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Better SWOT usage

A SWOT analysis is a ‘tried and true’ business planning tool, but business advisers believe many organisations fail to use this tool properly.

The process of preparing a SWOT analysis is relatively straightforward. The hard part is the next step. How do you use the information and how do you ensure it makes a difference to your business?

The aim of a SWOT analysis is to identify the strengths and weaknesses of an organisation, as well as the opportunities and threats it faces.

To make the process worth-while, the initial analysis has to be followed-up with strategic responses, according to Mal Di Giulio, a director of MGI Bridge Partners.

“Just about every business plan includes a SWOT, but very rarely do they go beyond a long list and become a useful planning tool,” he said.

Abbott Business Consultants principal Steve Abbott believes a business of any size can benefit from a SWOT analysis.

“It helps you focus on the business. Very rarely do business owners or their staff focus on the business,” he said.

“The SWOT analysis is only stage one. You need to go onto stage two, which is the follow-up strategies”.

The process of conducting a SWOT analysis should involve all staff in an organisation, for two reasons.

First, each staff member has the best understanding of the strengths and weakness of their own part of the business.

Second, all staff members should take ownership of the strategies and solutions that emerge from the SWOT process.

“You can’t give the staff your solution,” Mr Di Giulio said. “They have to be involved.”

Using an external facilitator can be advantageous, to ensure that all participants stay focused, he said.

Mr Abbott said participants needed to be highly focused during each stage of the process. For instance, they needed to focus totally on strengths during that stage of the process, then focus totally on weaknesses, and so on.

The facilitator can also ensure the owner or manager of the business does not dominate proceedings.

A recurring question for people conducting a SWOT analysis is deciding how many items should be entered in each field.

Mr Abbott recommends that all strengths and weaknesses should be recorded but suggests the list of opportunities and threats stop at 10, because participants can only focus on a few with the biggest impact

Mr Di Giulio takes a different tack. He encourages participants to start by writing down all the strengths, weaknesses, opportunities and threats they can think of.

“I encourage volume over quality initially, but you can’t leave it at that,” Mr Di Giulio said.

The next step was to link the quadrants, to identify how strengths can be used to take advantage of opportunities and to tackle threats, he said.

Similarly, the business needs to identify what it can do to ensure the weaknesses don’t compound the threats or stop it exploiting the opportunities.

“That process will give you a shopping list of strategic options, but you don’t want to come out with 15 or 16 action points,” Mr Di Giulio said.

“You need to prioritise and come out with the top two or three.”

Mr Abbott said specific items could be both a strength and a weakness.

For example, a retailer may stock a great range of products. That would be a strength of the business, but the holding costs of the stock would be a weakness.

Posing a series of questions can be a useful way to help staff complete a SWOT analysis.

To identify strengths, ask: What are your advantages? What do you do well? What do other people see as your strengths? Consider this from your own point of view and from the point of view of people you deal with.

To identify weaknesses, ask: What could you improve? What do you do badly? What should you avoid?

Opportunities can flow from changes in technology and markets, changes in government policies, new social and demographic patterns or local events.

Threats can be identified by looking at the obstacles faced, initiatives by competitors, changing technology and the required specifications for your products or services.

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