As a successful, growing business it’s important that any future growth decisions are informed by as much industry data as possible in order to identify the opportunities as well as the risks that could jeopardise a particular move.
One of the first things many businesses do during their planning process is to conduct a SWOT analysis.
This industry study assesses the strengths, weaknesses, opportunities and threats to help ambitious businesses tackle its biggest challenges and explore the most lucrative potential markets.
The SWOT framework is credit to Albert Humphrey, who developed the approach at the Stanford Research Institute (SRI) back in the 1960s and early 1970s. The ultimate goal of a SWOT analysis is to reinforce your business strategy by assessing all of your business’s strengths and weaknesses, as well as the potential opportunities and pitfalls within your marketplace.
SWOT analysis can be used in a similar fashion to the Lean Startup business model, ensuring businesses make objectives that are realistic and attainable, minimising risk and maximising efficiency.
Internal SWOT analysis examples
The first two letters in SWOT, S (Strengths) and W (Weaknesses), refer to internal factors within your own business. It relates to the resources and industry experience already available to you.
Let’s take a look at some of the strengths and weaknesses businesses typically consider about their own operations:
- Financial resources – funding and income sources and potential investment opportunities
- Physical resources – business locality, facilities and industry equipment
- Human resources – staff base and target demographics
- Natural resources – access to intellectual property (e.g. trade marks, patents or copyrights)
- Existing infrastructure – software, staff programmes, departmental hierarchies etc.
External SWOT analysis examples
The final two letters in SWOT, O (Opportunities) and T (Threats), refer to external factors that could influence your business. It’s the task of decision makers within your business to ascertain whether any of the following factors are a direct or indirect opportunity or threat to your company:
- External funding – e.g. legislature, gifts, donations and other potential sources
- Industry trends – technological developments, new product lines and shifting consumer demands
- Economic movements – financial trends on a local, national and global scale
- Target demographic – evolution of audience i.e. age, race, gender and culture
- Working relationships – dealings with partners and suppliers
- Regulations – i.e. political, environmental and economic
The key to any successful business is the ability to make well informed business decisions. To get a real picture of how your market sector is developing and stay abreast of key legislation affecting your business, sign up to the 'Introduction to using the Business & IP Centre’. The workshop will highlight and provide practical guidance in using key British Library sources to give you the confidence to make the right choices for your growing company.
By pairing internal weaknesses with external industry threats it’s much easier for you to pinpoint the most serious hurdles for your business to overcome. It’s equally straightforward to identify the biggest, most lucrative business opportunities and strengthen your proposition by underlining your strengths and gaps in the market.
How and when to use SWOT analysis effectively
The overall understanding of your business’ strengths and weaknesses, combined with the threats and opportunities of your marketplace put you in a significantly better position to take positive action. Without the SWOT analysis it can be extremely difficult to identify areas for change, set clear performance goals and develop an action plan to stay ahead of the competition.
Using your SWOT analysis, it’s possible to justify a business decision that’s already been decided upon. It’s also a step forward to creating a robust strategy to build upon your existing strengths and industry opportunities.
Arguably, the most common reasons for using SWOT analysis are:
- Identify new solutions to existing business issues
- Pinpoint new potential barriers to current business objectives
- Agree on the next direction for your business to take
- Discover possibilities and limitations for change
- As a means of brainstorming business ideas and better understanding the competition
- As a means of better informing key stakeholders
Once you develop business strategies to minimise your weaknesses and maximise your strengths and opportunities, be sure to regularly review them internally. Agility is the key to ensuring your company recognises its assets and flaws in a positive fashion.
The four SWOT analysis strategies are as follows:
- Strength-Opportunity strategies
Leverage your business’ strengths to maximise industry opportunities
- Strength-Threats strategies
Leverage your business’ strengths to minimise industry threats
- Weakness-Opportunity strategies
Minimise your business’ weaknesses to maximise industry opportunities
- Weakness-Threats strategies
Minimise your business’ weaknesses to minimise industry threats
Did you know that the British Library’s Business & IP Centre offers a unique and invaluable resource for any business wishing to successfully develop and grow? Sign up to ‘How do I use other The British Library collections for my business research?’ workshop and discover how to use our sources in areas such as market research, law, scientific research, arts and culture to better understand your market sector and make smarter business decisions. View our events page to see all of our upcoming events.