Understanding SWOT Analysis and Practical Tips To Effectively Use It

We always assess things before we begin our efforts. This could be anything from assessing our fears, to identify benefits or to understand the outcomes. It is here that SWOT Analysis plays its key role. I remember using this method in a tweaked manner while choosing my college, my job choices and even the cities I got to live in. What helped me was being thoroughly objective while doing this whole exercise which gave me a rational outcome, shorn of all the prejudices of personal preferences.

What is SWOT and How people use it

SWOT, an abbreviation that stands for Strengths, Weakness, Opportunity and Threats, is a simple tool that can have a profound impact on decision making and strategic planning for our personal or professional issues.

It provides us with our competitive advantage (or lack of it ) and also shows us the pitfalls. The first two, ie. Strengths and Weaknesses reflect the internal factors (like people, data, facilities, equipment, existing market, know-how/IPR, etc.) and the latter two are the potential external manifestations of the former(changing market trends, volatile economy, funds available, local and international regulations/laws, quick technological redundancy, etc.)

We always assess things before we begin our efforts. This could be anything from assessing our fears, to identify benefits or to understand the outcomes. It is here that SWOT Analysis plays its key role. I remember using this method in a tweaked manner while choosing my college, my job choices and even the cities I got to live in. What helped me was being thoroughly objective while doing this whole exercise which gave me a rational outcome, shorn of all the prejudices of personal preferences.

What is SWOT and How people use it

SWOT, an abbreviation that stands for Strengths, Weakness, Opportunity and Threats, is a simple tool that can have a profound impact on decision making and strategic planning for our personal or professional issues.

It provides us with our competitive advantage (or lack of it ) and also shows us the pitfalls. The first two, ie. Strengths and Weaknesses reflect the internal factors (like people, data, facilities, equipment, existing market, know-how/IPR, etc.) and the latter two are the potential external manifestations of the former(changing market trends, volatile economy, funds available, local and international regulations/laws, quick technological redundancy, etc.)

Now in this case if she sat with a paper and put across the SWOT analysis of her plan, she would come up with a more rational and realistic outcome.

If I have to give you some pointers about how I would conduct this SWOT analysis about her dilemma of relocating on her company project to Germany, here’s a sample:

 

 

Now if she would add a figure to each point and go on weighing them against each other and finally calculate her plus and minus points, she would be able to make a better decision that would never make her feel guilty- either of losing a great opportunity or of alienating my family.

That was just an example.

Companies conduct detailed SWOT analysis before taking any decisions and that gives them the advantage of mitigating risks to a large extent.

Pre-requisites for a SWOT analysis

  • As with any other management tool, SWOT analysis also requires robust and authentic data/information before embarking on it. Any deviation or errors in information can result in a faulty outcome, at least on a broad level.
  • A clear understanding of the players that go into this analysis. Factors like Funds, Marketing strategies, talent of team members, potential of market, technology, competition, etc. play a huge role in getting a good outcome out of the whole exercise.
  • A balanced view of the situation at hand, without being too optimistic or too pessimistic about the entire thing.

Outcomes of a SWOT Analysis

Once you have a clear layout of the SWOT, the most optimum option usually emerges from its own.

However, at times, one needs to take a contrarian approach if you know for sure that though the outcome may appear to be something, it could be altered with efforts.

Ex. If a new business idea shows that the threats from current competitors throws up harsh challenges in the beginning, one could plan and bypass or overcome competition through innovation, price advantage or a better service. It doesn’t entail that just because the SWOT shows certain things as strengths or threats, they would be absolutely so. One needs to understand that the strengths must be used to leverage so that they can turn into opportunities, the weaknesses must be eliminated or reduced to avoid turning into threats and the opportunities must be turned around to avoid threats. What you do with the outcome is what actually decides the accuracy of your decision.

A SWOT analysis could be a powerful tool in decision making or strategic planning but cannot be relied upon wholly. There are some things that rule beyond what’s obvious and they are experience, gut feeling, confidence in one’s potential (or that of the innovative idea or technology) and the faith in the customer segment that they will welcome what you have to offer.

If I have to put all this learning in the hypothetical case of my friend shifting from Hong Kong to Germany on promotion, she would have to work around convincing my family about the benefits, make arrangements for things that would need her personal attention near home, choose a neighborhood wisely and make the whole experience enjoyable for everyone.

SWOT analysis has also been criticized for its limitations, that it does not offer solutions, that it relies too much on information and data and that it is too simple a tool for making complex decisions that depend on numerous variables.

All said and done, one cannot underestimate the power of small ideas that go a long way in changing the world.

How have you used SWOT Analysis technique? What are some of the challenges that you faced while conducting one? I would love to hear from you. Take a moment and comment below your experiences.

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