In order to go somewhere, we first have to know where we are. Once the dream, the horizon, has been defined, when we can already visualize that cathedral that we are going to build, we must immediately take action. The first step is to know exactly where we are standing, what the situation on the ground is, what elements we have, or what we have to acquire, that we know how to do well, or that we have to learn to do and with whom we are going to compete. To define well the situation of the company there is a tool, which because it is one of the simplest and most well known, is the most effective: The matrix or the SWOT analysis.
This method, named for the first letter of the elements to be analyzed: F TRENGTHS, O pportunities, D ebilidades and A menazas involves analyzing the organization viewed from outside, as if we were outside observers.
We must ask ourselves exhaustively and answer ourselves very honestly what strengths and weaknesses our organization has.
We must analyze and study thoroughly what opportunities and threats we find in the environment (national and international) and in the current situation (social, economic, technological and political).
From this it follows that the Strengths and Weaknesses refer to the company itself, its operational wheel, its differences with direct competitors, its position vis-à-vis customers, its culture, ultimately what tools it has and what use makes of those tools.
While the Opportunities and Threats refer to the environment, what the organization does not handle, the country's economic situation, the possibility of a new competitor from abroad, changes in fashions or customs, in short, what do we have to change from our operational wheel to adapt to that environment.
The method is so simple that just this description is enough to start working, but the great difficulty generally arises in what questions to ask ourselves or what types of problems to face.
I attach a model worksheet that can serve as guidance on how to approach the work:
Organization assessment - SWOT situation analysis - Strengths
Strengths | Disagreement | I do not fully agree | Agreement |
We have a high level of competitiveness | |||
We have the necessary financial resources | |||
We are the recognized market leader | |||
We have a good reputation among suppliers | |||
We have a good reputation with customers | |||
We have a defined strategy | |||
We have lower costs than the competition | |||
We have better quality than the competition | |||
We develop more new products than the competition | |||
We have the appropriate technology for the products we manufacture | |||
We have the necessary structure to develop the business | |||
We have the right staff in each position | |||
We know the market perfectly | |||
We have the optimized distribution | |||
We have the necessary business control mechanisms | |||
We have the necessary sales structure | |||
Sales are growing according to the market | |||
The profitability of the company is as expected | |||
We have better managers than the competition | |||
The commercial policy is appropriate to the current situation and is the best for us | |||
We have no rejects for product quality | |||
The delivery time is better than the competition | |||
We do the necessary promotions | |||
OTHERS: |
Organization assessment - SWOT situation analysis - Weaknesses
Weaknesses | Disagreement | I do not fully agree | Agreement |
We do not have a clear strategic direction | |||
Our facilities are obsolete | |||
We have a weak image in the market | |||
We don't have the right staff | |||
We don't have adequate Managers | |||
We have a narrow product line | |||
We do not have the necessary financial resources | |||
We do not have enough profitability | |||
We have relative costs higher than the competition | |||
We continually have operational problems | |||
Suppliers are not suitable | |||
Staff are not motivated | |||
We do not know the market thoroughly | |||
Our sales force is not adequate | |||
We have too many production rejects | |||
We have excessive Scrab | |||
Our breakeven point is high | |||
The monthly billing has been decreasing | |||
OTHERS: |
Organizational assessment - SWOT situation analysis - Opportunities
Opportunities | Disagreement | I do not fully agree | Agreement |
There is a market segment that we can serve and we are not yet doing so | |||
We can develop new products or improve current ones to meet customer needs | |||
We have export possibilities | |||
Our competition is weak | |||
The market is growing | |||
We can develop new products for new markets | |||
The market is shifting towards greater use of our products | |||
We have possibilities to improve our costs | |||
The country's economic situation will improve in the next 2 years | |||
It will improve the purchasing power of our clients | |||
We can get venture capital at an attractive interest | |||
We can develop or acquire new manufacturing technologies | |||
Industry entry barriers are high | |||
OTHERS: |
Organizational Assessment - SWOT Situation Analysis - Threats
Threats | Disagreement | I do not fully agree | Agreement |
Low-cost foreign competitors are entering the market | |||
Substitute product sales are growing | |||
The market is not growing as expected | |||
Customers are changing their habits in a negative way to the use of our products | |||
Demographic changes have a negative impact on business | |||
Import rules for competing products change | |||
Prices are generally going down | |||
The market is concentrating on few customers | |||
Suppliers have greater bargaining power | |||
The situation in our particular market is declining | |||
The political situation in the country is unstable (2 years) | |||
Manufacturing technology is changing around the world | |||
We have environmental problems | |||
OTHERS: |
These statements are indicative and may change or add new ones depending on the type of industry or market where the organization develops.
Putting in each concept if you totally agree or disagree serves to weigh the seriousness or intensity of the problem (some authors suggest assigning a score to each problem, and thus knowing the seriousness of it).
I suggest, from personal experience, that the questionnaire be completed by more than one person in the company (if it is a single owner, it can be filled out by middle managers) and separately, without each one seeing what the other completes, many times each one perceives different things.
Then meet and discuss each topic, this is very good to align impressions and, in those cases where the concepts are different, generate a study to find out the reality.
In a company that I had to help, a large difference appeared among the owners in the appreciation of the relative quality of the competition, so it was decided to obtain product from it and carry out a survey among the employees. (This is a very good, and simple, method for making regular quality comparisons.)
Once the SWOT concepts have been defined, the short- and medium-term strategy arises naturally: reinforce strengths, change weaknesses, prepare or change to face threats and do not miss opportunities.
As the environment is so changeable and what is a strength today may be a weakness tomorrow (sometimes it happens when technologies change and the one we have becomes obsolete) I suggest conducting this analysis annually, it may seem exaggerated, but in such changing environments it seems to me Ideally, on the other hand, having everyone aligning impressions makes emerging strategies understood and accepted.
The next step is, knowing where we are and where we want to go, develop and implement the strategy.
"In order to go somewhere, we first have to know where we are. "