Understanding what your company does and doesn't do well is an important part of developing a long-term, sustainable business strategy.
SWOT analysis is a technique that can help determine your company's strengths and weaknesses, even during times of uncertainty. Knowing where your company stands is the best way to move it forward.
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During times of economic crisis, conducting a SWOT analysis might seem unimportant. But the opposite is true. It can help you weather storms with more confidence and clarity. No matter the situation, knowledge of your company and its position in the world is the best step toward success.
What is a SWOT analysis?
A SWOT analysis is a technique that helps companies assess their Strengths, Weaknesses, Opportunities, and Threats (SWOT). During times of crisis, SWOT analysis can become one of your company's greatest tools for survival. This common technique is used by companies across all industries to assess what they're good at, where they need to improve, where their competitors have an advantage, and where opportunities may exist. Before identifying potential opportunities or threats, it's always a good idea to know your areas of strength and weakness.
Evaluating strengths and weaknesses
Your company's strengths or weaknesses can be tangible or intangible. Strengths and weaknesses can be anything from your company's product features or service quality, pricing strategy, or customer service, to the availability of supplies, resources, or market share. It could be tied to your company's reputation, its delivery methods and timing, or its leadership.
Identifying opportunities and threats
Potential opportunities or perceived threats could be internal or external. Opportunities might exist in innovative technologies or as a result of your internal talent. Threats or risks might surface due to increased competition or environmental factors that impede the production or delivery of products or services.
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Due to the ever-changing business climate and environmental factors, your company should conduct a SWOT analysis annually—at the very least. Today's climate has given us a glaring example of why SWOT analysis is essential. As an example, during the COVID-19 pandemic, the food production and distribution industries have been drastically affected. This has created both threats and opportunities for many food-related wholesalers and retailers. It's created opportunities for revenue growth among online food delivery platforms. This demand for online grocery platforms has, in turn, generated risks for food suppliers and restaurants unwilling or unable to develop an online presence.
Why should your company perform a SWOT analysis during a crisis?
If your company is going to develop a sustainable advantage, it will need to first know where its strengths, weaknesses, opportunities, and threats exist. Without conducting a SWOT analysis, your company is flying blind and could be wasting precious resources and time on activities that propel it in the wrong direction.
Conducting a SWOT analysis is particularly important during times of crisis and uncertainty. Since the COVID-19 pandemic began, many companies and industries have had to revisit their SWOT analysis as a result of internal and external factors outside of their control. As a result of the pandemic impact, industries like travel and tourism, restaurants, entertainment, and many others have been forced to devise ways to address new risks and reevaluate new opportunities.
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Conducting a SWOT analysis helps your leadership team gain a clear view of what your company is doing well compared with its competitors and where it needs to pull up its socks. It also helps shine a light on areas where potential opportunities exist and where risks may reside.
Having a solid understanding of all of these areas identifies your current state and increases your company's visibility into how to best allocate its budget, resources, time, and effort. Ultimately, SWOT analysis provides the insight needed to make the necessary changes that ensure everything and everyone is working toward the same desired goals—with minimal waste.
Conducting a SWOT analysis during uncertainty
A SWOT analysis takes time and can be tricky during times of concern—especially during temporary and unknown crisis situations like a global pandemic. Barry Pruitt, a consultant with Rhythm Systems, said on the company's blog that using a crisis management tool like Crisis SWOT (cSWOT) is essential to ensuring "healthy decision-making capability and communication rhythm in your company during trying times." He said it's essential to apply the cSWOT approach to four distinct business scorecard (BSC) categories:
Conduct a pandemic SWOT analysis at least once a week, and make sure to communicate the next steps to each of the applicable stakeholders. Uncertainty is no time to drop the ball. Conducting a cSWOT analysis increases the chance that your company will be able to get through a crisis and emerge stronger in the end.
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