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SWOT stands for strengths, weaknesses, opportunities, and threats. Companies use SWOT analysis and SWOT analysis tools to analyze their situations. A few tools may be surveys, meetings, observations, and external reviews. The purpose of SWOT analysis is to define how well a company operates currently and where it can succeed in the future based on the variables in each area. SWOT analysis tools are not the same for each company or situation; owners and executives must look for the factors that are the most important during each analysis.
Surveys may be necessary to help a company defines its strengths and weaknesses. Owners and executives, for example, may send out a survey to each operational manager. The survey contains questions that allow each individual to answer honestly and provide a truthful look at the company’s operations. SWOT analysis tools can also use surveys to answer questions relating to opportunities or threats. Having information from multiple parties can help a company’s executive management team make the proper decisions regarding alternate business activities.
Meetings and focus groups represent other options for SWOT analysis tools. A significant drawback to surveys can be the lack of interaction between the participants and those reviewing the answers. Meetings and focus groups help overcome this drawback as owners and executives can ask questions and seek feedback from participants. Face-to-face interaction may also present more input for how a company can turn weaknesses into strengths in terms of SWOT analysis. Other information can also come from these meetings, making them valuable.
Observations may be the most powerful of all the SWOT analysis tools. Owners and executives can gain firsthand knowledge on the internal workings of the business. Using observations can remove all subjectivity and fluff from a company’s SWOT analysis process. For example, lower-level operational managers may attempt to downplay the negative aspects in their departments. This weakens the overall process, however, as poor information can lead to bad decisions from the upper management team.
External reviews or insight is often necessary for a company to complete its SWOT analysis. Consultants or other outside professionals can provide important, detailed information for SWOT analysis. These individuals may have insight or recommendations for a company regarding external economic factors. For example, sometimes threats can be uncovered by external insight. Knowing how a competitor can alter the market can change a company’s SWOT analysis.