When strategic planning, a SWOT helps you define your business strengths, weaknesses, opportunities, and threats.
A useful tool you can use to assess the environment you’re competing in is called the SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. And typically, it’s drawn on a grid. For strengths and weaknesses, those are typically within your own organization, capabilities you have or don’t have. As far as opportunities and threats, they can either be internal or external market-facing opportunities and threats.
So let me walk through an example. As you build a SWOT analysis, you’ll want to have the team together and have people throw out their ideas. And it’s generally a brainstorming session.
So perhaps we start our SWOT analysis and we look at our strengths. And our strengths consist of the brands we have, how efficient our supply chain is, the strength of our sales force and how well they sell our products, safety within our manufacturing plants, our recruiting information technology, and maybe our financial position. And as I’ve laid out the strengths, notice they’re all internally-facing capabilities of the company.
Then I look at weaknesses and ask people where our gaps are. We may have gaps in our expense reporting process, our information technology desktop support for our laptops, our digital marketing program, our intern program, and our acquisition integration skills. Because we’ve done acquisitions before and they really haven’t gone that well.
Now we start looking outside the organization at our opportunities and threats that we face. Opportunities might be the growth of social media and how we can take advantage of it, the bankruptcy of Acme, one of our main competitors, our ability to sell third-party products through our supply chain, and an opportunity to do couponing of our products at retail.
And then last, we look at the threats that we face within the market, as well as internally. We may have threats of our customers are going to push us on pricing, our competitors may be poaching our talent or thinking about it, the weather in Ohio where we have some of our operations may be a threat, Acme being bought by one of our competitors could be a threat, and also, economic trends that we face, because our products are a consumable and they’re discretionary by consumers. So if the economy worsens, our sales could go down.
And once I’ve looked at that total picture, I’ll have a better sense for the strategic environment that I’m going to be building my strategic plan in.
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