Making a company’s SWOT analysis is one of the most traditional methods used to define business strategies.
Together with the Porter Matrix, the BCG Matrix and the An off Matrix, we can consider this set of matrices as the golden quartet of the most traditional strategic marketing tools used to date to define business plans, annual company plans and strategic planning.
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All of them have in common the fact that they try to create a reasonably simple methodology that can be summarized in a final table, an easily visualized and understandable matrix, which condenses everything that was defined during the research and study of the company to be analyzed.
Today, a more contemporary and widely used methodology by large corporations is the Balanced Scorecard, known as BSC, which employs a broader and more detailed concept.
In order for you to better understand the SWOT analysis of a company, let’s start with a brief introduction to this matrix, followed by a step-by-step guide on how to maintain a SWOT matrix for your business. Then, let’s present a practical example.
Stay tuned, soon you will know exactly how to assemble the corporate SWOT matrix, which is also known as “SOFT analysis of a company”, which in Portuguese is the acronym that stands for Strengths, Weaknesses, Opportunities and Threats.
Every company must periodically perform a SWOT analysis
How to perform a company’s SWOT analysis
The SWOT methodology for analyzing companies aims to provide a strategic direction for the organization based on its internal and external environment.
- Internal environment: everything that is within the company’s domains and therefore it can control. These would be things like facilities, training, personnel, machinery, layout, advertising, location, points of sale, benefits and salaries (within the limits of the law), organizational climate, values, planning etc.
- External environment: everything that is outside the “jurisdiction” and reach of the company and which, therefore, it cannot control. These are natural factors, such as the climate, catastrophes, global warming, water scarcity, etc., and conjuncture and institutional factors, such as interest rates, exchange rate variations, government decisions, tax rates, political crisis, institutional instability, labor laws, environmental or export, among others.
The company can only act over what it has control over.
This is the basic premise of SWOT analysis that is, understanding the strengths and weaknesses of your internal environment in order to face threats and take advantage of opportunities in the external environment.
- Example of a company’s strengths: superior technology, qualified service, privileged location, high investment capacity, research and development bringing constant innovations, a very positive organizational climate, a company that attracts talent, a strong and consolidated brand, among others.
- Examples of weaknesses of a company: obsolete machinery, lack of training, unmotivated employees, problems with cash flow, unqualified personnel, outdated visual identity, communication and advertising out of tune with the public, products and services without competitive differentials, confusing strategic positioning, distribution difficulties and many others.
Realize that strengths and weaknesses are factors internal to the company and that, if necessary, it can try to change them. Unlike the external environment, which is impossible to change, see:
- Examples of threats for a company: rising energy prices, roads that displace its production in terrible condition, export barriers imposed by a foreign country, drought, inflation and others.
- Examples of opportunities for a company: high dollar (for an exporting company), construction of an airport nearby, lower tax on some of its raw materials, exit of a multinational competitor from the market, hot summer (for one hotel chain on the beach, for example).
It is up to a company’s SWOT analysis to determine how to address weaknesses and leverage its strengths to overcome threats and benefit from opportunities.
It takes being creative to understand a company’s strengths and weaknesses, opportunities and threats
Step by step to perform a company’s SWOT analysis
- Build a 4-quadrant table, with two rows and two columns, as if it were a square cut by two transversal lines.
- On the left side of the first line, outside the square, write Indoor Environment.
- In the first square of this row, write FORCES.
- In the second square of the same row, write WEAKNESSES.
- On the left side of the second line, outside the square, write Outdoor Environment.
- In the first square of this row, write OPPORTUNITIES.
- In the second square of the same row, write THREATS.
- Now, write inside each corresponding box the opportunities and threats, strengths and weaknesses of your company.
- Then try to determine your strategy and how to use internal factors to circumvent or leverage external factors.
Example of a company’s SWOT analysis
Imagine a neighborhood English school with a single unit, let’s detail the elements of the SWOT matrix:
- Native teachers who have lived in Brazil for years (some founded the school);
- Low operating cost;
- Close and personalized service to students;
- Excellent location.
- Unknown brand;
- Little capital;
- No presence in mainstream media.
- Private schools of general education (elementary and high school) have been looking to outsource the English department;
- Brazilian companies are increasingly internationalizing;
- The country’s economic situation has encouraged young people to look for employment outside the country.
- Strength of large English franchise networks;
- Proliferation of very low-cost online courses;
- Fall in the purchasing power of the population.
The result of this analysis could be: to create good communication material, such as a folder showing all the quality of the school and also visit private schools and companies to offer teaching partnerships.
In addition, participate in fairs here in Brazil that promote jobs and courses abroad, to attract young people who want to improve their English in real quality courses before leaving the country in search of a job..
Align the SWOT matrix with your company’s strategic planning
SWOT analysis can be used in strategic planning and with the sales goals of your business in search of strengths and weaknesses, threats and opportunities.
Thus, the business strategic planning l is a formal document listing the company’s objectives and the actions that must be taken so that the organization can achieve them.
The sales area must also collaborate to achieve these goals. Therefore, it is necessary to make a sales plan with your goals, objectives and specific actions that the sales team must carry out.