In most situations, business decisions are prompted by information that has come into your possession. Sometimes this information comes from the information system within your business but often it is from external sources.
An interesting thing to do is to quickly apply a swot analysis to new information. If you are not familiar with the term “swot”, this stands for strengths, weaknesses, opportunities and threats. The idea of a swot analysis is that you objectively try to determine the strengths and weaknesses of your business and also the opportunities and threats. The strengths and weaknesses are aspects of your business that are particular to your business. These are internal issues. The opportunities and threats are matters that are external forces that impact on the enterprise. It is a good idea to conduct a swot analysis from time to time.
On the assumption that you have conducted a swot analysis and therefore have objectively determined your strengths, weaknesses, opportunities and threats, you can apply the results of this analysis to new information that comes to you. Let us focus on information from external sources.
For example, you visit a trade show for your industry. At that trade show you observe a new technological advancement in a particular aspect of your industry. You then apply the results of your swot analysis to this new information.
As an example, you may have identified that one of your strengths is low overheads. Due to this, your enterprise is flexible and can change quickly. Accordingly, you might conclude that you could quickly adopt the new technology and steal a march on your competitors. So, off you go to your bank or other sources of capital to get the funds to adopt the new technology – and you know that this won’t be a problem because of your low overheads.
Alternatively, you might have identified the heavy capital investment in your company as a weakness. This means that it is difficult to alter the production process without very significant cost and disruption to customer requirements. When you see the new technology and realise that your competitors might be able to adopt it faster than you, perhaps this will prompt you to the decision – albeit difficult – of reinvesting in a new production process involving the new technology.
Let’s say you have identified rapid changes in technology as an opportunity for you. This maybe because of a particular set of skills that your people have. Because of their training, experience or knowledge they are able to rapidly understand the new information and apply it in a profitable way. So, you are alert to any changes in technology. You seize on this new development and give it to your people.
And, of course, if you see advances in technology as a threat, hopefully you will take action to minimise this threat.
Applying your swot analysis to every new piece of information would be too tedious. But it is a very useful practice to apply it to important information that you come across. The more regularly that you do this, the more alert you will be to developments in your industry and the more quickly you will be able to turn new information into profits or other benefits.