What is a SWOT Analysis? A-Z Guide for Newbies – 2022

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The Covid-19 pandemic swept through just a few short months, but it caused many large and small businesses to bitterly “stop the game”, and at the same time, it was an opportunity for many other businesses to become strong.

The common point of businesses that can manage through this pandemic is that they know how to improve their weaknesses and promote their strengths in a timely manner according to a proven method in Marketing, which is to use SWOT analysis.

What about your business?

Now that the pandemic is over, what if there are other potential challenges that await? Do you have a strategy to understand and build a business strong enough to overcome?

And do you have the right business recovery strategy after the recent big changes?

Join me to learn how to deeply understand what your business is, from strengths to promote, opportunities to seize to risks and threats to minimize as soon as possible!

Research and analyze the SWOT model yourself to restore growth, improve sales right here!

What is SWOT?

SWOT stands for 4 English words: Strengths, Weaknesses, Opportunities and Threats – is a famous business analysis model (or matrix) for businesses. Karma.

The SWOT model is a well-known business analysis model (or matrix) for all businesses that want to improve their business situation with the right direction and build solid development foundations.

In which Strength and Weakness are considered as two internal factors in an enterprise. For example reputation, characteristics, geographical location. Call it internal factors, because these are the factors that you can work to change.

And Opportunity and Risk are two external factors. For example, supply, competitors, market prices, because they are not factors that can be controlled by just wanting.

What is a SWOT analysis?

SWOT analysis is an important factor to create business strategy of enterprises. Basically, SWOT analysis is an analysis of 4 factors: Strengths, Weaknesses, Opportunities, Threats to help you determine strategic goals and directions for the future. enterprise.

SWOT analysis can be applied to an entire business or organization or to individual projects that the business is or will be implementing.

In short, a business SWOT analysis includes the following aspects:

  • Strengths: The characteristics of the business or project that give it a competitive advantage over competitors.
  • Weaknesses: The characteristics of the business or project make the business or project weaker than the competition.
  • Opportunity: An environmental factor that can be exploited to an advantage.
  • Challenges: Environmental factors can have a negative impact on the business or project.

In which areas is the SWOT applicable?

SWOT analysis (or SWOT matrix) is a strategic technique used to help individuals or organizations identify strengths, weaknesses, opportunities and threats in the market competition as well as in the process of building content. plan for the project. Businesses can use SWOT analysis to clarify investment goals and identify objective – subjective factors that can affect the process of achieving that goal.

Determining the SWOT model is extremely important. Because it will decide what the next step to achieve the goal is. Leaders should rely on the SWOT matrix to see if the goal is feasible or not. If not, they need to change their goals and redo the SWOT matrix assessment process.

Here are some application cases of SWOT analysis:

  • Strategic planning
  • Brainstorm ideas
  • Give decision
  • Developing strengths
  • Eliminate or limit weaknesses
  • Solve personal problems such as staffing issues, organizational structure, financial resources, etc.

Advantages and Disadvantages of the SWOT Model

Advantages

No cost: SWOT is a method of analyzing the business situation or any project implemented by the business. Effective and cost-effective method, these are the two biggest advantages of SWOT analysis.

Important results: SWOT will evaluate 4 aspects of strengths, weaknesses, opportunities and threats so that businesses can draw accurate results to help complete the project and overcome risks.

New ideas: The SWOT model can provide new ideas for businesses by analyzing the four categories of opportunities, threats, strengths and weaknesses of SWOT. The model not only tells you the advantages and disadvantages but also the threats to help you cope more effectively in the future, with the best risk avoidance plans.

Disadvantages

The results are not in-depth: Because the SWOT analysis is quite simple, the results received do not really reflect the right aspects. The results do not give feedback, only focusing on project preparation, which is not enough to complete the assessment and provide orientation and goals.

More research is needed: To really get good results, a basic SWOT analysis is not enough, because the SWOT technique only focuses on studying and analyzing the big picture.

Subjective analysis: A complete analysis is an evaluative analysis that captures the company’s performance, reliable, relevant and comparable data from which to make business decisions .

However, SWOT does not do this, the SWOT analysis is not enough to make any conclusions or decisions. All data obtained is only a reflection of the bias of the individuals performing the research or analysis. In addition, the data used for SWOT analysis is not really correct and can be outdated quickly.

Guide to building a SWOT Model

Usually the SWOT diagram is presented in the form of a matrix of 4 squares representing the 4 main factors. However, you can also list the ideas for each item as a list. How it is presented depends on the individual.

After discussion, agree on the most complete version of the SWOT, list the ideas in the 4 factors in order of most priority to least priority.

I have also compiled a few questions for each section for your reference in your SWOT analysis.

Strength

The first element of a SWOT analysis is Strength, which includes the parts listed in the following image:

As you might have guessed, this factor deals with the things the business is exceptionally good at, such as a good work environment, or a unique sales idea, or great human resources, excellent leadership. sharp,..

Try asking questions to expand on the first element: Strengths, by listing questions around the company’s strengths as follows:

  • What do customers love about your business or product?
  • What does your business do better than other businesses in the industry?
  • What is the most attractive brand attribute of your business?
  • Unique selling ideas that your business is cherishing?
  • Or what resources only you have that your opponent doesn’t?

The answer will give you an overview that will help you identify the core strengths of your business.

Don’t forget to consider the advantage from both an insider’s and a customer’s and industry’s perspective. If you have difficulty, just write down the company’s Unique Selling Proposition (USP) and maybe you will find strength from those characteristics.

You also need to think about your competitors.

For example, if all the other competitors offer high-quality products, then even if you have a good product, that is not necessarily your advantage.

Weakness

Overconfidence in its own strengths will become a weakness for businesses, when businesses cannot see the shortcomings that need to be changed.

Did you realize: What caused the business plan last Quarter to fail? The answer most likely stems from one or more of the following weaknesses:

Similarly, I also have a list of a few questions to help you find your weaknesses:

  • What do your customers dislike about your business or product?
  • What problems or complaints are often mentioned in reviews about your business?
  • Why did your customer cancel the order or not make/complete the transaction?
  • What is the most negative brand attribute in the world?
  • What are the biggest obstacles/challenges in the current sales funnel?
  • What resources do your competitors have that you don’t?

For weaknesses, you also have to have an objective and subjective overview: Are your competitors doing better than you? What weaknesses others see that you don’t recognize? Be honest and straightforward in facing your weaknesses.

Opportunity

Next in the elements of SWOT analysis is Opportunity. Does your business have a large number of potential customers generated by the marketing team? That is an opportunity. Is your business developing an innovative new idea that will open up a new “ocean”? That’s another chance.

Businesses can take advantage of opportunities that come from:

  • Trends in technology and markets
  • Changes in government policy related to your sector
  • Changes in society, population, lifestyle…
  • Local events
  • Customer trends

Some of the questions I suggest include:

  • How can existing or potential customer support/sales processes be improved?
  • What types of communication will drive customer conversions?
  • How can I find more industry Gurus to advocate for the brand?
  • What’s the best way to optimize cross-departmental workflows?
  • Is there a budget, tool, or other resource that the business is not making full use of?
  • Or, which advertising channels are potential but businesses have not yet exploited?

Tips

The best solution is to look at your strengths and ask yourself if they can open up any opportunities. Also, consider your weaknesses and ask yourself, after overcoming and limiting these, what new opportunities could you create?

In short, this element of SWOT analysis covers everything you can do to improve sales, or advance your business mission.

Threat

The final element of a SWOT analysis is Threat, Risks or Threats, there are many names for Threat, but generally anything that can put a company at risk for success or growth. enterprise.

This risk can include factors such as emerging competitors, changes in legislation, risks in financial mobility and virtually anything else that has the potential to negatively impact the future of the business. or business plan.

However, of course, there will be many potential Challenges or Risks that businesses face, which cannot be foreseen, such as changes in the regulatory environment, market fluctuations, or even Internal Risks. such as unreasonable salary and bonus hindering the development of enterprises.

Tips

When assessing opportunities and threats, use PEST Analysis – Analysis of the business environment based on Politics (P), Economy (E), Society (S), Technology (T) – to make sure you don’t overlook external factors like new government regulations or technological changes in the industry.

Oh! Forgot! If you do not know what is PEST Analysis?

What is PEST analysis?

PEST Analysis – Comprehensive analysis of the business environment based on Politics (P), Economy (E), Society (S), Technology (T).

Expanding the SWOT model into a matrix

The SWOT model can be extended by asking the right questions.

This is an advanced technique that establishes a foundation for removing obstacles and stimulating beneficial points.

  • SO (maxi-maxi) aims to take full advantage to create opportunities.
  • WO (mini-maxi) wants to overcome weaknesses to promote strengths.
  • ST (maxi-mini) uses strength to eliminate risk.
  • WT (mini-mini) addresses all negative assumptions and focuses on minimizing negative impacts and risks.

How to Analyze and Make a Detailed SWOT Strategy

So now that I know what each element of a SWOT analysis involves and the types of exploratory questions I might ask to get started, it’s time to really get down to creating my SWOT analysis. only you.

To illustrate how this works, I’ll give an example of a SWOT analysis for a makeshift coffee shop called The Cafe Home. This is the SWOT table I made for this cafe.

Based on the above SWOT table, we can start doing a SWOT analysis and come up with business development strategies right here.

Setting up the SWOT Matrix

Presenting your SWOT analysis as a matrix makes it easy to strategize by each element. First of all, I will convert the above SWOT factor table into a matrix first.

As you can see, this matrix representation allows us to easily identify 4 different analytic factors.

So, after the steps of listing and ‘jigging’ as above, it’s time for you to set up a strategy for your business based on SWOT factors, ensuring:

  • Develop strengths
  • Weakness improvement
  • Take advantage of opportunities
  • Limit risk

Ideally, according to my research, a strategy that can combine strengths with weaknesses, and turn weak into strong is the most ideal type of strategy!

First, let’s go into the strategy of promoting the existing advantages of the business.

Develop Strengths

For my (imaginary) The Cafe Home, my strengths include:

  • Good business location
  • Good facility
  • Good corporate brand
  • Diverse menu, seasonal specials
  • The price is evaluated by customers as commensurate with the quality

Combined with opportunities:

  • Increasing customer demand
  • New, creative menu is loved
  • Growth potential through delivery apps

How to combine, you need to research business strategies that align with the current Strength. Evaluate what strengths and opportunities you have that can help boost them.

I will give an example with a combination of Strengths 1, 2, 3 (S1, 2, 3) and Opportunity 1 (O1): taking advantage of opportunities when customer needs are growing and strengths are having a good reputation , has many prime locations, beautiful space => select Market Development Strategy: open more branches to meet customer needs, at the same time expand/optimize existing branches.

This strategy can simultaneously solve W3 – the area of ​​branches is still small. Besides, the opening of more branches also strengthens the brand strength. To ensure attracting customers for the new branch, it is necessary to have appropriate opening/incentive programs.

Similarly, we have a Product Development Strategy based on S(4,5) and O(1,2) to create an attractive signature drink menu.

Contrary to the advantages, businesses also need strategies to help limit or eliminate weaknesses that cannot be ignored.

Risk Metabolism

For the option of developing strengths, limiting S-T risk, I have the following strategy for The Cafe Home.

Basically, promoting strengths is the guiding strategy for all businesses. But how to promote and take advantage of the opportunity to “boost” strengths and reduce risks as much as possible is difficult.

Not all risks are predictable. For example, the recent Covid Pandemic, which is a huge risk that no business can know in advance to avoid. But improving the root risks, building a strong foundation will help your business be able to withstand major fluctuations like the recent pandemic.

Take advantage of opportunities

Improving your business based on the weaknesses identified in the SWOT model is a bit more complicated, because you need to be honest with yourself about the weaknesses that the business is suffering from in the first place. List the SWOT factors.

I won’t go into too much detail on how to combine strategies, instead giving you the strategy tables I recommend for The Cafe Home to help you visualize. Never rely entirely on the strategies I outlined in this example, as I’m just doing a quick example. And knowledge of business strategy will require you to do a lot of self-study.

W-O Strategy: Market Penetration Strategy: choose a delivery app to expand the potential customers to order online and at the same time develop the brand thanks to the combination with the favorite, reputable and economical app. Save marketing costs, solve the problem of small shop area without opening new branches urgently.

Besides, it is impossible to ignore the most unique combination, as a premise to research an effective strategy to eliminate weaknesses: W-T.

Remove Threats

Why is it the same Threat, but I called it Risk above, and now it’s Threat? Because the risk that goes with Strength is just a Risk, but combined with Weakness will be a real Threat to a business, the level of impact is completely different.

Here’s the strategy I recommend for removing The Cafe Home threat. But realistically, you cannot completely eliminate Threats.

Anticipating and minimizing as much as possible the impact of Threats in a SWOT analysis can be the most difficult challenge you face, mainly because Threats are often external factors. outside; There’s a lot you can do to minimize the potential damage of factors beyond your control.

But responding to and tracking Threats should be one of your top priorities, regardless of your control over Threats.

As I said at W-O, you won’t be able to completely solve problems if you avoid them. So let’s be honest. No matter how many times longer the list of Weaknesses and Risks is than the advantages the business has, honestly list them all.

Each weak point, each different threat will need a different treatment strategy.

In the example above, all 4 Threats are particularly challenging:

  • Increased competition rate
  • The opponent is much stronger
  • Trends in the industry are constantly changing
  • Unstable raw material costs

In some SWOT analysis, there is an intersection between Weaknesses and Threats.

For example, with The Cafe Home, S1: high cost compared to competitors and T4: unstable raw material cost shows that the cost intersection needs a lot of attention.

When compiling the results of your SWOT analysis, focus on finding intersections like the one above and see if you can address both the Weakness and the Threat at the same time.

In the end, you will have a summary of SWOT strategies specific to your business:

So how to choose the strategy to deploy?

You can try applying the Eisenhower Matrix. Basically, the Eisenhower matrix is ​​built on two questions:

  • Is this important?
  • Is this urgent?

From there, give a rating for the work to be implemented, including 4 types in the order of priority as follows:

  1. Important and Urgent
  2. Important but not urgent
  3. Not important but urgent
  4. Neither important nor urgent.

This matrix was created by the 34th president of the United States, Mr. Eisenhower, and is widely used in time management, extremely effective work management.

Applying the Eisenhower method, you will choose the preferred strategy to deploy first. Moreover, strategies that intersect with each other can be combined and deployed to optimize time and human resources.

The origin of the SWOT matrix

Over the years, the SWOT matrix analysis method has been widely accepted and known. Many people believe that the concept was conceived by American management consultant Albert Humphrey.

The origin of the SWOT matrix

While working on a research project at Stanford University, between 1960-1970, Albert Humphrey developed an analytical tool to evaluate strategic planning. At the same time, this tool also finds out why businesses’ plans fail. He named this data analysis technique SOFT – the first four letters of:

  • S = Satisfactory, current satisfaction score
  • O = Opportunities, an opportunity that can be exploited in the future
  • F = Faults, mistakes at the moment
  • T = Threats, challenges that may be encountered in the future

While most agree SOFT is the precursor to the SWOT model. But some believe that the concept of SWOT was developed individually and is not related to SOFT.

Who should perform a SWOT analysis?

The leadership class and the top of the company should actively use the SWOT analysis model.

William Review – An Agency Review also regularly applies the SWOT model on a quarterly/annual basis to understand the business and build an appropriate development strategy.

However, the process of SWOT analysis cannot be done alone.

To achieve the most objective and comprehensive results, the SWOT model should be developed by a group of people with many different perspectives and points of view.

Management, sales, customer service, and even the customers themselves can all contribute to this process. The SWOT matrix helps to unite the team and encourage the staff to participate in planning and building business strategies for the company.

If you are running your own business, don’t worry too much. You can still consult with friends, people who know your business, accountants or even suppliers. It is important to be able to gather many different perspectives.

Businesses can use the SWOT matrix as a basis to assess the current situation and determine the upcoming strategy more effectively and appropriately. But things are always changing. You need to continually re-evaluate your tactics and implement a new SWOT matrix every 6-12 months.

For startups, the SWOT analysis is part of the business planning process, thereby helping to systematize the strategy to get a good start and understand the future direction.

Example of SWOT matrix analysis of Starbucks & Nike

Starbucks

Strengths

  • Starbucks is a corporation with a profit of up to $600 million in 2004
  • As a global coffee brand famous for quality products and services
  • Being in the top 100 most rewarding places to work, respect employees
  • An enterprise with an ethical philosophy and mission
  • Understand customer tastes and trends

Weakness

  • Renowned cool hands in new product development and creativity. However, their ability to improve will sometimes fail very easily.
  • Present throughout the US but need to invest in other countries to spread business risk.
  • Mainly based on the competitive advantage of coffee retail, it is slow to encroach on other fields for growth.

Opportunity

  • Starbucks is very good at seizing opportunities
  • In 2004, the company cooperated with information technology group Hewlett Packard to open a CD-burning service at a Santa Monica store (California USA) so that customers could create their own music CDs.
  • New products and services that can be retailed in coffee shops such as Fair Trade products
  • There are opportunities to expand internationally, in new coffee markets such as India and the Pacific Rim
  • There is potential for co-branding with other food and beverage manufacturers, as well as franchising for merchants of goods and services.

Challenge

  • Will the coffee market continue to ascend or will it be replaced by other drinking habits in the future?
  • Risk of increasing prices of coffee and dairy products
  • Since its debut at Seattle’s Pike Place Market in 1971, Starbuck’s success has spawned a new style for many competitors and many copies, leading to many potential dangers.
  • Challenges from competitors

Nike

Power

  • Nike is a company with strong competition in the market
  • And Nike doesn’t have a factory, so there’s no burden of location and labor. Nike aims to lean organization – businesses that create a lot of value for customers with the fewest resources)
  • Strong in research and development to grasp customer trends
  • An international brand

Weakness

  • Nike’s weakness is that sports products are not yet abundant. Most of the income is based on the rich market share, so it is easy to be shaken if this market share decreases.
  • The retail sector is very price sensitive. Nike has its own retail stores under the name Niketown. However, most of the revenue and profit comes from selling to other retailers.

Opportunity

  • Product development presents Nike with many opportunities. The brand owner believes that Nike is not a fashion brand. But like it or not, Nike buyers don’t necessarily wear these shoes for sports. But see it as trendy style. That creates an opportunity because the product, even if it is not damaged, is still outdated. So customers will continue to buy new products.
  • Can develop products in the direction of sports fashion, sunglasses and jewelry. The more high-value accessories that go with the shoes, the more profit they make.
  • Businesses can also grow internationally, based on global brand recognition. Many high-income markets that pay for expensive sports products such as China or India have more and more generations of young people willing to pay.

Challenge

  • Nike is also influenced by the nature of the international market. Buying and selling prices differ in many different currencies, so costs and profits are not stable over time. This situation can cause
  • Nike to produce or sell at a loss. This is a common problem for international brands.
  • The clothing and footwear market is extremely competitive.
  • As mentioned above, the retail sector is extremely price sensitive. So customers can choose a cheaper supplier.
  • Competitors are always something the company pays attention to.

Conclusion

As such, I have shown you how to implement a SWOT analysis for small and medium businesses. Hopefully, the above guidelines (with the vivid example The Cafe Home) will help you better understand how to create a SWOT analysis matrix and an appropriate business improvement strategy.

Maybe studying business strategies will take a bit of time and effort, but believe me, everything has a price, having a full amount of knowledge is never too much.

Hopefully through this article, you have a better understanding of what a SWOT analysis is (or what is a SWOT analysis) and how to perform a standard SWOT model. If possible, immediately practice the content mentioned above to really make it your own knowledge!

Good luck!

References:

  1. How to Do a SWOT Analysis for Your Small Business (with Examples) – WordStream
  2. How to Do a SWOT Analysis for Better Strategic Planning – Bplans
  3. Section 14. SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats – Community Tool Box

 

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