Whether you are preparing for an important job interview, dealing with a complicated project, or need to convince a bank that your business plan will be successful and help you build a thriving company with no shortage of customers, you should definitely consider using a tool such as SWOT analysis. Thanks to SWOT analysis, you can gain a clear overview of your strengths, the areas where you may lag behind others, the opportunities available to you in the current situation, and the factors that require your particular attention.
Almost everyone encounters SWOT analysis, originally developed by Albert Humphrey in the 1960s and 1970s, at some point in their lives. This simple marketing tool from the field of strategic management can be used to quickly and effectively bring together all the key aspects of a particular organization and assess whether, after considering all market risks and opportunities, such a business has a chance of succeeding in comparison with its competitors.
It is highly adaptable.
The reason why SWOT analysis is such a popular and widely used “tool” lies in its adaptability. In other words, it can be applied to virtually anything or anyone. As already mentioned, it can be useful for mapping the potential success of a specific project, but it can also be used to evaluate which job applicants are best suited for a given position. In short, it is very versatile.
Its somewhat unusual name is, of course, no coincidence. The individual letters refer to the English words Strengths, Weaknesses, Opportunities, and Threats.
Everything has its order
In order for the entire SWOT analysis to have the desired effect, it is first necessary to understand the principle on which it is based. In this context, it is important to mention that, like the name itself, its form is not entirely random. It takes the form of a matrix with four quadrants arranged so that the first pair always consists of strengths and weaknesses, and the second pair consists of opportunities and threats. Positive factors, i.e., strengths and opportunities, must be on one side, while negative factors are logically on the opposite side.
Certain rules must also be followed when identifying the individual aspects to be analyzed. These rules divide the matrix into two equal parts, one dealing with the so-called internal environment and the other with the external environment. But what does this mean.
In fact, it is not that complicated. This division simply means that the strengths and weaknesses that are part of the internal environment must be related directly to the subject in question (organization, project, specific person), while opportunities and threats, which together fall within the external environment, must be viewed as factors acting from outside. In other words, while the subject under examination is able to influence the first group of aspects through its own behavior, it must simply adapt to the second group. However, this may be more evident in a specific case.
Practical example
Try to imagine yourself in a situation where, as the owner of a successful domestic printing company, you are interested in expanding your business beyond the borders of the Czech Republic. However, since this would initially be a relatively costly investment, it is necessary to think everything through carefully. To make your decision a little easier, you decide to perform a SWOT analysis.
You know from experience that, compared to the local competition, your company has better technological equipment, offers a wider range of products, and boasts a very low percentage of complaints. On the other hand, you are aware that you do not have as much capital at your disposal as other companies operating in the market you are considering, you have fewer qualified employees, and your network of contacts and potential customers is relatively small. At the same time, however, you know that the local economy is on the rise, you have a chance to obtain a multi-million dollar subsidy from the EU, and you can gain access to completely new know-how. What worries you, however, is the current negative development of the koruna exchange rate against the euro, the planned amendment to tax laws, and the risk of an increase in energy prices.
Once you have organized all these aspects as described above, you will have a SWOT matrix that looks like this.
SWOT Analysis is just the starting point
Although no business plan that is taken seriously can do without a proper SWOT analysis, this tool is only a necessary foundation that needs to be further developed in order to obtain the most reliable indications of the likelihood of success or failure of a specific project. It is therefore quite common to follow it up with other partial analyses such as PESTLE, Porter’s five forces model, or McKinsey’s 7s model, etc.
Pakliže byste se o této vskutku zajímavé problematice z oblasti strategického managementu chtěli dozvědět přeci jen o něco více, neváhejte a přihlaste se k MBA studiu na našem institutu CEMI. V rámci MBA programmes vás seznámíme s metodami strategické analýzy a ukážeme vám, jak ji můžete využít pro účely plánování a implementace vašich strategických rozhodnutí. A v rámci své seminární práce si rovnou můžete zpracovat strategickou analýzu na váš vlastní projekt.
If you would like to learn more about this truly interesting topic in the field of strategic management, don’t hesitate to enroll in the MBA programmes at our CEMI institute. As part of the MBA programs, we will introduce you to strategic analysis methods and show you how you can use them for planning and implementing your strategic decisions. And as part of your seminar paper, you can directly prepare a strategic analysis for your own project.
