The SWOT analysis is the basis for determining the company’s strategy and its prosperity. It looks for and analyzes the strengths, weaknesses within your company and the opportunities and threats from the market environment where you do business. Used mainly in marketing and management. SWOT makes it possible to realistically evaluate the strength of the company’s own internal environment with respect to the external environment.
The internal environment includes:
Strengths of the company – Strengths
Weaknesses of the company – Weaknesses
The external environment includes:
Opportunities for the company – Opportunities
Threats to the company – Threats
In all these areas, management is looking for significant factors that best characterize the area. These should not, if possible, be presumptions, but substantiated factors. For example – if the management claims that the company is financially stable and that is a strength that it intends to use to enter another industry or a new market, then it should substantiate this statement with the coefficient of financial stability, Altman’s model, etc.
If the SWOT analysis is properly prepared, it describes the real strength of the company and the opportunities on which it can earn in the next period. Thanks to it, we can comprehensively evaluate the functioning of the company, find problems or new growth opportunities. The analysis is being prepared as a basis for creating a firm strategy.
Within the SWOT analysis, it is appropriate to look for mutual synergies between strengths and weaknesses, opportunities and strengths, etc. These synergies can then be used to determine the strategy and development of the company. SWOT is therefore part of the company’s strategic (long-term) planning.
DESCRIPTION OF SWOT ANALYSIS PREPARATION
It is not easy to process a SWOT analysis. It is definitely not the work of an individual. There is a need to involve a team of staff who understand the areas covered by the SWOT.
The correct procedure should be:
- Assignment for SWOT analysis
- Assembling a team of specialists
- Defining the internal and external environment and what the environment belongs to
- Specification of factors into individual quadrants of the SWOT matrix
- Evidence of evidence for individual factors
- Selection of the most important factors
- Defining key success / failure factors
- SWOT strategy selection (max-max, min-max, …)
- Creating a company strategy
- Creating a plan for the implementation of the strategy
The team must define the individual factors very well. If it includes factors that have a real impact in a given environment, then the whole analysis is odd and the company will not find a strategy that should make money in the future. Expect that it takes several weeks to prepare a quality SWOT analysis and strategy. Evidence of evidence takes a long time and then also define a strategy that will be understandable within the company is not a matter of 5 minutes. Expect that the whole process from the assignment to the final strategy and plan usually takes a period of 1-2 months. Individual thoughts also need to mature.
USE OF SWOT ANALYSIS TO DETERMINE THE STRATEGY
SWOT analysis can be used as a powerful tool for determining and optimizing the company’s strategy, project or improving the current state or processes. With this option, it is possible to decide which strategy the management will decide on. The SWOT analysis offers the following strategic options:
MAX-MAX strategy – maximizing strengths – maximizing opportunities
MIN-MAX strategy – by minimizing weaknesses – maximizing opportunities
MAX-MIN strategy – maximizing strengths – minimizing threats
MIN-MIN strategy – by minimizing weaknesses – minimizing threats