Introduction
A SWOT analysis is a simple yet versatile
tool to help you to analyse a wide range of situations. These could be anything
from weighing up options for the location of a new building, to formulating and
revising the organisation’s strategic direction.
There are many management situations where
these four headings provide a useful basis for questioning and decision-making.
Essentially you can use SWOT to:
- Establish your present situation
- Evaluate your potential options
SWOT stands for:
- Strengths
- Weaknesses
- Opportunities
- Threats
Charting the results
The information gained can be recorded in a
number of ways, the most common being in the form of a simple matrix. :
POSITIVE NEGATIVE
INTERNAL Strengths Weaknesses
EXTERNAL Opportunities Threats
Despite the large amounts of information that
you may have at your disposal, it is important when performing a SWOT analysis
that only around 5–8 points are listed in each of the two areas
(internal and external).
Where do I get the information
for the SWOT analysis?
You can use a SWOT analysis as a
decision-making or problem-solving tool for relatively simple, individual
situations. In which case, a few carefully thought out questions might suffice.
However, if you are using it to formulate and revise your department’s
strategic direction, it is vital that the information that goes into your SWOT
analysis is accurate and thorough.
SWOT Analysis
Use the results from one or more of the
following techniques and methods to equip yourself with the information
necessary to perform an accurate SWOT analysis.
Resources and competencies
(Strengths and Weaknesses)
Benchmarking, financial analysis, historical
analysis, cost-efficiency measures, core competencies, performance indicators
and quality measures.
External environment
(Opportunities and Threats)
Environmental analysis techniques such as:
PEST (or PESTLE) analysis and scenario planning.
Ok, so I’ve completed the SWOT
analysis. What next?
Analysis of your completed SWOT should be
divided into two parts. For strengths and weaknesses, ask the
following questions: What are the consequences of this? Do they genuinely
help/ hinder what we want to achieve? (If they do not, they should be removed
from the SWOT)
- What factors are responsible for this strength/ weakness?
- How can we turn our weaknesses into strengths?
- How can we marry our strengths to current opportunities?
- Are there factors that are likely to exacerbate our weaknesses? If so, how can we avoid this?
For opportunities and threats,
ask these questions:
- What changes are likely to result from these? Will they genuinely help/ hinder what we want to achieve? (Again, it is important to note only those factors likely to have a real impact on what you want to achieve.)
- What should our response be to these?
- Are there any threats that we can turn into opportunities?
- Once these questions have been answered, it is important to spend some time analysing the results, looking particularly at the causes of the strengths and weaknesses, and what needs to be done in the face of the newly identified opportunities and threats. A SWOT analysis should end
with the linking of this analysis to action
points for the team to pick up and follow through.
The Key Distinction -
Internal and External Issues
Strengths and weaknesses are Internal
factors. For example, a strength could be your specialist marketing
expertise. A weakness could be the lack of a new product.
Opportunities and threats are external
factors. For example, an opportunity could be a developing distribution
channel such as the Internet, or changing consumer lifestyles that potentially
increase demand for a company's products. A threat could be a new competitor in
an important existing market or a technological change that makes existing
products potentially obsolete.
it is worth pointing out that SWOT analysis can be very
subjective - two people rarely come-up with the same version of a SWOT analysis
even when given the same information about the same business and its
environment. Accordingly, SWOT analysis is best used as a guide and not a
prescription. Adding and weighting criteria to each factor increases the
validity of the analysis.
Using SWOT to revise your
strategic direction
One such application might be to analyse the
relevant strengths, weaknesses, opportunities and threats, tied specifically to
formulating and revising your department’s/organisation’s strategic direction.
SWOT provides a framework for analysing the
internal and external influences on your team/organisation and the degrees of
preparedness within the team to met them. This can be linked to your current
strategic plan.
The strengths and weaknesses represent the
internal factors within your organisation that are under your control. So, for
instance, this might include issues such as people, systems, culture and
technology.
Similarly, opportunities and threats are
external factors and therefore outside your control (but often possible to
influence). You might find additional frameworks helpful, such as PEST (politics,
economics, society and technology), a useful structure for considering the
variable external factors. To help you carry out a simple SWOT analysis, you
might find the following questions a helpful starting point:
Strengths
- What things do we do well? (Think about your people, systems, culture and the organisation in general.)
- What positive feedback have we had?
- What is our unique competitive advantage? What are our core competencies?
Weaknesses
- What could be improved? (Again, think about your people, systems, culture and the organisation in general.)
- What is done poorly?
- Perhaps others perceive weaknesses that you do not see? Do your competitors perform better?
Opportunities
- What opportunities do you see which might be exploited?
- Are there any interesting market-based or technological trends, changing government policy or local events you might exploit?
Threats
- What obstacles do you face?
- What is the competition doing?
Charting the results
The information gained can be recorded in a
number of ways, the most common being in the form of a simple matrix. :
POSITIVE AND NEGATIVE CONCEPTS
INTERNAL Strengths & Weaknesses
EXTERNAL Opportunities & Threats
Despite the large amounts of information that
you may have at your disposal, it is important when performing a SWOT analysis
that only around 5–8 points are listed in each of the two areas
(internal and external).
Where do I get the information
for the SWOT analysis?
You can use a SWOT analysis as a
decision-making or problem-solving tool for relatively simple, individual
situations. In which case, a few carefully thought out questions might suffice.
However, if you are using it to formulate and revise your department’s
strategic direction, it is vital that the information that goes into your SWOT
analysis is accurate and thorough.
Use the results from one or more of the
following techniques and methods to equip yourself with the information
necessary to perform an accurate SWOT analysis.
__ Resources and competencies (Strengths and Weaknesses)
Benchmarking, financial analysis, historical
analysis, cost-efficiency measures, core competencies, performance indicators
and quality measures.
__ External environment (Opportunities and
Threats)
Environmental analysis techniques such as:
PEST (or PESTLE) analysis and scenario planning.
Ok, so I’ve completed the SWOT
analysis. What next?
Analysis of your completed SWOT should be
divided into two parts.
For strengths and weaknesses,
ask the following questions:
- What are the consequences of this? Do they genuinely help/ hinder what we want to achieve? (If they do not, they should be removed from the SWOT.)
- What factors are responsible for this strength/ weakness?
- How can we turn our weaknesses into strengths?
- How can we marry our strengths to current opportunities?
- Are there factors that are likely to exacerbate our weaknesses? If so, how can we avoid this?
For opportunities and threats,
ask these questions:
- What changes are likely to result from these? Will they genuinely help/ hinder what we want to achieve? (Again, it is important to note only those factors likely to have a real impact on what you want to achieve.)
- What should our response be to these?
- Are there any threats that we can turn into opportunities?
Once these questions have been answered, it
is important to spend some time analysing the results, looking particularly at
the causes of the strengths and weaknesses, and what needs to be done in the
face of the newly identified opportunities and threats. A SWOT analysis should
end with the linking of this analysis to action points for the team to pick up
and follow through.
