UNDERSTAND YOUR SWOT
• Strengths • Weaknesses • Opportunities • Threats
The first step you have to take in business is to understand your SWOT. What is SWOT? SWOT is an acronym for the Strengths, Weaknesses, Opportunities and Threats that you face in business.
SWOT is a useful analysis that helps you develop your business in ways that takes best advantage of your talents, abilities and opportunities. It helps you in choosing the right business and in defining your business success. It can help you uncover and take good advantage of opportunities that you are best placed to exploit. It helps you focus on your strengths. It helps you to manage and eliminate threats that would otherwise catch you unawares. With SWOT analysis completed, you can then design a strategy that helps you differentiate yourself from others, so that you can compete successfully in your chosen business.
SWOT can be used for strategy formulation, or as a serious strategy tool. You can also use it to understand of your competitors, which can then help you in drawing up a plan to successful beat them in the business.
SWOT Analysis is sometimes called Internal-External Analysis. This is because strengths and weaknesses are internal to you and your business while opportunities and threats are external.
- What are your values?
- What advantages (such as skills, training, network, technology, materials, resources) do you and your organization have?
- What connections and contacts do you have?
- What can you and what do you do better than others? (or better still, what are you best at?)
- What unique or lowest-cost resources can you draw upon?
- What do people in your territory and business see as your strengths?
- What factors mean that you win the business?
- What is unique about you and your company/ (or better still, what is your business's Unique Selling Proposition (USP)?
- What are your negative business and personality habits?
- Do you have any education, training and skill deficiency?
- What things are you not very good at?
- What should you avoid or what do you normally avoid?
- What are people in your business likely to see as a weakness?
- What are the things that make you lose business?
The next two factors, Opportunities and Threats are external to you and your business. To
better tackle these, it is best you do what is generally referred to as the PEST (Political,
Economic, Social and Technological) analysis. This will help ensure you do not miss out on any
of the external factors that may likely affect your business.
- What good opportunities can you spot?
- What emerging and interesting trends are you aware of?
- What market needs is currently not well satisfied by current businesses?
- What new technology can help you?
- Is your industry growing? If so, how can you take advantage of the current market?
- Do you have a network of strategic contacts to help you, or offer good advice?
- What trends do you see in your industry, and how can you take advantage of them?
- Can you take advantage of something the competition is failing to do?
- Is there a need in the industry that no one is filling?
- Could you create an opportunity by offering a solution to client’s complain?
Where can you spot opportunities?
- From Business journals, magazines and newspapers
- From networking sessions, seminars, workshops and conferences
- From the internet
- From clients, contacts and connections
- From the news and reports
- Changes in technology and market.
- Changes in government policy.
- Changes in social patterns, population profiles, lifestyle, and so on.
- Local events and happenings.
- What challenges or obstacles do you currently face and are likely to face?
- What are your competitors doing that may take business away from you or change the way business is done?
- Are systems, processes, procedures, quality standards and specifications for your business, job, products and services changing?
- Are changes in demand, tests and preferences affecting your line of business?
- Is technology threatening your business?
- Are profits and margins thinning in your business?
- Are more entrants encroaching into the business or are bigger firms taking positions in the business?
- Are debts and cash-flow problems affecting the business?
- What are third parties view/rating of that line of business and its players? Is it positive, waning or negative?
- Could any of your weaknesses seriously affect your business?
Consider your strengths, weaknesses Opportunities and threats from an internal perspective and from the point of view point of third parties - your customers and people in your business.
Be realistic as much as possible. It is best to be realistic now, and face any unpleasant truths as soon as possible. A simple way out is to write down a list of your, and your company’s, characteristics (try describing your company and business and write down the key and important features). Some of these features may well be strengths or weaknesses.
When looking at your SWOT, think about them in relation to your competition. For example, if other companies in the business provide efficient service, then that is not strength in that line of business but a business prerequisite.
In addition to been realistic, you also need to be rigorous in your SWOT analysis. Though simple it is an exercise that should not be done in a hurry or wishy-washy. Remember you are dealing with the present and most importantly, future success of your business. Do other people seem to perceive weaknesses and threats that you do not see? Are your competitors doing any better than you are doing?, Are there business avenues that you are not exploiting but which your competition is?
Example of a SWOT Analysis
Mr. Obateru Buhari Chimaroke is planning to commence his bakery business which is a start-up bakery business. The bakery and business is to be known as ChibuOba Bakery and his main product will be known as Rurike Loaf. Before now had worked with UAC foods in various departments and capacities and finally resigning as the Franchise Director of the Mr. Biggs Division. Because of his clout, he has been able to pull a few of the staff of UAC Foods to join him in managerial capacities. The rest of the staff are few and generally inexperienced. What may his SWOT analysis look like?
- We are in the FMCG industry with a high daily demand rate
- Our raw materials are readily available
- We are located within a high residential area and thus would incur less cost in delivering to clients
- Our products need no introduction in the market.
- We are able to give really good customer care, as the current volume of production means we have plenty of time to devote to customers.
- Our management has strong reputation and vast experience in the industry.
- We can change direction quickly if we find that our strategy is not working.
- We have low overheads, so we can offer good value to customers.
- Our company has little market presence or reputation at the moment.
- Our brand is unknown
- We have a small staff, with a shallow market experience.
- We have few marketing vehicles
- Our production capacity is low at the moment
- Our cost of production is relatively high
- We have the latest baking technology
- We cannot get credit supplies at the moment
- We are vulnerable to vital staff being sick, and leaving.
- Our cash flow is unreliable and we have weak working capital base.
- The bakery industry is growing, with many future opportunities for success.
- There are new and cheap baking technology and machinery
- Other food stuffs have suddenly become more expensive as compared to bread
- More people are consuming bread products
- The governments are encouraging local businesses.
- The banks are lending to the manufacturing sector
- Our competitors may be slow to adopt new technologies.
- High cost of flour and other inputs
- Poor supply of power and electricity and increase in electricity tariff
- Labour demand and demand for more pay and working conditions
- Proliferation of small bakeries and the entry of multi-nationals into the baking business
- Developments in technology that may change the bakery market beyond our ability to adapt.
- Dearth of experienced manpower in the industry
- Competition posed by fast food restaurant chains
- Increase in production and distribution cost due to increase in the pump price fuel
- Industry restrictions placed by the national food agency.
As a result of the SWOT Analysis, the bakery may decide to specialize in mass appeal products and good value services to high density residential areas. Marketing would thus be selective to get the greatest possible market presence for a given distribution cost, and the bakery would have to be up-to-date with changes in technology and government policies.
Download the SWOT worksheet and template from our Toolkit section.