Also know as a ‘situational analysis’, a SWOT analysis strives to determine the current strengths and weaknesses within a firm, as well as the opportunities and threats facing your firm (SWOT = strengths, weaknesses, opportunities, threats). A SWOT analysis is a powerful tool to evaluate the current position of the firm within its broader business environment. It is an evaluation undertaken by senior staff or the owner of the firm. It needs to be as honest an appraisal as possible – it is no use, ignoring facts, exaggerating truths or lying about your firm’s real circumstances. A SWOT analysis sets the scene for further planning within your company.

Strengths and weaknesses focus on the internal factors relating to your firm’s resources, abilities and skills. Strengths describe the activities that an organisation does well and that set it apart from competitors, such as a skilled labour force. Weaknesses, on the other hand, refer to the areas in which a company needs to improve if it does not want to loose advantage to competitors, such as a lack of capital.

More examples of strengths include:

  • The latest and best machines
  • A highly productive factory
  • Easy access to finance
  • A creative design team

More examples of weaknesses include:

  • Poor quality control
  • Poor customer services
  • Lack of access to finance
  • Insufficient staff

Note that (a) all of these are internal to the firm, and (b) some factors (such as access to finance) could be both a strength and a weakness.

External factors

Opportunities and threats focus on the external factors present in the external environment, that are likely to impact on the success of failure of your firm. Opportunities, for example, consist of the situations in the external environment that the organisation can exploit to its benefit, such as a new customer need that arises that the firm is in a position to fulfill. Threats, however, refer to the situations that exist in the external environment which your firm cannot exploit to its advantage. For example, the introduction of a newer, better and cheaper product introduced by the competition would be considered a threat to your firm.

More examples of opportunities include:

  • Identifying and targeting a new business sector
  • Business alliances that can help your firm grow its market
  • An award for your product by an industry association

More examples of threats include

  • Market saturation
  • The introduction of new products by competitors
  • Increasing numbers of competitors

Who should do the SWOT analysis?

Ideally a cross-functional team or a task-force that represents a broad range of perspectives should carry out SWOT analyses. For example, a SWOT team may include an accountant, a salesperson, an executive manager, an engineer, and an ombudsman. If you are a really a small business with only a few employees, involve them all – you may even learn something about your company you didn’t know. If it’s just you, ask your wife and a good friend or client that you know really well, to help. Worst case scenario you can do it yourself, but it is best to have other views (from other persons) about your firm.

How do I do the SWOT analysis?

A SWOT analysis is really a brain-storming session. Your team will sit around a table and step through the four components of a SWOT analysis (i.e. your firm’s strengths, weaknesses, opportunities and threats). You will begin with your firm’s strengths and each team member will attempt to identify what strengths your firm has. One of the team members will write down each strength identified. The team can debate each proposed strength and will eventually accept or reject the item as a factor.

Once you have done a SWOT analysis, it is essential that you incorporate the findings in your further planning. It is a waste of time if you do nothing with your findings! The findings will assist in your further planning by highlighting the strengths your firm will build on and opportunities it will pursue. At the same time, your firm will need to address its weakness and decide how it will defend against the threats it faces. These decisions should shape the future activities of the firm.

When do I do a SWOT analysis?

A SWOT analysis is an exercise that can be done at any stage and should be reviewed annually. Start straight away. It is not a costly exercise and can be arranged within a weak.

What does this SWOT analysis have to do with exporting?

We believe a general SWOT analysis is essential for any further planning that your firm may do, particularly in the field of exporting. Indeed, you will also be expected to do an export SWOT analysis later on in your export planning process. However, this export SWOT analysis will be based to a significant extent on your general SWOT analysis. The reason why you would do a general SWOT analysis before doing an export SWOT analysis is that if you find that you firm is threatened by new products or competitors, or if a new opportunity is identified, you may decide to first address the threat or take advantage of the opportunity before moving into exports!