Planning is a great differentiator for any company. This is because managers who understand the concept of their business and have the greatest amount of relevant information are more likely to make the right decisions, following the best paths and achieving the best results.
In this context, SWOT Analysis plays a fundamental role for decision-makers. It acts as a guide to position the company's specific characteristics within a context, analyzing the business, the market and its competitors.
Read on and find out why you should do your analysis as soon as possible!
What does SWOT mean?
The English term is an acronym for the words Strengths, Weaknesses, Opportunities and Threats. Some companies and educational institutions in Brazil use the acronym FOFA to refer to the same technique.
In any case, the central idea of the methodology is that each of these words leads to a reflection on the company and its context - both internal and external - offering a complete overview for more assertive and intelligent decision-making.
Analysis of internal and external contexts
Despite seeming too simple, the methodology has proven its effectiveness in countless organizations around the world. Perhaps even its simplicity of conception and execution is the source of such success. Its application is usually divided into two parts: internal and external analysis.
Internal analysis - We can say that internal is everything that is under the control of managers, such as the company's financial, physical and human resources. Here you should look for the business's competitive advantages, its weaknesses, opportunities and possible threats when compared to direct competitors.
A full understanding of the internal context is fundamental to considering the external factors that are relevant to the analysis. That's why it's recommended that managers start here before moving outside the company walls. It is also interesting to have representatives from different sectors give their opinion, in order to broaden the analysis beyond the board.
External analysis - External factors are all those that are beyond the control of the decision-makers, but which have an influence on the company, its products and the market in general. Political, climatic and economic issues are considered macro-environmental. Suppliers, partners and customers are considered micro-environmental.
These factors vary according to the reality of each business, so it is worth emphasizing the importance of carrying out an efficient internal analysis in order to optimize time and resources in the analysis of external micro- and macro-environmental factors.
Some tips for an effective SWOT analysis
We've put together some practical tips to help you carry out an effective SWOT analysis:
#1 - Position the analysis in time. Are you analyzing the present moment or the future of the company?
#2 - If your company is large and/or has different areas of activity, consider analyzing each one separately.
#3 - Your competitors are the basis for comparison in the analysis, so seek out as much information as possible about your main competitors.
#4 - Keep it simple. Prefer simple words and terms to very complex explanations and analyses. This will help you better understand the overall context.
#5 - Remember that this is not an objective analysis. In other words, unless the information is 100% reliable, it is subjective.
Remember action!
There's no point in taking the time to do a thorough SWOT Analysis if it doesn't serve as a basis for changes and improvements in your institution. So remember to keep it in a visible place and make a habit of updating it whenever possible.
Have you ever tried a SWOT Analysis in your company? Did you have any doubts? Leave a comment on the post and take part in the discussion!
