Each organization, aimed at a long-term existence in the conditions of the market, should take into account in its activity such an important moment as planning. However, as you know, all plans should be based on a preliminary analysis and on determining the main directions of development.
There are many methods of analysis of the enterprise. But there is one that professional managers have come to love especially recently - this is SWOT analysis, the decoding of which is to combine the first letters of four English words into an abbreviation. The article below will reveal the essence of the name of this technique and talk about its main features.
SWOT: decryption
The whole essence of this method of strategic research of the company is in its very name. In its name, this method collected four English words - strengths, weaknesses, opportunities, threats. Each word is responsible for a specific part of the analysis.
Thus, the first word strengths in translation means “strengths”. As a rule, the study primarily examines precisely those aspects that are the driving force for the organization.
The second word is weaknesses, which means "weaknesses" in translation. After identifying the strengths, the manager conducting the analysis determines what disadvantages a particular company has.
The third word is opportunity, which is translated from English as “opportunity." At this stage of the study, those opportunities that the company can use to achieve success or maintain themselves within the framework of profitability are determined.
The fourth word is threats, which means “threats”. When researching threats, the main risks for the organization are determined, due to which plans are developed to prevent or overcome them if they occur.
Thus, the SWOT decoding speaks for itself and already from this definition it becomes clear that such an analysis is carried out in four stages, and then based on the results obtained, concrete action plans for the company are drawn up.
Goals and objectives
It is worthwhile to dwell separately on the goals and objectives of the SWOT analysis of the strengths and weaknesses of the organization. The main goal is to determine the degree of development and develop an action plan to achieve the intended level. The moment of analysis is a kind of departure point to a given goal, which determines the company's place in the current market for the sale of goods and services. The main objective of this analysis is to determine the relationship between the strengths and weaknesses of the firm.
Types of analysis
There are three main types of this analysis:
- express;
- consolidated;
- mixed.
It is necessary to dwell on each of these species. Express analysis is usually the most popular option, which helps you quickly and easily learn the strengths and weaknesses of an organization. The difference between this type and others lies in the fact that the main attention is focused on the study of strengths and weaknesses, as fundamental factors for the success of the company.
A summary analysis is a study that allows, on the basis of the main indicators that determine working capacity, to develop the most optimal course that a firm needs to follow based on its development prospects.
Mixed - this is a type of research that combines the two previous ones and consists in the fact that with its help one can determine the competitiveness of the company and outline a clear plan of action to achieve the desired goals. This type of analysis gives the most accurate research results.
Key aspects
It is always worth remembering that SWOT analysis is used in order to be able to carry out strategic planning of the development paths of the organization or its component parts. Such an analysis should be focused on making the most of the available opportunities as efficiently as possible and attracting the necessary resources in time to prevent the impact of negative external factors and threats.
In order to really implement the developed strategies taking into account SWOT, they use such matrices, which are called Balanced Scorecard. This tool allows you to identify which areas of the company in strategic development are fundamental.
All data is formatted briefly and recorded in a SWOT matrix, which allows you to visually display the analysis factors. However, its disadvantage is that it is difficult to determine additional information from it. For example, in cell W (weaknesses - translation “weaknesses”) the fact of professional staff turnover is indicated, but this is only a fact not supported by a detailed study and determination of the cause. Therefore, managers are advised to use additional tools for analysis and thereby form additional reinforcement in the form of calculations dedicated to each factor.
Such an analysis is very useful for conducting competitive intelligence. As a rule, the probability of obtaining reliable information about competitors with this method is more than 50%.
Pros of SWOT Analysis
Having understood the interpretation of SWOT and the essence of this method, it is necessary to determine its advantages and disadvantages. There are such advantages as:
- Ease of holding. Such an analysis can be handled by both an experienced manager and any other specialist who has the opportunity to obtain basic information about the company.
- The analysis establishes clear relationships between the company, its capabilities and problems.
- To determine the key points in the SWOT analysis, you do not need to resort to the collection of extensive information.
- Such a study can talk about the profitability of the company and make a comparison with competing firms.
- This analysis makes it possible to concentrate on the weaknesses of the company.
- The analysis helps to prevent hazards that could harm the company from its environment.
Cons of SWOT Analysis
Any managerial tool and method has not only positive aspects, but also negative ones. Therefore, based on the minuses, it is necessary to determine the feasibility of using this method of analysis in a specific situation.
The following series of minuses of this study are distinguished:
- There is no temporal dynamics in such an analysis. The market situation is changing regularly and rapidly. Therefore, choosing this analysis technique it is important to consider that it will not be able to fully warn about changes in the external environment.
- The study does not take into account evaluative and quantitative readings, which is why information is minimized.
- Often, due to the manager’s inexperience, subjective indicators are displayed in such an analysis.
When is it worth doing this analysis?
It is imperative to conduct such an analysis if there is a need to create a general picture of what is happening at the enterprise or in the organization or to collect specific facts, which in the future can serve as the basis for a more in-depth study. This can serve as an initial catalog of coverage of all issues. It is worth noting that such a rough checklist of the main factors can be compiled even before negotiations or meetings with business partners, which will help determine the feasibility of cooperation.
You should not use such a tool for analysis if the company needs information about dynamic changes or in the study of the external environment to develop long-term plans. It is always worth remembering that SWOT analysis shows a picture of reality and can only be part of long-term planning. In addition, it must be borne in mind that such a research method is a way of obtaining only fragmentary and static information.
Conclusion
To summarize, it is worth noting that SWOT analysis is an excellent way to quickly assess the current state of affairs of a company and take into account all of O (opportunity - in the translation of “opportunity”). Based on this, the company can determine the effectiveness of a given course of activity. Ultimately, knowing all the factors of T (threats - in the translation of "threats"), you can not only anticipate the problems and risks, but use them to advantage.