Using SWOT diagrams or matrices is a key part of any business planning or analysis. Thus, when conducted thoroughly, a SWOT analysis can uncover a wealth of information and can be useful in a number of situations. This article will focus on SWOT analysis and what is it all about.
What is a SWOT Analysis?
A SWOT analysis is a strategic planning tool that helps a business owner identify his or her own strengths and weaknesses, as well as any opportunities and threats that may exist in a specific business situation.
SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors and opportunities and threats are external factors. A SWOT diagram analyzes a project or business venture by focusing on each of these factors.
It is most commonly used as part of a marketing plan, but it is also a good tool for general business strategizing, and to use as a starting point for team discussions.
Who should do a SWOT Analysis?
Basically, everyone (both new and old e-commerce businesses) should do a SWOT analysis.
If you’re just starting out or are still in the planning phase, a SWOT analysis will give you a competitive advantage. Doing it will inform your break-even analysis and give a more realistic picture of what you’re signing up for. Both should be included in a business plan if you need to seek financing.
How to do a SWOT Analysis?
A SWOT analysis is far from scientific. There’s no objective way of measuring how well you do one. It relies on your ability to observe and remember internal and external factors that can influence your business. It’s not about making accurate predictions so much as it is about knowing what to plan for.
Determine the objective
Decide on a key project or strategy to analyze and place it at the top of the page.
Create a grid
Draw a large square and then divide it into four smaller squares.
Label each box
Write the word “Strengths” inside the top left box, “Weaknesses” inside the top right box, “Opportunities” within the bottom left box, and “Threats” inside the bottom right box. These are titles, so they should be distinguished from the rest of the text using either color or font size.
Add strengths and weaknesses
Add factors that affect the project to the applicable boxes. Components of a SWOT analysis may be qualitative and anecdotal as well as quantitative and empirical in nature.
Analyze the finished SWOT diagram. Be sure to note if the positive outcomes outweigh the negative.
See Also: All About Market Analysis
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