The 4 Parts of the SWOT Analysis
These four categories ensure a business recognises what is influencing their strategies, actions or initiatives. With the knowledge of these positive and negative elements it can help businesses be more effective with their communication of which parts of their strategy needs to be highlighted.
In the drafting process of a SWOT analysis, people generally create a table with four columns in order to compare each category. Strengths and weaknesses don’t normally match items in the opportunities and threats columns. The four categories should correlate with each other as they are tied together.
By comparing external threats and internal weaknesses you can highlight serious issues your business may face. Once these are identified you can decide what will be the most appropriate course of action towards eliminating the internal weakness.
You could assign resources or lessen the external threat by cancelling the vulnerable area and perhaps come back to it once your business is sufficiently strengthened.
Strengths and Weaknesses
These are specifically internal factors. They apply to the resources and experiences available to you. Examples of areas which are considered internal factors include:
- Finance related resources – Funding, income and investment opportunities
- Resources related to physical factors – Your businesses location, facilities and equipment
- Human resources – Employees, volunteers as well as your target audience
- Natural resource access – Trademarks, patents and copyrights
- Processes – Employee programmes, department hierarchy as well as software systems.
Other categories which should be considered are areas such as:
- Your businesses culture and image
- Operational effectiveness and potential
- Roles of key members of staff.
To create a thorough SWOT analysis you need to identify both good and bad factors. You shouldn’t sugar-coat or glaze over critical strengths or weaknesses when listing them. Small business owners have found that by using the SWOT analysis they have re-considered taking on a project that their business couldn’t actually handle.
It is recommended that before trying to take advantage of or control your businesses external factors your need to fully analyse and objectively assess your internal factors.
Opportunities and Threats
Every business, organisation and person is affected and influenced by external factors. These factors may not be directly or even indirectly linked to an opportunity or threat.
It is still important to identify and make a note of each one. External factors are generally factors out of your businesses control like:
- Trends in the market – New products, technologies or shifts in customer needs
- Trends in the economy – Local, national as well as international financial trends
- Funding – Donations, legislature as well as other sources
- Demographics – Customers age, race, gender and culture
- Relationships – Partners and suppliers
- Regulations – Political, environmental and economic.
Recognising external factors can have a profound impact on your business. It can ensure you stay competitive as well as retaining larger advertising and marketing customers.
A SWOT analysis can be used to identify an untouched business opportunity which could provide you with organic, manageable growth.
It can also be used to properly analyse your pricing structure which could have been a potential threat to your business.