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What is SWOT? Almost all of us have heard of the SWOT analysis. We have bumped into it, either in the institute, in some subject at the university or just searching the Internet for information on how to start a business.

I am not going to say that thanks to SWOT analysis, you will be able to finish a fancy project in one minute. Rather, I will say that it is quite useful when it comes to clarifying ideas and looking for a certain focus and balance between our internal possibilities and the external conditions that we face.

In my case, I vaguely knew this matrix years ago, but recently I took one of the subjects of ADE in where I had to deal with this tool, so why not let me dedicate it in an article?


What is a SWOT analysis?

SWOT analysis (or SWOT) is an acronym formed by the words “strengths, weaknesses, opportunities and threats”. It was raised by Stevenson several decades ago but is still widely used and popular nowadays. It is mainly because SWOT is very simple and can be served to analyse both business projects and a person.

Its structure is a 2 x 2 matrix in which the internal/external factors of the company combine together with its weaknesses/strengths. I don’t want to be too annoying to repeat on this, but there is really no limitation for the object to be analysed.


Components of the matrix SWOT


They are the skills and internal competitive advantages that we have and those we can use to find opportunities. Some questions we have to ask ourselves are: What competitive advantage do we have? what are we doing better than the others? etc…


They are internal issues that hinder or limit the achievement of the desired strategy. Obviously, weaknesses bring negative effects to us and we will have to ask questions such as: What should I improve or how can I improve?

This refers to all that external factors that can represent a business possibility for our company. Some questions that we can ask at this point: what are the current trends in the market, what technological changes are currently taking place? And in the legal regulations? etc…

It is any external factor or force (in reference to Porter’s five forces) that can make us more difficult to implant our strategy, or to reduce our strategy’s effectiveness. In this case, we can ask ourselves questions like: what obstacles should we face? What is the competition doing? etc…

It is clear that opportunities and strengths represent the positive aspects of the matrix and that the threats and weaknesses represent the negative points. The limit of aspects to be included in each one of the factors we put it.


The four strategies of the SWOT analysis
Conducting a SWOT analysis helps us to consider the type of actions to take in order to gain advantage from the detected opportunities, reduce the threats, improve our weaknesses and promote our strengths.

When we are clear of what kind of goal we are going to pursue, we can give each of them an order and we will know how to choose the best-suited strategy to achieve the goal easily.

There are four possible strategies provided by the analysis SWOT and they are different combinations that combine the four factors mentioned above. Let’s look at each one of them.

The result of combining strengths with threats. A very common form of defensive strategy is that one differentiates itself from the rest. In this way, we can demonstrate our strengths without being eclipsed by threats from competitors or others.

The result of mixing strengths and opportunities. When your strengths are being recognised and you have the potential to attack the opponents to prove your supremacy. In such case, growth strategies (or offensive) are usually chosen.

This strategy arises as a result of the combination of external threats and our internal weaknesses. It is to try to survive the changes that occur in the environment and end up generating the least possible damage.

It is the result external opportunities that arise but that can not be exploited because of our weaknesses. The ideal outcome is to change the way we act to adapt to new opportunities.


How to do a SWOT analysis?
The first step will be to determine what or who are you doing the SWOT analysis on. We can do is to our company, a department, a competition or even to ourselves.

Secondly, we will prepare our array of 2 x 2 which we will divide into two blocks: one for internal analysis and one for external analysis. As we see in the image.


The internal analysis

It consists analysing the weaknesses and strengths of the individual, company or the objective department, in order to carry out a good analysis. Some aspects such as:

capacity, manufacturing costs, quality and technological innovation.

Line and product range, image, positioning and market share, pricing, advertising, distribution, sales team, promotions and customer service.

structure, the process of management and control and culture of the company.

selection, training, motivation, remuneration and rotation.

Available financial resources, debt level, profitability and liquidity. Research and development. New products, patents and lack of innovation.


The external analysis

It is about identifying and analysing the threats and opportunities of the market that one is engaging in. It covers the following different areas:

To define our target and its characteristics. Also the general aspects (market size and segment, demand evolution, consumer desires), and others of behaviour (types of purchase, conduct at the time of purchase).

To detect the market trends and find the possible opportunities to be successful. Also, investigate the companies, manufacturers, suppliers, distributors and customers.

To identify and evaluate the current and potential competition. Analyse your products, prices, distribution or advertising accordingly.

Including the factors that we cannot control, such as economic, political, legal, sociological, technological factors, etc…

And if you still wish to know more about the SWOT analysis, here we have an explanatory video and I hope you like it.

You can find the original article at http://www.pedroconesa.es/analisis-dafo/

What is SWOT? Strength, Weakness, Opportunity and Threat
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What is SWOT? Strength, Weakness, Opportunity and Threat
What is SWOT? It is an analysis tool that is suitable in analysing a business, a company or even a person. Read this, know more about SWOT and use it!
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