What is SWOT Analysis?

SWOT analysis is a management tool used to assess the Strengths, Weaknesses, Opportunities and Threats of a scenario. In Portuguese it can also be known as the FOFA Matrix.

Its objective is a diagnosis of the business environment. It is applied during strategic planning in the form of a matrix that helps the manager to think about these four elements and see bottlenecks or paths to be taken.

Due to its simplicity, it is also common to see Swot Analysis applied to the management of small initiatives and not only large companies, or even in personal life.

SWOT Analysis Example

The SWOT Analysis is divided between the internal environment (Strengths and Weaknesses) and the external environment (Opportunities and Threats).

Internally, we count the competitive advantages of the business (best product, best technology, qualified labor, etc.) as Forces. Weaknesses are the delicate points that are known internally, which are in a lower position than competitors.

Externally, Threats are aspects such as the market, seasonal issues, even political and economic issues. Opportunities are the same factors, but on the other hand they can offer a potential path for the company, not a problem.

How to do a SWOT Analysis

It is applied during the strategic planning stage, before launching a new product or business, or during a period of reevaluation and repositioning of the company. It is interesting to bring together the group of decision makers and key figures in the company for a moment of brainstorming, that is, a meeting in which everyone can collaborate equally, and preferably in an environment that allows the reduction of filters in speech. For a well-composed Swot Analysis, you need as much information about the company as possible, with sincerity and without pride or feelings that may cover up data.

The group will complete a model like this from the SWOT Analysis.

Each point can be thought of as follows:

Forces

  • Internal elements (under the control of company management)
  • Positive factors
  • What the company does best
  • Advantages over the competition
  • Intangible resources: knowledge and qualities of human resources, company reputation, brand image, etc.
  • Tangible resources: availability of capital, customers, distribution channels, registered patents, etc.

Weaknesses

  • Internal elements
  • Negative Factors
  • Internal issues that are hurting competition
  • Areas with difficulties and poor performance
  • Is there a flaw in the business?
  • Obsolete technologies in production, or something like that?
  • Limited resources
  • Problems with location (distribution difficulties, poorly located and problems with the workforce due to this, etc.).

Opportunities

  • External elements, beyond the company’s control
  • Positive factors
  • Market opportunities that can benefit the company
  • External perception of the business
  • Changes in competition and the market as a whole
  • Is the opportunity valid and permanent, or just a window?

Threats

  • External elements
  • Negative factors
  • Competitor rating
  • Anticipation of future external risks
  • Analysis of market challenges: are they trends or are they always on the side of the business?
  • Situations that can harm marketing strategies
  • Relationship with suppliers
  • Consumer behavior
  • Political and economic issues
  • Market news