What is SWOT Analysis

SWOT analysis or position analysis is a crucial exercise that all businesses should undertake at regular intervals, whether they are new or old. It is basically a critical appraisal of the Strengths and Weaknesses, Opportunities and Threats in relation to the internal and environmental factors affecting a business.

By undertaking a SWOT analysis a business will be able to prepare much better short and long term plans. It will also allow them to identify gaps between their actual and desired performance and aid them in closing these gaps.

• Strengths- These are the things that your business does well. It may be that the marketing of your organisation is better than your competitors' or your product is more advanced. Whatever these attributes are, list them down under this heading.
• Weaknesses- This is an area where you will need to be very truthful withy yourself. Here you need to list down things about your organisation where the performance is weak. For instance, your business may not be very good at dealing with customer complaints and as a result your retention of long term customers or repeat orders may have suffered.
• Opportunities- These are environmental factors that can be exploited. For example it may be that your current product or service can be enhanced by the introduction of some new technology that has been developed. Another example might be that a law has been changed in the country you are operating in and that change has opened up a new distribution channel for your product or service. When you look at this area you will need to think long and broad outside your business.
• Threats- These are environmental factors which may lead to a deterioration of your business performance or a weaker position in your chosen market place. For instance, two of your competitors may have merged their respective businesses to form a more powerful organisation with economies of scale. In turn, they may have reduced their prices and it may be difficult for you to compete with them.

If you undertake the SWOT analysis and make it part of your annual or quarterly business appraisal, you are likely to spot market opportunities more quickly, improve on your products and service levels and reduce the effects of external influences on your business. This analysis is a very good tool to ensure that you make the right decisions as regards the future of your business.

10 Questions to Diagnose Strategic Competence

Through his article entitled “Are you a Strategist or Just Manager?” , Hans H. Hinterhuber and Wolfgang Popp discussed about the importance for executives to go beyond managerial competence toward strategic management competence. He argue that strategic management competence is linked with the personality of successful entrepreneurs and managers.

Strategist can be identified by measuring the vision, the way to suit changing conditions, and generalize the ideas into action and led others to do so. Although there is no test that can precisely evaluate an individual’s strategic management competence, he presented ten-question profiles based on Prussian general’s strategic thinking that are helpful to diagnose/measure strategic competence. Here are the questions:

1. “Do I Have an Entrepreneurial Vision?” This is an important skill to provide an orientation point that guides a company’s movement in specific direction.

2. “Do I Have a Corporate Philosophy?” This question is measurement of ideological creed of both entrepreneurs and managers.

3. “Do I Have Competitive Advantage?” By understanding where does competitive advantage exist, company could get the unique position in the market.

4. “Do My Employees Use Their Ability to Act Freely in The Interest of the Company?” Effective directives combine the strategic intention of top management with the initiative and creativity of all employees.

5. “Have I Built an Organization That Implements My Vision?” Managers must ensure that company’s vision remain in their position.

6. “Are The Line Managers Involved In Strategic Planning?” The key to successful execution of strategy is early involvement of line managers.

7. “Is the Corporate Culture in Harmony with the Strategies?” It is a must that corporate culture, company philosophy, and strategies can be implemented by employees.

8. “Do I Point out Directions and Take New Approaches?” Managers must have performance and entrepreneurial capability in spontaneity, originality, intuition, and personal greatness to become a strategist.

9. “Have I been Lucky in My Life So Far?” The good strategist also needs good luck. They must have an ability to put oneself in position that favors being lucky.

10. “Do I Make Contribution to the Development of Society and Myself?” Managers must make good relationships both inside and outside the company.

So, are you a strategist or just manager?