The value of doing this internal and external analysis is dependent on the effort put into it by the participants but as a tool it is very simple to use and effective. The key is to continuously repeat the SWOT for each and every part of the business, the competition and market.
Business Strengths – What is Done Well
What are the internal key factors that help the business make money or its strengths? These strengths can be analysed in any part of the business or by considering it as a whole:
- Systems – effective and efficient business systems that are the tools of the business to get the job done
- Process – effective and efficient business processes that deal with all normal operational activities ensuring timely delivery and customer satisfaction
- People – talented and productive people that add value through what they do or how they do it. Provide new ideas to build a better business
Business Weaknesses – What Can be Improved
What are the internal factors that hinder or are harmful to the business or its weaknesses? These weaknesses can be considered the inverse of the strengths:
- Systems – Ineffective or inefficient tools that are out of date or obsolete. Haphazard growth or poor design of systems leading to sub optimal organisation of business tools
- Process – Ineffective or inefficient business processes that lead to congestion of deliverables in the chain of events to produce them. Processes that are reliant on external providers that are unreliable or lack an appropriate level of quality
- People – unproductive or disruptive people that either slow the business processes down or create a difficult working environment
Market Analysis
What are the opportunities in the market? New market entrants, businesses, products or services that provide fresh opportunities to do things better, faster or cheaper. Additional opportunities may come from competitor businesses that are struggling or leaving the market place and whose problems or absence may lead to new customers.
What are the threats in the market? New market entrants, businesses, products or services that will change the competitive landscape and may lead to the loss of business. Other problems may come from new business initiatives by market competitors that may damage business.
In addition, some people might like to use Porters Five Forces Model for competitive analysis.
PEST Analysis
Beyond the immediate market is the impact of other major forces – PEST – Political, Economic, Social and Technology. PEST Analysis looks to these other external business opportunities and threats and looks at what impact government initiatives, spending or tax plans might have. Or, the impact of the economic environment especially during times of general hardship such as a recession or depression. Or, the social/demographic changes such as an aging population or the rise in eating out. Or, the impact of new technology and assessing changes such as the internet or mobile communications.
Using SWOT Analysis
Having performed the SWOT analysis the key is now:
- How to leverage the strengths?
- How to improve the weaknesses?
- How to exploit the opportunities?
- How to minimise the threats?
Answering these questions is not necessarily easy but completing it is the first step in strategic analysis and Strategy to Improve A Small Business. If needed, this article gives further help on How To Use SWOT Analysis.
Roger Lever - Early career was in Treasury Banking and this led to my interest in financial investment, especially the stockmarket. Enjoy reading widely ...
