“If you want to be happy, set a goal that commands your thoughts, liberates your energy and inspires your hopes.” (Andrew Carnegie)
SWOT Analysis is an immensely powerful tool, which I recommend each one of you to do, at least once a year. This is a process of taking stock of Strengths, Weaknesses, Opportunities and Threats. If the SWOT analysis is done by self, then get this discussed with your mentor or guide and fine-tune. If it is done for your company, then involve the key stakeholders, key leadership team, and fine-tune. This is an extremely simple tool, if done diligently the benefits are immense. It helps to bank on strengths, work on weaknesses to improve, cash on the opportunities and prepare well to overcome the threats.
Each of the component of SWOT is explained in detail below:
Strengths: Identify your true strengths. Critically examine what these strengths have delivered. Example: As an individual you may find strength as “Effective in negotiation”- validate this with the results you achieved, like ability to get the best product or service at the right price or you negotiated well to get a better budget for your function. Like this, list down the key 7-8 strengths that truly depicts you as an individual or for an organization.
Weaknesses: This really requires tremendous amount of courage and conviction to write down. Critically question what you were not able to achieve or what you are hesitant of doing it. Example: For some people “networking or socializing” is a bigger challenge. For some “Communication” of thoughts is a problem. As a company you might have disgruntled employees, it would be a hurdle to achieve the set goals. The weakness here results in is low levels of customer satisfaction. Once the weakness is identified then it is easy to improve.
Opportunities: Which is obvious or might come at later point of time, but one need to try to get it. In current times the opportunities are anything you do in the areas of personal hygiene and the products or services that might help people work from home. Identify all probable areas of opportunities and draw up a plan to work on it.
Threats: understanding the likely threats will help you plan better. Example if your house is in the low-lying area, there is likely threat that during monsoon your house is getting flooded. Similarly, for your organization if you know that another company starting operations in your area, there is a likelihood that few of your key resources might be poached by this company. By understanding these threats in advance will help you to plan things better, may be the design of your house and the drainage system to take care of floods and develop second line resource to take up the enhanced role etc.
The answers to these questions outlined below may help you to identify S-W-O-T more appropriately:
Strengths (S) A distinctive competence? Well-thought-of by stakeholders? An acknowledged leader? Well-conceived operational strategies? Location advantages? Insulated from competitive pressure? Proprietary technology? Adequate financial resources? Access to economies of scale? Cost advantages? Product innovation abilities? Proven management?
Weaknesses (W) No clear strategic direction? Obsolete facilities? Weak image? Poor track record? Falling behind in R & D? Lack of managerial depth and talent? Missing any essential skills or competencies? Plagued with internal operational problems? Vulnerable to competitive pressures? Competitive disadvantage? Below-average marketing skills? Unable to finance needed changes in strategy?
Opportunities (O) Serve additional customer groups? Enter new market or segments? Expand to meet broader range of customer needs? Diversify into related services? Vertical integration? Ability to move to better strategic group. Complacency among other companies? Faster market growth?
Threats (T) Likely entry of new competitor? Growing of substitute/competition? Slower growth? Adverse government policies? Vulnerability to recession and business cycle? Growing bargaining power of customers or suppliers? Changing stakeholder needs and tastes? Adverse demographic changes?
Recommended five steps on SWOT Analysis:
It is extremely easy to do, anyone who understands the basic concepts can do this exercise.
It concentrates on most important factors affecting individual or organization.
Once the analysis is done, prepare a plan of action (POA) to address the areas of Weakness, Opportunities and Threats.
Periodically review these POA to make progress.
Repeat this exercise on a periodical basis.
“Goals are not only absolutely necessary to motivate us. They are essential to really keep us alive.” (Robert H. Schuler)