What is SWOT Analysis and why use it in digital business?

If you intend to enter the world of digital entrepreneurship, you need to know all the management tools and techniques available on the market. That way, it’s easier to create and manage your business. Therefore, how about knowing what SWOT Analysis is?

This tool is very useful for you to make your company’s strategic planning. Since it helps to collect data to make a diagnosis of both the internal and external environment of the organization.

This facilitates the process of identifying the strengths and opportunities that can leverage your growth. As well as the weaknesses and threats that can hinder organizational development.

Thinking about the importance of this theme for digital entrepreneurship. In this text, we separate the main information about it so that you can understand the role of this tool in your company’s management.

Are you curious? Want to know more about what SWOT Analysis is and why use it in your digital business? So, keep reading this text and check out all the information we’ve put together for you. Come on!

What is SWOT Analysis?

Also known as SWOT matrix or SWOT matrix, it is a management tool widely used by companies. This is because it provides information through which it is possible to understand whether or not the company has competitive advantages in the digital market.

It is also possible to understand whether the business experiences a positive and favourable scenario or a negative and unfavourable scenario, according to the characteristics of the external environment.

It is worth noting that this tool can be used to analyze a company, a project or a product or service. Furthermore, there is also its application in personal life, that is, in career planning. That’s because it’s so versatile and easy to use.

But, after all, how to apply SWOT Analysis in my digital business? For this you need a paper, a spreadsheet or a document. Then, you must build a 2×2 matrix and in each quadrant must write: strengths, weaknesses, opportunities and threats, respectively. See how it looks in the image below:

SWOT Analysis Model

See how the SWOT analysis structure looks like

The next step is to fill them with information pertinent to your digital business. Remember that this is a time for a lot of reflection so that the data filled in is in accordance with reality. Otherwise, this analysis will not be valid.

Once this is done, it is necessary to make a correlation between the elements of the matrix. In other words, identify which forces can leverage opportunities, or which threats can be turned into opportunities, and so on.

After this analysis process, it is time to develop action plans to leverage strengths, correct weaknesses, seize opportunities and mitigate threats. Therefore, this tool is essential when preparing the strategic planning of a digital business.

What are the elements of SWOT Analysis?

SWOT Analysis is a management tool composed of four quadrants or elements: strengths, weaknesses, threats and opportunities. Each of them has its own characteristics, which, in turn, can impact the company in different ways.

Therefore, it is essential that you know each of these elements. This way, it is easier to understand what they represent to the organization. Thus, the process of analyzing the company’s internal and external environment can be considered more assertive.

Want to know what each element of the SWOT Analysis means? So don’t waste time! Follow the text below and learn more!

Forces

Strengths or strengths are the positive characteristics of a company, that is, its competitive advantages. They are part of the internal environment, so they are variables that can be easily controlled.

In this case, we can cite as an example the training of work teams, quality of service, well-structured production processes, quality of products or services, among others.

It is important for the company to be aware of its strengths. In this way, it is possible to maximize them so that they are perceived by customers and by the competition. Furthermore, they help to strengthen the organizational structure and, consequently, it is easier to achieve strategic objectives.

Weaknesses

Weaknesses or weaknesses are also part of the internal environment. In this way, they can be controlled by the company. Furthermore, weaknesses represent the negative variables compared to the competition.

Therefore, we can highlight as an example the lack of training, problems in the delivery process, lack of employees, excessive bureaucracy, among others. It is worth mentioning that the company needs to be aware of these characteristics, as they cannot be neglected.

If that happens, the organization can suffer very serious consequences, such as the loss of customers, the creation of a negative image in the market or, even, in more extreme cases, it can lead the company to bankruptcy.

Opportunities

Opportunities or opportunities are elements external to the company, that is, they cannot be controlled. In this case, we have the events that favor the development and growth of the organization, that is, they represent a positive scenario.

Remember that a threat can become an opportunity, as long as the company has a good systemic view. For example, the COVID-19 pandemic that started in 2019 was bad for many companies.

But for digital businesses, especially those that produce and sell online courses, this event boosted their sales. Since people stayed at home longer and needed something to do.

So, we can conclude that these organizations have turned a threat from the external environment into a profitable opportunity. Furthermore, there are also pure opportunities that the company can take advantage of, such as the emergence of a new market, the launch of a new technology, the increase in tax incentives, among others.

Threats

Finally, there are threats or threats, which, in turn, are variables external to the company. Therefore, it becomes more difficult to control them. In this case, we are talking about climate problems, economic crises, government policies, pandemics, changes in consumer behaviour, reduction of tax incentives, among others.

As these are situations that are beyond the company’s control, they end up creating an unfavourable scenario. Therefore, it is necessary that you make a contingency plan to manage to survive these events. In this way, it is possible to reduce losses and minimize bad consequences.

Performing competitive analysis can also be helpful in building the swot analysis:

Why use this tool in the digital business?

SWOT-analysis helps build more assertive strategic planning. That’s because you can identify which strengths need to be leveraged and which weaknesses need to be corrected.

As well as the opportunities that need to be seized and the threats that must be reduced or transformed into opportunities. With this information in hand, you can develop a more realistic plan.

Therefore, your decisions will be based on real data. This greatly facilitates the decision-making process and, consequently, increases the chances of your digital business to prosper in this increasingly competitive market.

Therefore, SWOT Analysis helps you to make more assertive decisions, build an efficient strategic planning and ensure your company’s longevity. So, this tool is essential for managing your digital business.

Now that you know what SWOT Analysis is and why to use it in your digital business, it’s easier to identify the strengths and weaknesses of the internal environment, as well as the threats and opportunities of the external environment.

This way, you can make great strategic planning of your business and, consequently, increase your chances of achieving the expected results. Therefore, if you are thinking of structuring your company, how about getting to know SparkStart?

Our free acceleration program can help you in this process, as well as in building your digital product to meet the demands of your target audience. So, do not waste your time! Discover our product right now and enjoy!