SWOT Analysis

SWOT ANALYSIS
A GREAT MANAGEMENT TOOL

SWOT analysis provides insight at a point in time - like a snapshot. Also like a snapshot, it can provide a different picture depending upon what it is focused on. In your family business, you might focus one view on the business as a whole; another view of one operating division; yet another view of one sales territory.

Don Schwerzler, leading family business expert, recommends SWOT analysis as one of the most simple yet effective tools a family businesses can use to grow their business and to create the infra-structure that is critical to the Succession Management Process.

Schwerzler, who has been studying and advising family business entreprenuers for more than 40 years is the founder of the Family Business Institute. "SWOT analysis is simple to do and the results can be significant," says Schwerzler.

To do the analysis, start by dividing a page into four quadrants with a vertical line and a horizontal line.

The top two analysis quadrants are Strengths and Weaknesses. The bottom two quadrants are Opportunities and Threats.

Strengths Weaknesses
Opportunities Threats

In the first box of this analysis, list all the strengths of your family business, operating division, sales territory or whatever you are analyzing. This isn't the time for modesty. One of the strengths you take for granted might be something that your customers value and that your competition doesn't have or do. Brainstorm. Write down words that characterize your business. You can edit later.

In the top right box list weaknesses - things you don't have, things you cannot do, things you don't do well. This is the time for brutal honesty - you are not producing a selling document so there is no point in fooling yourself. But also a time for realism... sure, you don't have a billion dollars, and you aren't likely to get it soon, nor could you do well with it if you did get it... so stick within the realm of reason.

The lower left box is for opportunities. What is the market NOT doing, what are your competitors NOT doing - what does the market need that you could perhaps provide? Think in terms of what would benefit your customer - cheaper, easier, more convenient, faster...

Lower right is for threats - what do you see that could make you obsolete; that could wipe you out. What are your competitors doing that will change things for you... building automobiles, so there will not be horses drawing carriages, so your buggy whips will no longer be needed [unless you can keep them for long enough for them to become valuable collectors items to be sold online at an eBay auction!].

Notice that the top two [Strengths and Weaknesses] relate to matters that are INTERNAL to your family business, while the bottom two [Opportunities and Threats] relate to EXTERNAL matters.

A couple of hints here - things that throw our clients off more than anything else when they do this type of analysis...

  • Keep It Simple, Sam - not too much detail in a SWOT analysis - it is a snapshot so stick to the big picture. [You might have some items that will warrant deeper study after the analysis.]
  • beware of paralysis by analysis or the ready-aim-ready-aim syndrome
  • you aren't perfect predictors who know everything about the future, so just try to capture what you do know

Family businesses can gain critical insights into the factors that influence operational effectivness by using Family Business SWOT Analysis. "OK, we keep it simple, not too much analysis, and stick to what we know... but how can we be sure we don't miss important things in our Analysis?!"

Glad you asked! We have included some links to tips and strategies that should really help.

Best Practices Benchmarking

Organizational Culture

In looking at the family businesses' organizational culture, we are assessing behaviors that are important to creating a strong effective staff and competent leadership. Anything for your SWOT Analysis here?
  • Values and Beliefs; Leadership; Human Resource Systems; Organizational Character

Leadership Styles

Different leadership styles are available depending upon concern for profit or concern for production. An imbalance in the concerns tends to sway the leader to a less effective style.

Organizational Strategy

Organizational strategy is concerned with envisioning a future for your family business, creating value in the eyes of your customers, and building and sustaining a strong position in the marketplace. This is usually a fertile area for items for your SWOT Analysis.
  • Vision, Mission and Competitive Advantage; External Assessment; Internal Assessment; Objectives, Initiatives and Goals

Organizational Design

Organizational design assesses the internal structure and systems of the family business, its organization (including staffing structure, internal control systems and the condition and use of information) and its unique skills and abilities. Another fertile area for SWOT Analysis issues.
  • Basic Structure; Core Competencies; Information, Systems and Technology; Organizational Efficiency

Organization Structures

Organization structures are how winning companies do their work better - enable interaction across departmental lines, have sensible and effective reporting relationships, clear lines of authority.

  • Study 5 Formal Organization Structures and their Strategic Advantages and Disadvantages. Balance these with your family business' strategic intent to find the right structure for you.

Gap Analysis

Produce Gap Analysis of the critical issues by studying the key elements of these core drivers. Help you and your managers establish an Action Plan to address these critical performance issues. Hours, not weeks or months. A logical follow-on to your SWOT Analysis.



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It's a snapshot, but do a SWOT Analysis regularly and review them occasionally to track progress. Your SWOT Analysis is an excellent basis for your initial call to our Managing Director.



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