Simplified Strategy for Finance - SWOT Analysis

As a CFO or FP&A you will be required to support your organization’s strategic plan, and one of the important tools used to analyse the internal and external environment is the SWOT analysis.

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats

Strengths & Weaknesses cover the internal forces, and Opportunities, and Threats cover the external forces.

1.      Strengths: Are the organization’s resources and capabilities that can be used to develop a competitive advantage vs other competitor; strengths should be realistic and not modest. Examples: Strong brand equity, talented and skilled team, strong financial capabilities, etc

2.      Weaknesses: Are the barriers to maintaining or achieving a competitive advantage; a limitation, fault, or defect of the organization; weaknesses; should be truthful so that they addressed and overcome as quickly as possible.

Examples: Lack of quality is some products, lack of financial resources, high employees’ turnover, loa customer retention, etc

3.      Opportunities: Are the favourable external factors that could give your organization a competitive advantage.

Examples, if a country cuts tariffs, a new innovative technology that can help in serving customers better, etc.

4.      Threats: Are the factors that have the potential to harm your organization.

Examples, rising costs for materials, increasing competition, tight labour supply, etc.