Nobody knows this better than business people: the market is tough and competition is fierce. In order to stay afloat, get ahead, and succeed, businesses need to be strategic.
The SWOT analysis is a business tool that helps you formulate a plan of action by analyzing four important areas of your business.
Learning how to use this tool can take your business to the next level! 📈💰
What is a SWOT Analysis?
A SWOT analysis takes a deep look at 4 areas in relation to your business:
Having a clear picture of the internal characteristics (strengths and weaknesses) and external circumstances (opportunities and threats) that impact your business will help you:
Track and measure performance
Gain a competitive advantage
Strengths & Weaknesses
Start by considering your strengths: What do you add to the market?
Then take an honest look at your weaknesses so you know what you can do better.
What is my business good at?
What do we do better than our competitors?
What are our achievements?
What are our resources and assets?
Think strongly about:
What are some reasons that some people don't buy our product?
What do our competitors do better?
What have we failed to accomplish?
What resources do we lack?
Examples of Strengths:
High employee retention
Strong brand recognition
Became profitable after six months
Examples of Weaknesses:
Didn't meet Q2 sales goals
Competitors have better brand loyalty
Consumers find products too expensive
Lack of capital to expand internationally
You work in the PR department of a tech company that's launching a new product. You've put together a list of weaknesses the company needs to confront. Which weakness should you prioritize?
Opportunities & Threats
Now it's time to see what opportunties you can leverage to help your business.
After that, examine the external threats that could make it difficult for you to perform as desired.
Take advantage of:
New, untapped markets with little competition
Markets with favorable labor laws and low taxes
A change in the economy or culture that creates a need for your product
Be aware of:
Changes in the economy
New regulations and rising taxes
Negative customer opinions
Changing cultural and social attitudes
Examples of opportunities:
A competitor went out of business
A nearby country doesn't have any businesses selling your product
A nearby country lowered import taxes
Animal rights awareness is increasing in your country and you sell vegan bacon
Examples of threats:
The popular presidential candidate promises to raise taxes
Many customers left bad reviews
Amazon begins selling the same product that you sell for half the price
Increased regulations on a widget you use to assemble your product
Your primary buyers are men ages 35-45. Which opportunity is the best one to take advantage of?
A Plan of Action
Code Hope is an imaginary for-profit tech bootcamp that teaches refugees coding skills without making them pay a penny of tuition upfront! They're only required to pay their tuition after gaining full-time employment after graduation.
Do a SWOT analysis to help Code Hope strategize!
Has investors who have made big investments
Is the only business of its kind in the United States
Has excellent instructors who are intrinsically motivated by the cause
Some famous celebrities started talking about "social entrepreneurship"
Many refugees are moving to your state because of its welcoming attitude
The government is giving tax breaks to businesses with a social cause
Won't make a profit until 20 graduates pay back their tuition
It's difficult to find refugees who speak English well enough to find employment
Can't afford to pay its instructors competitively
A newly formed NGO with the same mission has received many donations
A popular presidential candidate threatens to kick out refugees if elected
Increased taxes for the tax bracket that software coding salaries tend to fall in
Now think about which of the following two strategies is best for Code Hope:
Code Hope will only accept refugees who speak college-level English. It will lower salaries for employees to below a livable standard so that it can use the extra money to donate to political campaigns that will cut taxes for all tax brackets. Finally, it will publish unsourced blogs that claim that the NGO with the same cause has been misappropriating funds.
Code Hope will reach out to celebrities who tout "social entrepreneurship" to seek endorsements and monetary opportunities with their fans. It will also partner with an NGO that gives free English lessons to refugees so that its graduates have an easier time finding employment. Finally, it will donate to the candidate who is favorable to refugees.
Which strategy should Code Hope use?