How to conduct a SWOT analysis?

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The name SWOT comes from the English words S – strengths, W – weaknesses, O – opportunities and T – threats, meaning strengths, weaknesses, opportunities and threats. When deciding how to start your business, you should conduct the final analysis precisely in these four variations, that is, according to factors:

  • external and internal,
  • positive and negative.

From such a division, a table of 4 boxes is formed, containing the following combination of these four criteria:

  • strengths of the venture (internal and positive factors), i.e. specific characteristics of the company that distinguish it in favor of its competitors,
  • weaknesses (internal and negative factors), in other words, aspects in its operation that hinder future development,
  • opportunities (external and positive factors), providing new opportunities for the company and weakening threats,
  • threats (external and negative factors), in other words, obstacles to the company’s operations that are beyond its control, but it must overcome.

SWOT analysis is very often used by well-known companies in the world. In 1988, the Nestle conglomerate bought out the English candy company Rowntee for $4.32 billion. Nestle decided on such a transaction after a thorough analysis of the strengths and weaknesses, as well as the opportunities and threats to the development of the investment. The estimated value of the factory itself was only 15% of this amount, the remaining 85% was paid for Rowntee’s strengths, i.e. its well-known brands of candies and chocolates, a well-built distribution network and a positive image among customers.

In the next post, see how to count the points in the SWOT analysis.