SWOT analysis is one of the tools we have at our disposal to analyse a company or a project. With other analytical tools such as the PEST(EL), analysts, executives and managers use SWOT analysis. Conducting a SWOT analysis brings real benefits as it offers a systematic way to understand a company’s identifying strengths, weaknesses, opportunities and threats.
Trying to list all the advantages and strengths that a SWOT analysis has is not an easy task since every company is unique. However, the most common benefits and advantages we discuss below.
Monitor and Benchmark
Conducting a SWOT analysis is not something that you should perform 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 the steps that you should be taking to grow your market share. Comparing what the company is doing to its main competitors provides a means of strength and weakness analysis. A SWOT analysis is a great framework that can help you systematically approach this task.
One of the critical elements that a SWOT analysis includes is the “threats” element. Threats or risks are essential for every business. Taking the necessary steps to understand your business’s risks and what actions it needs to take to “hedge” against these risks are two essential benefits that a SWOT analysis can help you perform.
Another element that a SWOT analysis includes is the “strengths” element or its competitive advantage. Identifying your strengths is vital for every company that wants to grow. Competitive advantage is something companies should be looking to monetise. It can be your brand, logistics, 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 provide.
Identifying these strengths is necessary to increase profitability, add diversity to your product portfolio, and work on the following element: the weaknesses.
Work on Weaknesses
There is no doubt that all companies have Achilles’ heels, or less poetically, weaknesses. A SWOT analysis can help you brainstorm weaknesses that cost you growth, sales and profits. Working on these weaknesses may help your company improve its position in the market.
Conducting a SWOT analysis should be performed frequently by all companies, both SMEs and multinationals. It is a helpful exercise that adds value by identifying key elements. Identifying a company’s strengths, weaknesses, opportunities, and threats helps evaluate its performance against measurable targets.