Released on: March 10, 2008, 11:24 pm

Press Release Author: santosh kumar

Industry: Management

Press Release Summary: Analyzing the strengths, weaknesses, opportunities, and
threats (SWOT) of a business is a well-established tool that is widely used by
academics, consultants, and advisors. Although it is a simple concept, business
owners often struggle when trying to use it because it is so broad. It is difficult
to determine where to start, what questions to ask, and where to focus. The obvious
problems get attention while many other important issues get overlooked. SWOT
analysis is a great tool, but its effective use requires additional structure.

Press Release Body: Analyzing the strengths, weaknesses, opportunities, and threats
(SWOT) of a business is a well-established tool that is widely used by academics,
consultants, and advisors. Although it is a simple concept, business owners often
struggle when trying to use it because it is so broad. It is difficult to determine
where to start, what questions to ask, and where to focus. The obvious problems get
attention while many other important issues get overlooked. SWOT analysis is a great
tool, but its effective use requires additional structure.

Strengths and weaknesses relate to internal factors, while opportunities and threats
cover external ones. The internal factors can be divided into five categories:
management, workforce, sales and marketing, operations, and financial. The external
factors are also divided into five categories: threat of new entrants, bargaining
power of suppliers, bargaining power of customers, threat of rivalry from
competitors, and threat of substitution.

To approach the analysis in a structured way, prepare a checklist using the
categories mentioned above. Identify factors within each category that are important
to your business. Under management for example, a major weakness for virtually every
small business is relying too heavily on the owner. What would happen to the
business if something happened to the owner? In the workforce category a factor
could be employee turnover and the availability of new hires. The threat of new
entrants might include the possibility of a big box retailer opening near your
business. The bargaining power of suppliers and customers categories should consider
the possibility of losing a major supplier or customer. Come up with several factors
for each category to complete the checklist. It is important that you do not try to
rate or solve each issue as you identify them. If you do, you will get bogged down
on each factor and never complete the analysis.

Once the checklist is complete, you should rate each factor based on its importance
to your business. Use an alphabetical scale from A to E, where A = very important, B
= important, C = some importance, D = little importance, and E = not important. Next
rate each factor based on proficiency (internal) or vulnerability (external). Use a
numerical scale from 1 to 5, where 1 = very proficient or not vulnerable, 2 =
proficient or little vulnerability, 3 = average proficiency or some vulnerability, 4
= poor proficiency or vulnerable, and 5 = deficient or very vulnerable.

The factors with the lowest letter and highest number (A5) are the biggest
weaknesses or threats. The ones with the lowest letter and lowest number (A1) are
the biggest strengths or opportunities.

Using this structured approach makes a SWOT analysis possible and practical for any
small business. To make this process worthwhile you must use this information to
take action. Work to fix the worst problems first, prepare for the biggest risks,
take advantage of the best opportunities, and build your secondary strengths.


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