The S.W.O.T. Analysis is a very powerful and often used tool to help businesspeople in all industries sort out the things that will affect their success and what actions they should be taking. A great look at the “picture” of an S.W.O.T. Analysis is found at: www.businessteacher.org.uk/wp-content/swot-analysis-image.png

It breaks everything down into broad, but logical categories. First, everything is either External or Internal.

The External would refer to the topics that we covered in our last two blog posts – the Remote Environment and the Competitive Environment. Each of these items is categorized as either an Opportunity or a Threat. Take another look at the things that you identified in your Environments as we went through this in the last two posts. The first step is to realize that these “things” exist and that they can (or should I say will) affect your business. Is their effect likely to be positive or negative? Do they represent an Opportunity or a Threat?

A secondary look at these items would be good. There are two scales that you would rate them on – how likely are they to happen and how big would their effect be. This helps you rank Opportunities and Threats so that you deal with the most important ones.

The Internal items are categorized either as Strengths or Weaknesses. We haven’t touched on these yet in this series of discussions, so let’s talk about them a bit now.

Internal items would include any of the things “inside” your business. They would include, but not be limited to, your financial status, your location, the abilities and talents of your management and staff, the knowledge that you have of and the relationship that you have with your customers, your store’s image in the marketplace, your stores appearance including lightning, shelving, fixtures, etc., your relationships with vendors, the effectiveness of your marketing, etc.

It is a broad list!

You could make it very specific – how good are you at avoiding overstocks without keeping too many dollars tied up in inventory?

Some thoughts about using S.W.O.T. to analyze internal issues:

Don’t kill the messenger! In many organizations when you bring up things that are weaknesses, you are accused of being negative, critical, etc. (Sometimes the knee-jerk reaction of fixing the blame instead of fixing the problem is an easy way to take.) For your organization to grow, you have to be able to talk about and deal with “brutal truths” – truths that are not positive. Your whiniest employees may be able to bring you some real insight!

What was a strength five years ago might not be the same thing now. The market has changed, your competition has changed, technology and society have changed – be sure that your definition of a strength is up to date.

Don’t overemphasize one single strength. You need a full roster of strengths to compete in today’s marketplace. One major strength will not overcome an array of weaknesses.

A strength does not by itself equal a source of advantage in the marketplace. Internal issues have to be balanced and set against marketplace conditions to see if they produce anything for you. In today’s telecommunication’s world, would being the best phone company in the pay phone arena give you a major advantage? (But – how about being the best cell phone company?)

A weakness doesn’t have to be forever! You can change it! It may take some years, depending in what it is, but it can be changed.

We’ll talk more about specific strategy concepts in future blog posts, but for now….Look for how to use your Strengths to take advantage of Opportunities while minimizing the effects of your Weaknesses and avoiding Threats.

I’ll have our next post in this series up around the first of May. We’ll explore various strategic options that you might consider.