SWOT Your Business

Business Swot AnalysisIt never ceases to amaze how the classic SWOT quadrant with a simple list of Strengths, Weaknesses, Opportunities and Threats is still used in this time of powerful computers and metrics-based models.

A simple model (synthetic for the purpose of example) is presented here below.

Strengths (+)

Opportunities (+)

  1. Unique and well received product
  2. Prime location of product outlet
  3. Unique pool of employee skills
  4. High quality product currently in high demand
  5. Strong word-or-mouth endorsement
  6. High profile CEO

 

  1. New/emerging market niche for incremental innovation of product
  2. Strategic alliance (merger with competitor) in the offering
  3. Market growth above three times economic growth
  4. Market sector holding up in down economy

Weaknesses (-)

Threats (-)

  1. Lack of quality in support service delivery
  2. Minimal and uninspiring marketing campaign
  3. Unique product features un-differentiated in media campaign about product offered to market

 

  1. Possible incremental innovation or direct copy entering product niche
  2. Stressed cash-flow situation

 

 

It can be noted from this example (which replicates the typical SWOT format) there are ten pluses (i.e., 6 Strengths and 4 Opportunities) and five negatives (i.e., 3 Weaknesses and 2 Threats). Thus, one may reasonably conclude that the business is solid and viable because the number of Strengths and Opportunities far exceed the number of Weaknesses and Threats. Well, that may not be so and the consequences of missing the critical element can result in a sad and possibly costly outcome.

Whilst standard SWOT practice in interpreting SWOT tables in this format is to conclude the enterprise is viable, this business may actually be at considerable risk because it is in a stressed cash situation; a situation that most likely will constrain its growth, let alone limit day-to-day operations. In fact, it may be close to shutting the doors or even bankruptcy. Even one Threat of this type can overpower many more S and O’s – and invariably do!

In the venture start-up phase, one may well have an overpowering argument for a viable business given that the Strengths and Opportunities far outweigh the Threats and Weaknesses. However, if the owner cannot raise the capital, she does not have a business!

Also keep in mind that many enterprises go bankrupt because they cannot finance cash-flow needs – even when the fundamentals of the product offering and the business model are sound.

The critical point to remember is the need for a ‘Weighted SWOT’ where each attribute is represented by their impact on the business and, thus, where the attention needs to be focused over the short to long-term.

Figure 1 below is an example of the output of a weighted SWOT matrix that represents a typical set of weighted SWOT metrics for Strengths to be exploited and Weaknesses to be corrected (refer Figure 2).

Figure 1. Strength Matrix

Matrix 1

Figure 2. Weakness Matrix

SWOT your business Matrix 2

Strategic Outcomes Group has developed a series of Weighted SWOT applications, from the simple to the more complex sets of metrics, to simply create and model SWOTs.


2 thoughts on “SWOT Your Business

  • Chris,

    A TOWS model is a little more complex, but I have found it to be even more powerful when weighted – or better still, plugged into a hierarchical model with iterative prioritisation(s) of each component.
    Kenneth.

    Comment from: Dr. Kenneth Preiss

  • As a student I am familiar with SWOT analysis, I have never seen a weighted SWOT before. Clearly, they show the impact on the business where attention needs to be focused over the short to long-term. What are your thoughts about TOWS Analysis?

    Comment from: Chris Goodwin

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