The SWOT analysis matrix , or SWOT , is a well-known strategic tool for analyzing the situation of the company. The main objective of applying the SWOT matrix in an organization is to offer a clear diagnosis in order to make the appropriate strategic decisions and improve in the future. Its name derives from the acronym formed by the initials of the terms: weaknesses, threats, strengths and opportunities. The dafo analysis matrix allows us to identify both the opportunities and the threats that our market presents, and the strengths and weaknesses that our company shows.
In the external analysis of the company the key external factors for our company are identified, such as those related to: new customer behaviors, competition, market changes, technology, economy, etc. Special care must be taken since they are uncontrollable by the company and directly influence its development. The SWOT matrix therefore divides external analysis into opportunities and threats.
- Opportunities: they represent an opportunity for company improvement. Opportunities are positive factors and with the possibility of being exploited by the company. To identify opportunities, we can answer questions such as: are there new market trends related to our company? What technological, social, legal or political changes are occurring in our market?
- Threats: they can jeopardize the survival of the company or to a lesser extent affect our market share. If we identify a threat early enough, we can avoid it or turn it into an opportunity. To identify the threats of our organization, we can answer questions such as: what obstacles can we find? Are there financing problems? What are the new trends that our competitors are following?
In the internal analysis of the company the key internal factors for our company are identified, such as those related to: financing, marketing, production, organization, etc. Ultimately it is performing a self – assessment, where the matrix of SWOT analysis is to identify the strengths and weaknesses of the company.
- Strengths: They are all those capacities and resources that the company has to exploit opportunities and manage to build competitive advantages. To identify them we can answer questions such as: what advantages do we have compared to the competition? What low cost resources do we have available? What are our strengths in product, service, distribution or brand?
- Weaknesses: They are those points that the company lacks, which is inferior to the competition or simply those in which it can improve. To identify the weaknesses of the company, we can answer questions such as: what do our clients perceive as weaknesses? How can we improve? What prevents them from buying from us?
Dafo or foda example :
Once the SWOT analysis is finished, we will try to take advantage of our strengths to take full advantage of the opportunities offered by the market, and to reduce the threats detected, correcting or eliminating our weak points.
As we have seen, it is an effective and easy to implement tool, so the matrix of SWOT analysis can be applied to any company, regardless of size and activity.