2 essential factors that can make your SWOT analysis effective

SWOT analysis

A SWOT analysis is a powerful tool that you can use if you want to strategically analyse your business and position it to exploit business opportunities that are available in the external environment. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. The SWOT analysis is an integral part of strategic analysis and looks at the internal and external situation of your company.

SWOT Analysis
SWOT Analysis

You need to consider 2 factors when preparing your SWOT Analysis. They factors are as follows:

1. Conduct an internal analysis of your business and summarise the strengths and weaknesses of your business

SWOT Analysis


  • Do you have a plan that maintains and builds a competitive advantage over your competition? What is your business strategy in terms of sustaining the business, growing your business, delivering products or services that meet the needs and preferences of your target market and looks at how you will grow your profitability.


  • What qualifications does your management team have?
  • What skills does your management team have?
  • What training has your management team done?


  • What is your leadership style?
  • Is your leadership style visionary?
  • Are you thinking long term?


  • Does your company have a management information system?
  • Does your company have an accounting system?
  • Are your systems integrated?
  • What procedures have you put in place to ensure that your team members get the job done right?

Shared vision and values

  • Does your company have vision? Where do you see your company in the next 5 years?
  • Has the vision been communicated?
  • What core values are evidenced in your company’s corporate culture/ work ethic?



  • Do you have sufficient manpower?
  • Are your staff members committed, passionate and ambitious?


2. External analysis – scanning the external environment can help us identify key opportunities and threats for our business

One great model for scanning the external environment is PEST analysis. PEST analysis helps you to identify the opportunities and threats emanating from political changes, economic changes, social-cultural changes and technological changes. PEST analysis can be used for evaluating market growth, and as such the position and potential direction of your business entity.

PEST Analysis

    Political changes

    What regulations is the government putting in place and how do they affect your business? Think of employment laws, tax policy changes, environmental regulations, statutory instruments and trade restrictions.

    Economic changes

    • Are fuel prices going up or down?
    • Are interest rates going up or down?
    • Is inflation going up or down?
    • What about the currency exchange rates? How volatile are they? How do the movements impact your business?

    Social changes

    Social factors impact on consumer needs and your potential market share

    • What is your country’s population? Is it growing?
    • What are the age demographics like?

    Technological changes

    Automation. Artificial intelligence. Cryptocurrency. Block Chain… these are key buzz words today. How do these factors impact your business? Do they present opportunities or threats? These days technology changes are can be so advanced to the extent that they act as barriers to entry.