Is SWOT analysis important in 2023?

Is SWOT analysis important in 2023?

SWOT analyses remain a valuable planning tool to assess a company’s weaknesses and identify strengths in order for them to assess their current position.

Despite being used by firms for more than half a century, SWOT analyses are still relevant in 2023 and a well-executed analysis can drive business success across a number of core areas.

What is a SWOT analysis?

A SWOT analysis evaluates and benchmarks a company’s competitive position now and in the future across four areas: strengths, weaknesses, opportunities and threats.

A SWOT analysis template is traditionally set out as a square divided into quarters, with internal factors (strengths, weaknesses) on the top row and external forces (opportunities, threats) beneath. (For a free template see the bottom of this blog post.) The SWOT matrix can be used to examine overall business performance or a specific business question, such as whether to open a satellite office or launch a new product.

Internal and external factors to include in a SWOT analysis matrix

Strengths: what is difficult for your competitors to replicate? e.g. unique products or internal processes; tangible assets; brand awareness; internal resources; intellectual property, expertise of employees, financial results.

Weaknesses: what do you need to improve on? e.g. technical expertise; underperforming product line; high levels of debt; customer journey issues, and pricing.

Opportunities: what are the gaps in the market you can make use of? e.g. competitors leaving the market; changes to government policy; industry trends; external environment.

Threats: what obstacles might you face now and in the future? e.g. exchange rates; supply chain issues or costs; new competitors; global pandemic or conflict in overseas markets; changes to consumer behaviour; obsolete products or services; reliance on retailers/distributors.

Who to involve in a SWOT analysis brainstorming session

  • People with a good overview of the company’s market position and the departments or projects being analysed.
  • Someone from outside the organisation who brings different perspectives and fresh thinking.
  • People who can focus on facts rather than opinions, and won’t suffer from bruised egos.
  • People with an understanding of the business data and how to interpret it.

SWOT analysis example

SWOT analysis example

 

Once you’ve carried out your own SWOT analysis, it can be used to influence decisions and inform future business strategy in a number of distinct ways.

Comprehensive understanding

A SWOT analysis provides a holistic view of a company’s internal strengths and weaknesses, as well as external opportunities and threats.

Carrying out a SWOT analysis of competitors can also give you a deeper understanding of your own position in the market and identify opportunities to remain competitive or increase your market share.

By examining these factors, businesses gain a comprehensive understanding of their competitive position, enabling them to make informed decisions and develop an up-to-date business plan.

Adaptation to changing environments

In 2023, businesses face rapid technological changes, market dynamics and consumer preferences.

A SWOT analysis helps companies adapt by identifying emerging opportunities and potential threats. Once they’ve identified the opportunities, they can align their strengths with market demands and address proactively anything that might negatively impact them.

In addition, you can use a SWOT analysis of individual threats to help you put in place a robust plan for issues management, meaning you’re better able to respond to crises if and when they arise.

Strategic decision making

The opportunities presented by a SWOT analysis can inform all of a firm’s decision-making processes.

By capitalising on strengths and opportunities, businesses can create a strategic plan and pursue growth strategies that play to the business’s strengths.

The analysis can be particularly helpful to small businesses: once they identify weaknesses, they can develop an effective communication strategy to stay ahead of potential challenges.

Using the SWOT technique to look at the pros and cons of a particular business project can also help break down a complex issue into bite-size chunks. This can assist you in deciding whether it’s viable, as well as outline all the key factors of the project that might need to be included in presentations or applications for funding.

Effective resource allocation

SWOT analysis questions can facilitate resource allocation by providing a clear understanding of a company’s strengths and weaknesses.

By leveraging strengths, businesses can allocate resources optimally, whether it be investing in R&D, talent acquisition or marketing initiatives.

Similarly, the analysis can identify areas where resource allocation can address internal weaknesses and enhance overall performance.

Depending on what you decide your SWOT analysis covers, it can have a place in creating an exit strategy for the sale of a small business or key individuals leaving a business.

Continuous improvement

A SWOT analysis is not a one-time exercise. It should be conducted periodically to adapt your business model to the evolving business landscape and changing needs of your target audience.

Regular assessments enable businesses to track progress, refine strategies and capitalise on identified opportunities, fostering a culture of continuous improvement.

Part of the planning process cycle within any company should involve updating existing SWOT analysis examples. This is a chance to re-examine negative factors and assess how they’ve been addressed; reflect on competitive advantages, and ascertain whether the business took the chance to seize opportunities that were identified and subsequent results.

The SWOT framework as a strategic planning technique

A good SWOT analysis remains an indispensable tool for businesses looking to gain or maintain a competitive advantage. It is a great starting point to examine internal factors, as well as external factors, that have an impact on your business opportunities.

Far from the ‘blunt tool’ it is viewed as by some, using a SWOT template to analyse the right questions can assist with complex business decisions and help you see the big picture.

By conducting a comprehensive analysis of strengths, weaknesses, opportunities and threats, companies gain a deep understanding of their competitive landscape.

With the SWOT analysis complete, a business can produce a plan of action based on it: how to play to existing strengths, reduce weaknesses, capitalise on opportunities, and reduce the impact of potential threats.

The SWOT analysis provides a roadmap for informed decision-making, effective resource allocation and adaptation to changing environments, ultimately driving business growth and resilience.

Click here for a fully-customisable, free SWOT analysis template.

 

 

If you need further help to expand your strategy, get in touch to see how our team of experts can help you achieve your business goals.