SWOT: Strengths Weaknesses Opportunities and Threats
May 30th 2008 23:50
SWAT
I realized the other day that there are some basic business terms that my readers may not be familiar with, but need to be. After all, we are limited in experience by the language we use! By giving something a name we are able to deal with it abstractly and create a mental frame work to experiment with the idea.
So here is your new word: SWOT.
It is an acronym. Not SWAT "Special Weapons and Tactics". But close! In business it stands for Strengths Weaknesses Opportunities and Threats. You may even see it as TOWS, SWOT just backwards.
I was talking to a friend of mine a couple of months ago and he had no idea what a SWOT analysis was. The thing is, he reads and has read a lot of pop business books and has ran his own business for decades (not always successfully, mind you)!
I have found that many people who think they know about business really do not have much in the way of formal thought dealing with business. Most people shoot from the hip and fly by the seat of their pants. In doing so they miss opportunities, and expose themselves to threats they could easily be avoided/hedged against.
This is you brief introduction to this idea. You can do a lot of research on how to do a SWOT analysis, including a “Weighted SWOT”.
SWAT Team
Strengths: What are you best at? Wal-Mart is best at inventory management, using JIT (Just In Time) inventory control. If you do not know what that is look it up! It is part of TQM (Total Quality Management) a close cousin to Kaizen the Japanese version of “Continual Improvement”.
A strength is often a Core Competency, and able to be parlayed into a Strategic Competitive Advantage. I know… new words and ideas… look them up or ask me to explain and I will make a post on the given topic.
Weaknesses: what are you not so good at? What is always a thorn in your side internally? Do you have a problem in your accounting department that leads to you not being so “Solvent”? Are you continually understaffed, maybe you cannot seam to get everything done you want to?
What was Enron’s Weakness? Their moral disposition of their leadership! It brought them down and Author Anderson (Enron’s accounting company, one of America’s Big 5 Accounting companies). If you are not familiar with Enron, look them up!
External Factors
Opportunities: what possible customer base are you overlooking? What about outsourcing something to get a reduction in overhead?
This is colored by your internal filters of course but opportunities are not always something you can simply create. You have to see the opportunity to be able to take it.
Threats: what could knock you out of the market? What if you are in a niche market and a large competitor moves into your territory? What are you going to do?
We do not really on own enemy not coming but instead we prepare for the day that he will come. (Sun Tzu) Rest assured if you are making money, someone else will try to move in on your market share.
It would be prudent to start viewing your operations in this light. Ask your self:
What am I best at?
What am I not so good at?
What is available to me that I am not taking advantage of?
What could hurt me if I do not prepare against it?
After asking your self this, ask a friend these questions about you. What do they see that you do not?
In doing this type of analysis, perception is everything.
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