SWOT analysis, which stands for Strengths, Weaknesses, Opportunities, and Threats, is a tool used in organizations to evaluate competitive position, examine internal and external factors, and develop effective strategic planning. This analysis is designed to provide a realistic view, based on data and facts, of an organization’s strengths and weaknesses, as well as the opportunities and threats that may affect its development.
Elements that make up the SWOT analysis
The SWOT analysis consists of four main elements:
- Weaknesses: These are aspects that limit the development capacity of your business, due to its internal characteristics.
- Threats: These are all those external factors that may prevent the execution of your business strategy or endanger the viability of your business.
- Opportunities: These are external factors that favor the development of your business or provide the possibility of implementing improvements.
- Strengths: They gather the set of internal resources, power positions, and any type of competitive advantage of your business.
Internal analysis factors (Weaknesses and Strengths)
- Production: Aspects such as production costs, break-even point, and productive capacity.
- Human Resources and Organization: The training and productivity of staff, talent selection and retention processes, as well as the organizational chart and business culture.
- Finance and Assets: Financial ratios and any tangible or intangible assets that may be subject to economic valuation. For example, the level of indebtedness or the value of the brand.
- Marketing and Distribution: The positioning of your products and services in the market, as well as the promotion and distribution channels over which your company has direct control.
External analysis factors (Threats and Opportunities)
- Market and Clients: The target audience for your products or services, including aspects such as market volume and demand evolution.
- Sector and Competition: Trends and characteristics within your sector, such as competitors’ products, their pricing policy, or their distribution channels.
- Environment: All those economic, social, political, geographical, technological, or environmental factors that may directly or indirectly influence the development of your business.
Evaluate the different possible strategies
As a result of the report you obtain from your SWOT, you should be able to establish various strategies that allow you to make the most of your company’s circumstances. Most of the strategies to implement can be summarized as:
- Offensive strategies (Strengths + Opportunities): They seek to relate internal and external strengths to strengthen the project’s situation.
- Defensive strategies (Strengths + Threats): They relate internal strengths to counteract external threats.
- Adaptive strategies (Weaknesses + Opportunities): It involves changing some element of the weaknesses to better take advantage of the opportunities.
- Survival strategies (Weaknesses + Threats): It seeks to relate internal and external weaknesses to favor the image of the project with respect to other situations.
The SWOT analysis is an essential tool for any Galician company that wants to maintain its competitiveness and adapt to changing market conditions. It allows identifying internal strengths and weaknesses, as well as external opportunities and threats, offering a clear and realistic view of the company’s situation.
To conduct an effective SWOT, it is essential to involve the entire team, maintain an impartial vision, and perform comparative analyses with competitors. Additionally, it is important to evaluate the different possible strategies and implement those that best adapt to the needs of your business.
You can take advantage of the advisory services of the Galician Economic Office to implement diversification strategies and boost the growth of your business. You just have to fill out the form online on our website.
