SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats, and is a cognitive tool used in business to evaluate both the internal and external aspects of a business entity. SWOT analysis is used in conjunction with the Mission Statement (see here for the article on Mission Statements) The general rule is that strengths and weaknesses are internal, that is they are aspects of the existing business. Conversely opportunities and threats are external to the entity, and include the business world at large and competition. Using again my own business as an example I have developed the following strengths and weaknesses.
| Strengths | Weaknesses |
| High level of technical writing ability | There is an upper limit to the amount of work that can be taken on |
| Strong reputation with existing customers | Existing Customer base is small |
| Good turnaround of projects | Not enough time is spent generating new contacts in the industry |
As a general rule of thumb, there should be as many weaknesses as there are strengths. This is because it is natural for many of us to focus on the positive things about our businesses. Whilst it is important to focus on the positive it is equally important to focus on our weaknesses so as to develop strategies to combat them. Focusing now on the opportunities and threats
| Opportunities | Threats |
| Constant Demand for new content | High Levels of Competition |
| Ease of accessing the customer base on web forums | Quality of content often sacrificed to price by consumers |
| Specialist Business Market increasing daily | Sourcing new work is time consuming |
Again it is important to assess the threats in as much detail as one assesses the opportunities, as really knowing the limitations of the external environment will help to develop the strategies needed to maintain the competitive edge. From the use of SWOT, as well as having a good Mission statement, the business owner will be able to develop a good Balanced Scorecard, which is the focus of the next article. For more information on SWOT analysis see www.quickmba.com/strategy/swot/, a good site with much detailed information on SWOT analysis, it is also probably a good idea to look briefly at PEST analysis, which takes SWOT a step further and details on this can be found on www.marketingteacher.com/Lessons/lesson_PEST.htm , but the level of detail here is sufficient to develop our business plan.
January 22nd, 2008 at 9:21 am
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February 10th, 2008 at 5:16 am
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February 19th, 2008 at 5:58 am
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July 17th, 2009 at 1:17 am
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THANK YOU,