Today, businesses face numerous obstacles, from supply chain issues and volatile markets to uncertain economic trends and higher consumer demands. Understanding how your business is performing and adapting to needed changes is key to longevity in the business world today. To overcome some of the obstacles, businesses need to assess their strengths and weaknesses, and business owners need to make decisions based on those examinations. In the early 1960s, the Stanford Research Institute created a business assessment to evaluate why corporate planning fails. The evaluation sought to analyze the satisfaction, opportunity, fault, and threat (SOFT) of business operations.
Today, the SOFT evaluation has evolved into an analysis that looks at internal and external factors that an organization may encounter. Known as SWOT analysis, the assessment looks at the strengths, weaknesses, opportunities, and threats that companies face. This is an important process for businesses of all shapes and sizes.
When considering an advertising agency vs freelancer, for example, the businesses are different, but the goals are the same. A marketing agency usually has several clients and turns out large campaigns. A freelancer, however, usually focuses marketing efforts on smaller, more intimate projects. Both companies are focused on marketing. However, they have varying aspirations. A SWOT analysis can help each of these businesses understand how they are performing in the industry and what they need to do to move forward.
No matter the size of the business, running a company can be difficult today. Constant analysis and evaluation are critical for survival. Let’s take a closer look at SWOT analysis and its benefits for any company.
What is SWOT Analysis?
A SWOT evaluation is a framework assessment that looks at strengths, weaknesses, opportunities, and threats to determine a company’s competitive position. A SWOT analysis allows companies to develop a strategic plan by assessing external and internal factors, as well as current and future potential. The evaluation is designed to create a realistic, fact-based, data-driven picture of an organization, its initiatives, and its performance within its industry.
The insights the company can gain from a SWOT analysis will allow business leaders to coordinate internal and external activities to generate more successful operations. The process helps businesses focus on strengths to downplay weaknesses and avoid threats to take advantage of available opportunities. A thorough analysis asks companies to evaluate their strengths and weaknesses, look at what things competitors do better and determine what opportunities and trends can be beneficial or harmful.
Benefits of SWOT Analysis
Data from a SWOT analysis is presented in a two-by-two grid that provides a visual summary of business operations. The visual arrangement of information presents an easy-to-understand overview of the situation and business planning process. Unlike other business tools that require in-depth assessment, data, and documentation, the SWOT analysis can also be done quickly. The analysis doesn’t require specialized training or tools and can be done through several iterations.
Aside from providing a quick visual summary of operations, one of the most powerful benefits is that a SWOT analysis can integrate and coordinate entire organizations. The results of a thorough analysis can highlight opportunities for better integration and interaction between the various parts of a team. The results of a SWOT analysis can demonstrate how better communication and coordination among various departments and teams can lead to more opportunities for success.
Businesses today experience more obstacles and challenges than ever before. Given that recent data suggests that consumers are no longer brand-loyal, companies fight for every dollar and provide excellent customer service. From small businesses to large corporations, a SWOT analysis can help companies of all sizes evaluate their operations, decisions, and customer service. An analysis can allow businesses to access better opportunities and focus on operational strengths.
