SWOT Analysis
SWOT Analysis forms part of the strategic planning process or strategic review of a business. It primarily involves scanning the internal environment in light of identifying and understanding the internal Strengths and Weaknesses of a business. This is coupled with a scan of the external environment – scanning the external environment enables a business to identify and understand the opportunities and threats. It is important to conduct a SWOT analysis for your business plan. The SWOT analysis is a summary of the external and internal environment analysis. You can also consider it to be a corporate appraisal.
| Strengths | These are the internal strong points about your business – they primarily include your core skills, competencies and expertise. They reflect the capabilities of your business and provide a good foundation for your business strategy. |
| Weaknesses | This refers to internal factors that are lacking in your business. Weaknesses need to be comprehensively assessed in order to correct them or strategically turn them into positive strengths. |
| Opportunities | Opportunities are the likely benefits to your business resulting from changes in the external environment. |
| Threats | Threats pertain to the possible pitfalls or dangers resulting from changes in the external environment. These are likely to have an adverse or detrimental effect to your business. |
In essence, the Strengths and Weaknesses are internal factors and the Opportunities and Threats are external factors.
Conducting a SWOT analysis is beneficial for a start up or existing business as it enables the entrepreneur to respond as follows:
| Basis | Response |
| Strengths | Capitalise or build on the identified strengths |
| Weaknesses | Turn weaknesses around |
| Opportunities | Successfully assess and exploit the opportunities |
| Threats | Avoid the threats as you do not have direct control over them |
How do I go about drawing a SWOT Analysis?
| Scan the Internal Environment |
| This involves scanning the internal environment of your business in order to deduce the Strengths and Weaknesses of your business. They following schematic provides a guide for assessing the internal environment. |
Internal environment considerations:
| Skills | What skills, competencies and expertise do you and your team members have? Do you have financial skills? What about business management skills? Do you have skills that are directly related to the type of work your business renders? Where essential skills are lacking in your team, mention these as weakness. Where essential skills are present, note these as strengths. |
| Strategy | Does your business have a clear strategy? Have you planned for the long term, medium term and short term? Does your business have a clear, well aligned vision and mission? What about strategic objectives? Are action plans and targets present in your business? Do you have performance indicators? Assess the scenario to deduce the strengths and weaknesses in this regard. |
| Staff | Does your business have the right staff? Does your business have the right number and type of employees? Where the scenario is positive, state these as strengths, otherwise mention these as weaknesses. |
| Structure | Do you have an organisational structure? Is it formal or informal? Does sit how clear lines of reporting, networking or communicating? Is it the right structure for your business? Discuss these considerations and allocate your findings under strengths or weaknesses, whichever is appropriate. |
| Systems | What systems do you have in place? Do you have Accounting Systems? What about Monitoring and Control Systems? Where the answer is yes then this is an internal strength. In instances where important systems such as Quality Control Systems are lacking – this must be noted as a weakness |
| Shared Values | What values do you possess? Are these common to other personnel in the business? Your values may include: creativity, accountability, confidentiality, trustworthiness, honesty and many more hallmarks. The key question is – are these values shared? Are they the foundation and core of your business culture? Essentially, in instances where the values are shared, this can be noted as an internal strength; or as a weakness if the case is otherwise. |
External Environment Scanning
The Opportunities and Threat are derived by scanning the external environment. The external environment encompasses the following:
| Perspective | Considerations – Opportunity or Threat |
| Political Changes | Government policiesPolitical climate |
| Economic Changes | The global recession Interest rates Inflation rates |
| Social Changes | CrimePollution The Aids pandemic and other diseases Unemployment |
| Technological Changes | New technologies Availability of technologyThe Internet |
| Legislative Changes | Labor related lawTax related law Employment related law |
| Environmental Changes | Global warming Recycling E-wasteDeforestation Greening |
Sample SWOT analysis | |
| Strengths | The shared values of the team A strong well established brand name and brand loyalty Excellent reputation and positioning in the market Good competitive advantages Good location of the business Creditworthiness of the owners of the business Skilled, competent and experienced personnel Accreditation with significant bodies Financial and accounting systems in place Monitoring and evaluation systems in place |
| Weaknesses | Lack of quality control systems Lack of advanced financial management skills Lack of a formal structure Slight gap in capabilities |
| Opportunities | Availability of advanced technology Developments in Information Technology Great Market demand Growing export market Growing industry Favorable Government policies Positive seasonal influences Increased consumer spending |
| Threats | Direct competitors Indirect competitors Threat from consumers Threat from substitute products or services Threat from suppliers Rivalry |
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