Have you ever noticed why we taste a bit while cooking some dishes or recipes? To know whether the ingredients are added in a proper measure. By doing this, we will know whether the ingredients are in perfect amounts. If we find anything insufficient, we’ll add more to obtain our desired taste.
Similarly, an Analysis is an event of examining and evaluating a particular process. This is also one of the performance tracking measures that help us accomplish our goals since we can find error-occurring points in the process. Finally, the total efficiency of the concern is increased by the analysis. In today’s scenario, there are plenty of analysis methods available. SWOT Analysis is one of the best and most versatile among them.
SWOT Analysis is a powerful way to measure your company or your own self. If the analysis is performed for a company or an organization, the number of employees is not an issue; it works the same in all employee counts. The analysis helps you to determine various measures of the entire company or an individual. Thus it provides a broader amount of data related to the particular one.
This article will be an ultimate guide to learning about SWOT analysis and its attributes. Let’s get started.
What is SWOT Analysis?
SWOT stands for the expansion of Strengths, Weaknesses, Opportunities and Threats. Basically it is used to measure the business health of your company.
This is the first and foremost step/element of the SWOT analysis. Strengths are the things in which you or your company are doing well. These are the things that assist your success. It is crucial since it gives you more confidence to keep moving forward. For example,
- Things your company is doing well.
- Things in which you are superior to your competitors.
- The best employees of your concern.
- Uniqueness of your company’s infrastructure or some other resource as well.
- Other positive things which distinguish you from others.
The second element of the SWOT analysis is weakness. It is also as necessary as the strengths. Weaknesses are the things that restrict you and your firm from reaching success. Simply these are the negatives of your company. For example,
- Things your company is not doing well.
- Things in which you are inferior to your competitors.
- The poor performing strategy followed in your company.
- Non-available resources.
- Financial limitations.
After finding out the weaknesses, next, you need to sketch the opportunities, the third element. Opportunities are nothing but the chances or openings that are available to your company to enhance the entire performance. For example,
- Finding that some of your specific products are demanded in the market.
- You are about to receive financial support.
- Getting positive reviews from your customers continuously.
- The actions you’ve taken to improve the company are working eventually.
- Utilizing the potential of the good performers.
The final element of the analysis is listing out the threats. Threats are nothing but the things that would affect your company negatively if any actions aren’t taken properly. For example,
- No requirements in the market for your products.
- Increase in the no. of competitors.
- Changes occurring in standard policies or laws.
- Negative reviews given by the consumers or customers.
- Insufficient resources.
Classification of SWOT Elements
One more thing you need to know about SWOT is that it has an Internal-External Analysis (IE Analysis) method. It means the analysis includes both internal and external factors. The SWOT elements mentioned above are further classified into two, namely internal and external factors. Let us know the details of them below.
Internal factors are the things that the company can control and is capable of doing so in the future as well. Strengths and weaknesses come under this category because the company can control them. For example, I said, “Your Company is doing well in something” is your strength. That thing is influenced entirely depending on how your company performs.
External factors are just the opposite of internal factors. They are the things that are not under the company’s control. This means companies aren’t capable of controlling external factors. For example, “Increase in no. of competitors” is not under the company’s control. The opportunities and threats come under this category.
How to determine the elements of SWOT?
We’ve seen the elements of SWOT. But how do we determine those elements? I’ll leave some example questions for each element in the following. You can ask those questions and even still more to your teammates to structure the elements.
Questions to determine the Strengths
- What is the best product we’ve introduced?
- What are our capabilities?
- What do the customers feel about our good products?
- What is the best resource we have?
- What are our good attributes?
- What are the milestones that we’ve completed so far?
- What are the products only available with us and not with our competitors? And so on.
Questions to determine the Weakness
- What is the worst product we’ve introduced?
- What do the customers feel about our worst products?
- What are the gaps in our capabilities?
- What is the lousy resource we have?
- Why did we lose our client last time?
- What are the milestones that we haven’t completed so far?
- What are our bad attributes?
- What are the products only available with our competitors and not with us? And so on.
Questions to determine the Opportunities
- What is the demand rate for our product in the market?
- How can we engage our new product in the market?
- What is the state of the new strategy we’ve introduced recently?
- What is our recent development in technology?
- What about the availability of financial support?
- How can we increase the performance of our well-doers? And so on.
Questions to determine the Threats
- What are the changes made to the policies and laws?
- What is the main obstacle we are having?
- What happens if the non-available resource remains the same?
- What happens if the product is not demanded in the future?
- What happens if financial support is not available? And so on.
Advantages of SWOT Analysis
There are a lot of things available that make the SWOT analysis necessary while evaluating the organization’s health. It gives a broader range of advantages to its users. The major advantage is that it helps to determine the strengths and weaknesses which influences the success of a firm. A few more advantages are,
- The SWOT analysis is a powerful tool to determine the position or health of the business/ company.
- Almost suitable for every business.
- One of the simplest analyses.
- Even an individual can take over the entire analysis.
- The analysis could be the most efficient of all in some cases, since it contains internal and external influences on your company.
- Helps to make decisions.
- By exploring both positives and negatives of the concern, the analysis stands as a neutral one.
- Enables you to make precautions for threats.
- SWOT Analysis is cost effective and sometimes free of cost.
- By enabling you to take solutions, it reduces the time taken to obtain the goal.
PESTEL – A similar analysis to SWOT
While discussing the SWOT analysis, you are supposed to know one more analysis that is also related to the SWOT. It is nothing but the PESTEL analysis. This is one of the competitive analyses of SWOT. Many people are confused about choosing the suitable analysis when it comes to these two. So here we will have a comparison of these two analyses followed by a short description of the PESTEL analysis.
What is PESTEL Analysis?
PESTEL analysis is also similar to SWOT; we are examining the factors of a company. But the difference is that PESTEL analysis focuses only on the external factors that are influencing your company’s performance.
PESTEL can be abbreviated as Political, Economic, Social, Technological, Environmental, and Law/ Legal factors. These are the six elements of PESTEL analysis. The entire analysis is to determine all these factors. You can see that all these are external factors that are not under the company’s control. For example,
- What are the challenges you are facing because of the new political policy?
- How does the stock market value affect your business?
- What is the social response to your company?
- What are the pros and cons of your technologies when comparing recent developments?
Differences and Relationship between SWOT & PESTEL Analysis
Actually, both analyses are somewhat similar. They differ for the following reasons.
- Elements of SWOT are strengths, weaknesses, opportunities, and threats. Elements of PESTEL are political, economic, social, and technological.
- SWOT focuses on internal and external factors, whereas PESTEL only focuses on external factors.
- SWOT helps to understand the company’s position as a business. In contrast, PESTEL helps to understand the trends in the market.
- PESTEL analysis can be incorporated with the SWOT for an effective outcome.
- PESTEL analysis helps you to understand the trends happening in the market. But SWOT helps you to understand your company’s functionalities. Both are important when we need to meet success.
Choosing the best one
After knowing these two analyses, it is also necessary for you to be clear on choosing the suitable one for you. If you are starting a new career in business or running a small business, then you can obviously go for the SWOT analysis. Since it helps you to understand the entire positive and negative things about your company, you can make the perfect decision to keep moving on.
Otherwise, if you are already running a business and still want to enhance your company’s performance more, you can go for the PESTEL analysis. Since it helps you find the ongoing trends in the market, you will understand then, what you need to do to make your business shine in the market.
As we’ve already discussed, it is far better to conduct these both in a manner of PESTEL analysis at first. If you conduct the PESTEL analysis, it can help you understand your business environment clearly. Then you can conduct the SWOT to examine your company according to the particular business environment.
Well, if you are clear with the details mentioned above, it is okay. If not, it is also acceptable. Now, this is the time for us to look at an example for a real-time SWOT analysis.
SWOT Analysis Real-Time Example
We all know about TESLA. It is an American automotive company that manufactures highly-featured e-cars. For a better understanding of SWOT, let us perform a SWOT analysis for that company with our knowledge of it.
- One of the leading manufacturers of e-cars.
- It is one of the most valuable automobile companies in the world.
- All models are highly-featured such as auto-pilot mode.
- Enhanced safety features.
- Innovative ideas in every new product.
- Highly skilled employees.
- Complications in designing and manufacturing.
- Lesser TAM- Total Addressable Marketing.
- Products are not cost-efficient for all.
- Lack of batteries to power the products.
- Lesser production rate as compared to others.
- The entire world is moving towards e-vehicles.
- Incorporating in-house manufacturing for batteries.
- To produce less expensive cars.
- Increase in the production rate.
- Almost all competitors have started to manufacture e-vehicles.
- Financial uncertainty.
- High-risk factor because of Lithium-ion batteries.
As you can see, I’ve used a SWOT PPT template to list out the elements. It is taken from SlideEgg’s Free Slides page. With this, we can understand the business health of the company. For performance enhancement, TESLA needs to maintain the strengths, try to overcome the weaknesses, utilize the opportunities, and use smart solutions to the threats. This is just an example on how a simple SWOT analysis is performed. Like this, you can also download the SWOT PowerPoint Templates online to get your SWOT analysis made.
Thanks a lot for reading this article fully!
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