The SWOT - Result of a well-founded Analysis Phase

The SWOT is an essential tool in strategic planning, helping to understand a company's competitive position and make informed decisions. However, it is not a standalone process: The SWOT analysis must be the result of a comprehensive analysis phase and should never replace it. A successful analysis phase requires the involvement of managers, employees, and, if necessary, customers who contribute valuable perspectives. In this blog post, I explain why the analysis phase is essential, how managers, employees, and customers can be involved, which tools can be used to analyze the company and its environment, and how to use the SWOT analysis effectively.

What is SWOT analysis?

The SWOT analysis is a strategic framework that systematically summarizes internal and external factors of a company or project. The four letters are formed from the abbreviation of the following contents:

• Strengths - This is about the strengths and advantages of the company, such as unique competencies or strong market positions.

• Weaknesses - These refer to the weaknesses and disadvantages of the company, e.g. limited resources or inefficient processes.

• Opportunities - This category contains external opportunities that arise from environmental developments, such as new market trends or technological developments.

  
  

• Threats - These refer to the risks the company is exposed to due to developments in its environment, such as high competitive pressure or regulatory changes by the EU.

It's important to understand that the SWOT analysis is not a starting point, but rather a tool that condenses the results of a thorough analysis phase. Without this thorough preparatory work, the analysis remains superficial and uninformative.

The analysis phase: The key to success

The analysis phase is the foundation of a meaningful SWOT analysis. It requires a systematic examination of internal and external factors as well as the active involvement of information carriers. These include managers, employees, customers, and other experts who can provide relevant insights through their knowledge, experience, and expertise. The analysis phase typically comprises the following two levels:

1. The analysis of the company

   Examine company data such as financial metrics, employee competencies, process efficiency, and customer satisfaction. Involve managers and employees from relevant departments (e.g., production, sales, marketing) to gain a comprehensive picture of the company's strengths and weaknesses. Use proven tools, which are described, for example, in my book "Strategy Tools in Practice – Volume 1: Analysis and Assessment of the Strategic Starting Position." These include interviews, viability analyses, traditional supply chain analyses, value chains as cost optimization tools, innovation risk matrixes, customer journey analyses, interface analyses, and functional analyses. Supporting Excel tools are also available for some of these tools at www.strategiewerkzeuge.com .

   
   

2. The analysis of the company's environment

   Analyze the market, competitors, technological developments, and legal frameworks. Conduct workshops with managers and employees to gather strategic and operational perspectives. Use tools such as PESTEL analysis or Porter's 5 Forces analysis and structure the knowledge accordingly. Be sure to also ask your customers about their needs, brand perceptions, or their opinions on market trends to precisely identify opportunities and risks. Use additional external data sources and supplement existing findings with industry reports or any available internal reports to create a broader data base. The above-mentioned book "Strategy Tools in Practice – Volume 1: Analysis and Assessment of the Strategic Starting Position" also presents other useful analysis tools, such as megatrend and technology analysis, the industry cost curve, and competitor analysis.

How do you create a SWOT analysis?

After completing the analysis phase, create the SWOT analysis as follows

1. Pool the findings : Consolidate the results of the analysis phase, based on the results of the workshops and the data obtained with the tools. Which internal and external factors are crucial?

2. Create the SWOT matrix : Design a 2x2 matrix with the fields strengths, weaknesses, opportunities and threats.

3. Express yourself clearly : Formulate meaningful entries and work with precise statements, such as “strong innovative power through patented technologies” instead of “good products”.

4. Develop strategies : Derive effective strategies from the SWOT matrix. Strengths must be built upon and opportunities must also be exploited. Weaknesses must be minimized to the extent that they could hinder results. Risks should generally be avoided.

Practical example

Consider a company that produces sustainable packaging. The analysis phase could provide the following insights:

1. Findings from the company analysis (strengths and weaknesses) : The analysis reveals that the company demonstrates high resource efficiency. It also identifies strong innovation through patented materials. However, the company faces limited production capacities; the bottlenecks in production are quantified using value chain analysis.

   
   

2. Findings from the environmental analysis (opportunities and risks) : Customer surveys show a high demand for environmentally friendly packaging, while the industry analysis according to Porter (5-Forces) points to increasing competitive pressure from large corporations.

Using the SWOT, the results are now compressed and clearly summarized as follows

• Strengths: Patented, sustainable materials; high innovative strength.

• Weaknesses: Limited production capacity; high production costs.

• Opportunities: Growing demand for sustainable products; new funding programs for green technologies.

• Threats: Competitive pressure from established corporations; fluctuating raw material prices.

The strategic directions developed from the SWOT are

1. "We promote our patented materials to capitalize on demand for sustainability and win funding programs."

   
   

2. "We rely on partnerships with external producers to increase capacity and meet competitive pressure."

Tips for an effective SWOT analysis

• Invest in the analysis phase: Use tools such as Excel tools or the book “Strategy Tools in Practice” from strategiewerkzeuge.com to ensure thorough data collection and evaluation.

• Choose the right information carriers: Involve managers, employees and customers who offer relevant perspectives through their expertise or experience.

• Promote open communication: Create a space where information providers can give honest feedback to avoid blind spots.

• Update regularly: Repeat the analysis phase with stakeholder engagement and updated tools to respond to changes in the company or market.

Conclusion

The SWOT analysis is a valuable tool for creating strategic clarity—but only if it's based on a comprehensive analysis phase that includes managers, employees, and customers. Specialized tools such as the book "Strategy Tools from Practice - Volume 1" and the Excel tools available on this website support your work and make the SWOT analysis precise and practical. The SWOT analysis is not a substitute for preparatory work, but rather its structured conclusion.

Discover more strategic tools, practical tools and further literature at www.strategiewerkzeuge.com and take your strategic planning to the next level.