Evaluation of strengths and weaknesses

No all identified strong and weak sides of a company or other organization are equally important in terms of creation of a strategy. They need to be evaluates, which will allow to concentrate on those most significant.

If you think that it is worth taking into account all factors, which you differentiated, remind yourself of a principle formulated by Vilfredo Pareto. A conclusion from his theory is that 80% of profit is generate by just 20% of activities. Therefore, you do not need to focus on everything to significanlty improve your results. Besides, taking everything into consideration would be pretty complicates, costly and time consuming.

Write down strong and weak sides that you identified in the below table, and then evaluate them in accordance to instructions. As you can see, you could earlier limit yourself to choose those aspects of company’s operation, which you assess to be significant, and only now specify whether it is a strong or a weak side of the business.

No. Strengths or a weaknesses Evaluation of a factor as a side Rank of the factor Combined evaluation
weak
strong
1
2
3
-2
-1
+1
+2
1. Strengths 1
2. Strengths 2
Strengths …
Weaknesses 1
Weaknesses 2
Weaknesses …

Evaluation of a factor as a strong or weak side is performed via a point scale where:

– 2 points mean that the factor is believed to be a very weak side of the company,
– 1 point means that the factor is believed to be a weak side of the company,
+1 point means that the factor is believed to be a strong side of the company,
+2 points mean that the factor is believed to be a very strong side of the company.

Provide the determined strong and weak sides with a rank, so specify the meaning that you ascribe them with. The rank may be ascribed e.g. on the basis of your own knowledge of the branch, market research, evaluation of management of the company or employed experts. Applies markings:

3 means the highest rank;
2 means the average rank;
1 means the low rank of the factor.

Combined evaluation is a product of Evaluation of the factor as a side and Rank of the factor. The higher (or lower) it is, the factor is of more significance. Therefore, it will be selected to be used in preparation of matrix of the SWOT strategic analysis. Hence, it will influence the choice of the recommended strategy.