To accomplish the tasks and achieve success, each leader must evaluate his organization from the point of view of all parties, and most importantly - do not turn a blind eye to the problem areas and give them due attention. But before you start to deal with any problems, you need to identify them, understand their cause and suggest what the consequences may be.
For this, there are many techniques and methods in management, however, the SWOT analysis method is the most popular and demanded. It is about him that will be discussed in this article. And also below it will be possible to find out what a SWOT analysis of a company’s activity is, what its strengths and weaknesses are, and an illustrative example of this audit method will also be presented.
What is a SWOT analysis?
SWOT analysis is the development of the famous professor Kenneth Andrews, who carefully examined the issue of including external factors in the analysis of the organization's activities. This important point made it possible to more accurately analyze the work of companies and clearly identify the causes and consequences of all phenomena occurring in their internal environment. It is this analysis that makes it possible to choose the main factors and directions that will lead the organization to success.
If you take the name apart, then the SWOT analysis is an abbreviation that consists of the following words:
- S is the firm's strength (Strength);
- W is the weakness of the firm (Weakness);
- About - these are the capabilities of the company (Opportunities);
- T - these are the problems (threats) that the company is facing (Threats or Troubles).
These four components can be called fundamental principles for building the right business. It is important to note that SWOT analysis is a good reflection of all the fundamental organizational issues, the awareness of which helps to build the right tasks and goals for the company.
Analysis objectives
The purpose of the SWOT analysis is a detailed study of the processes that take place in the company, as well as external circumstances, threats and other phenomena that affect a particular company. If the company does not have such strategically important information, then it can be called “blind”, and all its attempts to succeed will be meaningless and not reasoned.
The benefits of conducting such an analysis of activities are hard to overestimate. As the studies show, it is especially useful to conduct a study of the company’s activities according to the SWOT method for conducting competitive “intelligence” and determining the place of the company in the market for the provision of goods or services.
Factors in a SWOT Analysis
A strategic analysis of the activities of a company or organization must necessarily include the study of the following factors:
- organizational;
- technical;
- HR
- financial;
- marketing.
When these factors are taken into account, the head or chief manager of the company is able to determine the best form of ownership of the organization, use its own resources and production assets in its work, or work with other firms. And also the SWOT analysis of the enterprise allows you to build the necessary personnel policy and methods, methods and principles of positioning the company at the level of the external environment.
In addition to internal factors, it is necessary to take into account the properties of the external environmental socio-economic environment, since, for example, the cultural, demographic, and political situation can play a key role in building subsequent business concepts.
Types of analysis
The following types of enterprise SWOT analysis are available:
- Express analysis. This type involves identifying the strengths of the company, which are key in confronting external threats to the business. In addition, such an analysis allows us to identify ways to use the various opportunities that are in the external environment and to understand what resources should be attracted to achieve success. The advantage of this method of SWOT analysis is the visibility and ease of use of the data obtained in further practice.
- Summary analysis. This type provides for the study of the main indicators (organizational, financial, personnel, technological) that determine the activities of the company at a particular moment. And also thanks to a summary analysis, a clear plan for further development can be formulated. The advantages of this type of research on the activities of the company is a comprehensive assessment of the main factors of the company, and choose the appropriate development strategy and determine a number of activities that will be focused on achieving strategic goals.
- Mixed analysis. This type provides for the merger of the two previous types of analysis (express and summary). With this approach, it is possible to study in detail both the strengths that emerged during the SWOT analysis and all the main factors, and then obtain accurate data on the state of the company and outline a plan for achieving strategic goals.
It should be noted that the most often used by managers when conducting an audit is express analysis.
Strengths and weaknesses of the organization
A SWOT analysis is just a method of collecting data on the advantages and disadvantages of a particular company, but only those people who collected information and professional managers can determine how to use the information received.
Do not forget that the weaknesses and strengths of the organization identified in the SWOT analysis are a set of data that exist at the time of the study. Therefore, it is extremely important to take any measures to improve the activities of the company without delay.
If we talk specifically about the weaknesses of the company and those opportunities that are under the leadership, it should be understood that the data identified during the study have a great influence on the future activities of the company. However, it is very important to make the right decisions and build on current information and try to organize the work of the company in such a way that it corresponds to reality and is comparable with the external environment.
So, for example, during the SWOT analysis of the organization it was found that it conducts its business in the field of entertainment services, located in the state, where the number of solvent population is significantly increasing. In this case, the management of the organization makes sense to invest financial resources in their development, with the aim of their further increase.
Formulation of goals based on analysis
Based on the conclusions of the SWOT analysis of the company, it is necessary to formulate a number of tasks and goals and display them in the plan (roadmap). It should be remembered that these goals are the level of development that the organization is striving for today and the path to achieving it begins with the most important thing - awareness of the current state of affairs.
Application of information obtained during analysis
As noted earlier, the purpose of this analysis is to develop the right strategic goals so that the company can achieve success. After receiving important information, it is necessary to start developing a strategy and drawing up a plan for its implementation.
Be sure to take into account the strengths of the company - this will help to focus on the quality and quantity of services provided or the production of goods. Taking into account weaknesses is an opportunity to identify those moments that hamper the firm’s movement to success, but the conscious denial of this moment may cast doubt on all subsequent activities.
Advantages and disadvantages of analysis
Any method of researching the activities of an enterprise has strengths and weaknesses. SWOT analysis is a very universal type of valuation of a company, which has the following advantages:
- helps to identify problems in the company and potential opportunities to improve performance;
- ease of analysis and efficient use of the data;
- the ability to clearly identify the relationship between the capabilities of the company and emerging issues;
- when conducting this analysis, there is no need to collect extensive information, it is only important to consider the main factors of production;
- the ability to identify clear prospects for the further development of the company;
- analysis helps to identify a clear picture of the company's profitability;
- an opportunity to reveal competitive advantages of the enterprise and to strengthen them;
- ability to identify additional resources and internal potential of the company;
- analysis allows you to prevent and identify existing problems (threats) and eliminate them in time;
- analysis makes it possible to objectively assess the situation in the external environment and adjust the actions of the company for them;
- when forming an action plan on the basis of analysis, you can create a logical scheme in which information and the interaction of the strengths and weaknesses of the company will be correctly formulated.
However, despite the many advantages, it is important not to forget about the following disadvantages of the SWOT analysis, namely:
- lack of time dynamics (analysis does not warn about the appearance of new threats and various factors);
- the lack of quantitative indicators in the analysis, which is why it can not be called sufficiently informative.
Based on this, we can conclude that the SWOT analysis is appropriate when it is necessary to quickly draw up an objective picture of reality for setting or adjusting goals and objectives. And also this research takes place when the company implements a strategic plan, moves towards certain goals, and just such an analysis can quickly reveal how effective the implementation of the program is.
How to analyze?
Before you study the example of a SWOT analysis, it is important to familiarize yourself with the instructions for its preparation. Conventionally, the process of conducting analytical activities by the SWOT method can be divided into five main stages, at which information is collected and entered in a standardized reporting form (balanced scorecard).
The first step is to prepare for the analysis. It is necessary to analyze current affairs in the market, to find out if the characteristics of the product or service provided are in demand today. It is especially important to pay attention to the opinion of consumers about the company of its derivatives. Next, you need to conduct a competitive analysis, to find out how well things are with the main competitors. At this point, it is important to remember that identifying the disadvantages and advantages of an organization is especially easy when comparing with competing enterprises.
Further, it is important to clearly identify internal factors that could potentially affect competitiveness, such as the professionalism of personnel, the condition of equipment, lack of resources, etc. That is, a clear picture will be formed in which it will be seen whether the company is ready for today join the struggle for consumers and what management should pay special attention to eliminate shortcomings. At this stage, we also study such indicators as product properties, its market recognition, customer loyalty, price, assortment, technological equipment and patents, distribution, as well as product positioning and advertising campaigns.
The second stage involves the study of environmental factors and possible threats. At this stage of the analysis, you can get such information about the possibilities of expanding the company and conquering a new target group of consumers, increasing the assortment, developing new technologies to reduce production costs. At the time of assessing potential threats, it is important to consider factors such as the possibility of a change in the way of life of consumers (increase or decrease in wages, cultural changes in the consciousness of a group of people, etc.), which can lead to the abandonment of products, the emergence of new competitors, and economic recession. demographic changes.
The third stage is the formation of a table from the information received. As noted earlier, all information should be entered in a unified reporting form called a balanced scorecard or balanced scorecard. In the case of a SWOT analysis, this is a table that consists of four squares, where each of them answers questions about strengths (S), weaknesses (W), opportunities (O) and threats (T).
The fourth stage involves the formation of a report. To begin with, the strengths of the company, which are a competitive advantage, are signed. The following describes ways to develop a company through these strengths. After that, proposals are prepared to transform the weaknesses of the company into strengths. The same thing is done with threats - there are ways from reformatting to new opportunities. It happens that there are simply no logical ways to convert negative points into positive ones. In this case, it is necessary to prepare a program to minimize losses due to the impact of threats.
After the forms have been completed, it is necessary to proceed to drawing conclusions. The following methods can be used here:
- Quick method. In this case, all secondary issues are excluded, and the focus is on the main goals. In this case, extra points are excluded from the forms.
- Matrix method. In this case, specific strategies for solving the tasks formulated, namely, the actions of SO, WO, ST, WT. SO actions are activities that take advantage of a firm's strengths and opportunities. WO actions are programs that help overcome weaknesses and take full advantage of opportunities. ST actions are actions that involve comparing possible threats with existing strengths, which in case of problems will help the company avoid large losses. WT actions are measures aimed at overcoming the company's weaknesses by conditionally exposing them to potential threats.
At the fifth stage of report formation, its presentation is prepared. Here, such points should be clearly formulated, an introduction, a brief argumentation of the constructed matrix and a breakdown of the data obtained, conclusions, suggestions, and a firm action plan should be prepared to achieve the goals.
