOT analysis. SWOT, an acronym for Strengths, Weaknesses, Opportunities and Threats is an exercise that allows us to identify just that – the internal strengths and weaknesses of our company, and how we can exploit and improve them, and the external opportunities and threats our businesses face.

In future posts we will be looking at concepts such as Lean Business, PESTEL, building a business model and leadership.

Whilst we hope that you find the Shireburn Business Masterclass useful, do not hesitate to get in touch or send us recommendations of tools or subjects you would like us to cover.

SWOT Analysis

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats and it identifies all internal and external factors that can help us capitalise on our potential as well as identify those elements which might harm our objectives.

First Things First

Without a clear idea of what the goals are, anything can be a strength or a weakness, an opportunity or a threat. It is only once we have a clear idea of where we are going that we will know whether a particular road will lead to success.

Business Plans can come in handy, not just when carrying out a SWOT analysis, but for the day-to-day running of a business. It shouldn’t be a document you prepare when opening a new business only to be relegated to the bottom drawer once everything picks up. It should be a document that is continuously updated, every quarter or so, according to market performance and business goals.

Beasts of a Different Nature

Strengths and Weaknesses are internal and as such can be controlled, whilst Opportunities and Threats are external and whilst out of our control for the most part, are still things we can impact. Make no mistake though; weaknesses can also be opportunities and identifying strengths can help us deal with current and emerging threats. This is what makes SWOT analysis such an important exercise within organisations.

Click here to download a copy of the SWOT template, and follow the below instructions to complete it accordingly.

Strengths are internal components which we can identify as being of value that we can capitalise on. Cash reserves, market penetration, brand leadership and field authority are all examples of strengths a company might have in its market. Strengths go into Quadrant 1.

Weaknesses are internal components which might restrict us from following through with a preferred plan. Weaknesses can include resources restrictions, lack of insight such as customer feedback and restrictive presence whether it’s social media, expos and so forth. Weaknesses go into Quadrant 2.

Opportunities are external components which offer the opportunities we need to accomplish our goals. Opportunities can include market growth, emerging technologies and favourable legislation in current or new markets. Opportunities go into Quadrant 3.

Threats are external factors which might negatively restrict us from achieving our goals. Declining demand and recessions are all existential threats that can negatively affect the outcome we are looking for in the short or long term. Threats go into Quadrant 4.

Once we have identified all of the four SWOT elements, by understanding where we stand, we will be in a better position to reach the goals our business hopes to achieve.

Asking the right questions will help us make the most of the SWOT analysis results. Depending on the industry, questions may vary but here are some to get you started.

Questions to Ask Yourself

  • What strengths do we currently possess to thwart threats we face?
  • Which weaknesses can we turn into opportunities?
  • How might opportunities change in the future, and how can we plan ahead to make sure we are in a position to make the most out of them?
  • What resources do we need now to build the strengths we need in order to challenge current and future threats?

Taking Action

Whilst it is impossible to cover every scenario here, we can lead with a few examples showcasing how points raised during a SWOT analysis can be addressed.

Economics tells us consumers will turn to cheaper alternatives when the price of something no longer remains affordable. If rising prices are a threat, purchasing alternative stock can help a business overcome the economic downturn.

Marketing and advertising can be more cost-effective using social media channels over more traditional ones. It can also allow us to build relationships with our customers. Is customer engagement a threat? Social media can provide the best bang-for-buck in expanding your reach, provided it is properly managed.

Launching innovative products and services can help businesses acquire market share even in mature markets. If creative thinking is one of the strengths of the business, innovation could be the key to gaining a larger market share.

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