The SWOT Matrix

Originally designed in the 1960’s by management consultant Albert Humphrey, the SWOT matrix is still in full swing and is as useful today as it was then.  Prior to the SWOT, corporate planning had very little success.  The SWOT analysis proved effective for Fortune 500 companies in producing long-term planning that was both executable and reasonable. 

A SWOT is a study done to identify a business’s internal Strengths and Weaknesses as well as external Opportunities and Threats.  If you know the type of business you want to start and the landscape for the industry, this shouldn’t be too challenging.  This type of exercise will become your best friend and even as you establish yourself, you will want to have SWOT analysis as an ongoing operation.  It is a simple and effective way of understanding the landscape and track for your business.

A SWOT is normally outlined in a table.  One row for the internal strengths and weaknesses and another for external opportunities and threats. 

What you want to do is work towards turning weaknesses into strengths, capitalize on opportunities, and understand the threats so that they can be monitored.

SWOT EXAMPLE

Let’s pretend that we started the Bad Basenji Brewing Company.  We are a new craft beer company in a high-end beverage industry, which is a rapidly growing market. We have been operating for a few months and want to update our original SWOT analysis.

StrengthsWeaknesses
Aggressive marketing campaign with clear and measurable goals and a well-defined customer demographic.   Management team is experienced in the product and business.Business growth has caused quick expansion with many new hires to train and new organizational structure needs.   Being a new brewery, we lack the reputation and capital that big brew houses have.
OpportunitiesThreats
Growing consumers who have a desire to find high-end beverages and bottles.   Industry awareness and expansion exceeds standard industry growth.Current State government restrictions on shipping alcohol.   Growing competitive market with more businesses entering the space.

From our SWOT analysis, we may consider seeking some form of financing.  The business is growing strong and has a growing consumer base.  To properly train individuals and manage the organization, we may want to consider adding an Operations Manager to streamline the training process.  Additionally, more capital would provide for stronger advertising campaigns. 

Both would help us capitalize on external opportunities and ease the threat of the growing competitive landscape.  We may also want to consider lobbying efforts to try to lift or ease the strict requirements on alcohol shipments from the state.

Everything that our SWOT provided was both reasonable and achievable.

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