SWOT analysis is one of the tools that we have at our disposal to analyze a company or even a project. Together with other analytical tools such as the PEST(EL) analysis, SWOT analysis is being used by analysts, executives and managers. There is no doubt that conducting a SWOT analysis adds value as it offers a systematic way to understand your company identifying strengths, weaknesses, opportunities and threats.
Trying to list all the advantages and strengths that a SWOT analysis has (compared to other tools) is not an easy task since every company and therefore every case is unique. However, the most common advantages are:
Monitor and Benchmark
Conducting a SWOT analysis is not something that should be performed once. Both the markets and individual companies are dynamic and therefore evolve. A SWOT analysis should be performed to monitor your performance and measure your progress and it is something that needs to be updated frequently. SWOT analysis can help your company to identify measurable targets and monitor your progress against those targets.
In addition, a SWOT analysis can help you understand your competitors and what are the steps that you should be taking to grow and grab market share. Analysis of the strengths and the weaknesses is performed by comparing what Company A is doing compared to the main competitors and a SWOT analysis is a great framework that can help you approach this task in a systematic way.
One of the key elements that a SWOT analysis includes is the “threats” element. Threats or Risks are key for every business and taking the necessary steps to understand the risks that your business is facing and what actions need to be taken to “hedge” against these risks are two vital tasks that a SWOT analysis can help you perform.
Another element that a SWOT analysis includes is the “strengths” element which could be also (in the right context) be described as the competitive advantage. Identifying your strengths is key for every company that wants to grow. Competitive advantage is something that can and should be monetized by all companies. It can be your brand, your logistics, your customers loyalty or the fact that your company is big enough to have the necessary economies of scale to offer quality at prices that your competitors can not afford to offer.
Identifying these strengths is necessary to increase profitability, add diversity in your product portfolio and also work on the next element which is the weaknesses.
Work on Weaknesses
There is no doubt that all companies have an Achilles’ heel or if you prefer a more realistic and less poetic wording , weaknesses. A SWOT analysis can help you brainstorm weaknesses that cost you growth, sales and profits. Working on these weaknesses will help your company improve its position in the market.
Conducting a SWOT analysis is something that should be performed frequently by all companies, both SME and big companies. It is a helpful exercise that adds value by allowing you to identify key elements such as strengths, weaknesses, opportunities and threats and evaluate how your company performs against targets that are measurable.