How to do a SWOT Analysis
A simple and proven technique to help kick off your strategic planning
What is a SWOT?
SWOT is any acronym that stands for:
Strengths
Weaknesses
Opportunities
Threats
The primary use of a SWOT analysis is to increase awareness of the factors that go into making a business decision or establishing a business strategy.
SWOT’s focus on both positive and negative influences and well as if they are internal (controllable) or external (not controllable, but yet influenceable)
Strengths are positive and internal
Weaknesses are negative and internal
Opportunities are positives and external
Threats are negative and external
SWOT’s are often show in a 4 quadrant chat like the one below.
How to Perform a SWOT
This is an exercise that is best performed together. Gather your management team, load up on coffee and have some fun. Use a whiteboard and draw the 4 quadrants.
Be sure to not discount any suggestions. This is a brainstorming session and no ideas are bad ideas. You can always combine or refine them later.
If possible, it’s beneficial to have a neutral 3rd party lead this exercise. I do this will all of my clients and it allows me to push back and spark conversations that might not happen without this third party facilitating the exercise.
For each of the quadrants you’re ideally looking for 5-7 items. Write them all down but condense and refine them to 5-7 later.
Start with Strengths. Go around the room and ask for people shout out your company's strengths. What makes you special and different than other companies? These are the things you want to nurture and grow. Maximize your strengths.
Now it’s time to move to Weaknesses. These are things you are not so great at. Be honest with yourself. Also recall that theses are INTERNAL factors. That means you have control over them.
Opportunities are external factors that are growth potential for your organization. It might be new markets, new partnerships, new product development etc. Opportunities cannot be controlled but you can be ready for them wen they appear (or you can help hedge your best by working towards these opportunities).
Finally we come to threats. These are external (uncontrollable) factors that can have a negative impact on your business. Competition, loss of market share, economic factors, price of oil etc.. could all be threats to your business. We list these as we want to understand what we can and cannot do to mitigate or at least lessen the impacts of these threats.
Example SWOT
I asked ChatGPT to do a SWOT analysis on a company based on it’s website.
Note: Please do not do this for your SWOT. You need the people who work in your business to do this work. Not AI. This is just a way to show some examples of what one might look like. These response are pretty broad and I’d expect your responses to be a bit more pointed.
I have changed a few things (like their name) to protect the identify of the company.
Strengths:
Expertise in Custom Automation Equipment: AutoCo LLC specializes in providing quality custom automation equipment, showcasing their ability to cater to diverse customer needs.
Diverse Industry Reach: They serve a wide range of industries, including automotive, consumer products, electronics, general manufacturing, life sciences, and logistics, demonstrating versatility and adaptability.
Certifications and Partnerships: Their certifications as a FANUC Authorized System Integrator, and other industry recognitions speak to their commitment to quality and industry standards.
Geographical Presence: With locations in State 1 and State 2 they have a significant presence in the United States to serve a broad customer base.
Weaknesses:
Market Concentration in the U.S.: Despite their diverse industry reach, their physical presence seems to be concentrated primarily in the United States, which may limit global market reach.
Dependence on Manufacturing Trends: Their heavy reliance on the manufacturing sector could be a risk factor if there are downturns or significant changes in this industry.
Limited Service Diversification: While AutoCo LLC has a broad industry reach, their core focus is on custom automation equipment. This specialization, while a strength, could also be a weakness if market demand shifts towards other types of automation solutions or services that are outside their primary expertise.
Opportunities:
Growing Demand for Automation: The increasing global demand for automation in various industries presents a significant opportunity for growth and expansion.
Technological Advancements: Advancements in robotics and automation technology offer opportunities for innovation and development of new solutions.
Expansion into New Markets: There is potential for geographical expansion, especially in emerging markets where automation is becoming increasingly important.
Threats:
Intense Competition: The automation industry is highly competitive with numerous established players and emerging startups, which could pose a challenge in terms of market share and innovation.
Rapid Technological Changes: The fast pace of technological advancements in automation and robotics could necessitate continuous research and development to stay relevant.
Economic Fluctuations: Economic downturns, especially in key industries they serve like automotive and manufacturing, could affect demand for their services and products.
Using the Results
Once the list has been created now it’s time to analyze the results. Looking at your Strengths determine what you can do to make these even more powerful. How can you utilize them to gain more business? Are there strengths you should have on here that are not?
For your Weaknesses, what can you actively do to fix these. Is it education, training, a new hire or maybe letting a poor performer go? Sometimes a strength can also be a weakness so consider this relationship.
Plan on how to take advantage of your Opportunities. Is there a new emerging market you should be investigating? Do you have designs that could be standardized into commodity-like products? Is there an employee at another company that is unhappy and you could swoop them up? As a famous adage goes “luck is where opportunity meet preparation”. You have to be ready to take advantage of those opportunities.
Finally look at your Threats and determine which are most likely to affect your business the most. Then make a plan to counteract those threats. While these are external and out of your control, you can control how you react to them. Be prepared and they won’t be as scary as that might seem.
Conclusion
A SWOT is a simple but effective way to help frame your future business planning. It’s only one step in the business development journey but a critical first one. Give it a shot and see what comes out of the exercise. Keep in mind that these should be repeated and updated quarterly.
If you need further assistance reach out the me at Automation AMA to help with your strategic business planning needs.
The Automation Navigator is brought to you by Automation AMA, a company founded and run by an industry leader in assembly, robotics and packaging. Automation AMA offers a variety of services to help you on your automation journey or to help fine tune your engineering, sales, operations and business development departments. Learn more at www.automationAMA.com or shoot me an introductory email.
