SWOT analysis / SWOT

A SWOT analysis is a simple way to review the operating environment of our business. The strength of SWOT is that it has a fixed structure, which allows us to see the forces affecting the company and the tasks related to them in a new light.

The SWOT analysis is a really fashionable way to review the company's operating environment and lay the foundation for the business plan. The method itself is simple: make a list of the factors that determine whether the business will be successful or not. 

Once you have the list, place the collected factors in a four-part field, depending on which one you are with. The things we are good at should be listed as strengths - for example, nice design or low price. Those in which we are lagging should be classified as weaknesses - for example, it could be that the store is in a hidden location or the brand is unknown. If there is something that we can easily turn to our advantage, it should go in the opportunities column - this could be, for example, increasing demand. On the other hand, what threatens the success of our business should be included among the dangers - this could be the increasing supply or the strengthening of competitors. 

Then make a list of what we need to do to maximize our strengths and overcome our weaknesses to maximize our opportunities and prevent dangers. (Caution, our weaknesses often indicate other people's strengths!). It can be seen that the method is extremely simple, and at the end a series of tasks is compiled for the tasks to be done. 

However, you have to be careful with the SWOT analysis, it can easily get stuck. One of the flaws of the method is that it does not weight the individual factors, i.e. it basically does not provide an answer to the question of what is the main strength and in what order the other elements follow it. The same is true for the other three categories. If we are too thorough and put a lot of factors into the hat, it is easy to start thinking about insignificant things. 

Another danger of the method is that certain factors are related to each other. It is a common case that we come up with an effective method to overcome one of the weaknesses, but it negatively affects another factor that we have just listed among the strengths. We must therefore also pay attention to transverse effects, and if we do this, the method will no longer seem so simple. 

The SWOT analysis is an effective asset for creating an image of the world around us, but a very important condition for it to work well is not to get lost in the details! Few but important factors must be considered and influenced with effective action plans.

If we want to scrutinize the broader environment of the enterprise, it is useful to familiarize ourselves with the PESTEL model.