SWOT analysis comes from the initials of the English words Strengths, Weaknesses, Opportunities, Threats. It is a tool that allows you to study the situation of a company, institution, project or person, analyzing its internal characteristics and external situation. This tool allows us to know the real situation in which an organization, company or project finds itself and plan a future strategy.
When doing a SWOT analysis, it is essential to keep in mind that it will offer us a balance of forces. On the one hand, there will be weaknesses and threats; on the other, the strengths and opportunities. We must also consider that a SWOT analysis is nothing more than a static model of reality at a specific moment in time. It does not last over time, but it can be modified according to the circumstances in which it occurs.
The first step is to select the object of analysis and about which we want to make a decision. This can be a company, an institution, a project or even a person. Once the goal is defined, we will first carry out an internal analysis and then an external one. Subsequently, the data obtained will be inserted into a matrix that will allow us to evaluate the situation of the analyzed object and make the appropriate decisions.
Two factors must be taken into account in the internal SWOT analysis: strengths and weaknesses. Strengths are the attributes that allow you to generate an advantage. If we are doing an analysis on a company, we will have to analyze the availability of capital resources, personnel, goods and product quality to see if they are strengths that allow it to generate a competitive advantage over its competitors.
On the other hand, the weak points are all the elements, energy resources, skills and attitudes of the company that represent an obstacle or limitation for the company. Weaknesses are nothing more than internal problems, which must be identified in order to be eliminated.
An organization or a person cannot exist without the surrounding environment. If the SWOT analysis consisted only of the internal analysis part, it would not be correct, because it would not explain the relationship with the outside. The next step, therefore, is to carry out an external analysis to discover the opportunities and threats present in the context. For this purpose, it is necessary to identify the elements that have some relationship with the organization.
Opportunities will be the positive factors, while the threats will be the negative ones. Opportunities are generated in the environment and can be exploited. On the other hand, threats are the elements that can undermine the organization, so it may be necessary to design an adequate strategy to evade them.
Once these steps have been completed, it is necessary to insert all the data obtained in a matrix of 2 x 2. The more we schematize the data obtained, the easier it will be to render them visually: fix the main points to establish each element within the two Previous analyzes will help this stage of the process.
By inserting the data into the matrix, on the one hand we will have the strengths and opportunities that correspond to the positive aspects of our company and the environment. These will constitute the potential: they indicate the courses of action or decisions to be made. The other part of the matrix will show us the limitations, it will determine the combination of weaknesses and threats. These limitations will be a warning.
This matrix also leaves us with a third combination, the one formed by the diagonals. The combination of strengths and threats poses the risk, while the combination of weaknesses and opportunities represent the challenges. Both the risks and the challenges mark the way forward. They will determine future actions.
At this point, we have completed our SWOT analysis. Now we just have to evaluate the results of the matrix and make the appropriate decisions. The whole process followed so far is based on decision making, in particular in ordering the information necessary to make rational decisions based on objectivity. L ‘ SWOT analysis will enable us to create future strategies.
Although SWOT is accomplished by trying to make appropriate decisions, the results will largely depend on the quality of the information. The better the information we include in internal and external analysis, the less likely we are to make mistakes.
Now you are ready to perform the SWOT analysis and, if you want to take it a step further, you can always complete it with a CAMO (Correct, Address, Improve, Explore) analysis, which consists of correcting the weaknesses, addressing the threats, maintain strengths and exploit opportunities.