SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. SWOT as a technique can find suitable applications across diverse management functions and activities, is particularly applicable in early stages of strategic and marketing planning. The SWOT analysis headings provide a good framework for reviewing strategy, position and direction of a company or business proposition, or any idea. Completing a SWOT analysis is very simple, and is a good subject for workshop sessions. SWOT analysis also works well in brainstorming meetings. SWOT analysis could be used for business planning, strategic planning, competitor evaluation, marketing, business and product development and research reports. SWOT analysis measures a business unit, a proposition or idea.
A SWOT analysis is a subjective assessment of data which is organized by the SWOT format into a logical order that helps understanding, presentation, discussion and decision-making. SWOT analysis can be used for all sorts of decision-making, and the SWOT template enables proactive thinking, rather than relying on habitual or instinctive reactions.
The SWOT analysis template is normally presented as a grid, comprising four sections, one for each of the SWOT headings: Strengths, Weaknesses, Opportunities, and Threats. The questions in the SWOT template are examples, or discussion points, and obviously can be altered depending on the subject of the SWOT analysis. Note that many of the SWOT questions are also talking points for other headings. It is important to clearly identify the subject of a SWOT analysis, because a SWOT analysis is a perspective of one thing, be it a company, a product, a proposition, and idea, a method, or option, etc.
| Here are some examples of what a SWOT analysis can be used to assess: |
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| • | a company (its position in the market, commercial viability, etc) |
| • | a method of sales distribution |
| • | a product or brand |
| • | a business idea |
| • | a strategic option, such as entering a new market or launching a new product |
| • | an opportunity to make an acquisition |
| • | a potential partnership |
| • | changing a supplier |
| • | outsourcing a service, activity or resource |
| • | an investment opportunity. |
SWOT analysis template
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Subject of SWOT Analysis: …………(Define Your Subject Here)…………… |
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| Strengths (Focus here is on Internal) |
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| • | | Advantages of proposition? |
| • | | Capabilities? |
| • | | Competitive advantages? |
| • | | USP's (unique selling points)? |
| • | | Resources, Assets, People? |
| • | | Experience, knowledge, data? |
| • | | Financial reserves, likely returns? |
| • | | Marketing - reach, distribution, awareness? |
| • | | Innovative aspects? |
| • | | Location and geographical? |
| • | | Price, value, quality? |
| • | | Accreditations, qualifications, certifications? |
| • | | Processes, systems, IT, communications? |
| • | | Cultural, attitudinal, behavioral? |
| • | | Management cover, succession? |
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| Weakness (Focus here is on Internal) |
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| • | | Disadvantages of proposition? |
| • | | Gaps in capabilities? |
| • | | Lack of competitive strength? |
| • | | Reputation, presence and reach? |
| • | | Financials |
| • | | Own known vulnerabilities? |
| • | | Timescales, deadlines and pressures? |
| • | | Cash flow, start-up cash-drain? |
| • | | Continuity, supply chain robustness? |
| • | | Effects on core activities, distraction? |
| • | | Reliability of data, plan predictability? |
| • | | Morale, commitment, leadership? |
| • | | Accreditations, etc? |
| • | | Processes and systems, etc? |
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| Opportunities: (Focus here is on External) |
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| • | | Market developments? |
| • | | Competitors' vulnerabilities |
| • | | Industry or lifestyle trends? |
| • | | Technology development and innovation? |
| • | | Global influences? |
| • | | New markets, vertical, horizontal |
| • | | Niche target markets? |
| • | | Geographical, export, import? |
| • | | New USP's? |
| • | | Tactics- surprise, major contracts, etc? |
| • | | Business and product development? |
| • | | Information and research? |
| • | | Partnerships, agencies, distribution? |
| • | | Volumes, production, economies? |
| • | | Seasonal, weather, fashion influences? |
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| Threats: ( Focus here is on External) |
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| • | | Political effects? |
| • | | Legislative effects? |
| • | | Environmental effects? |
| • | | IT developments? |
| • | | Competitor intentions - various? |
| • | | Market demand? |
| • | | New technologies, services, ideas? |
| • | | Vital contracts and partners? |
| • | | Sustaining internal capabilities? |
| • | | Obstacles faced? |
| • | | Insurmountable weaknesses? |
| • | | Loss of key staff? |
| • | | Sustainable financial backing? |
| • | | Economy - home, abroad? |
| • | | Seasonality, weather effects? |
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Advantages:
SWOT analysis can provide:
| • | a framework for analyzing strengths, weakness, opportunities and threats. |
| • | an impetus to analyze a situation and develop suitable strategies and tactics. |
| • | a basics for analyzing core capabilities and competences. |
| • | the evidence for, and cultural key, to change. |
| • | a stimulus to participation in a group experience. |
Checklist for SWOT analysis:
| 1. | Establish the objectives |
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The first step in management of a project is to be clear on what you are doing and why. The purpose of conducting SWOT analysis may be wide or narrow, general or specific - anything from getting staff to understand, think about, and be more involved in the business to re-thinking a strategy, or even re-thinking the direction of the business. |
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| 2. | Select appropriate contributors
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| This is important if the final recommendation is to result from consultation and discussions, not just personal views, however expert. |
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| • | Pick a mix of specialists and 'ideas' people with the ability and enthusiasm to contribute. |
| • | Consider how appropriate it would be to mix staff of different levels. |
| • | Think about numbers: 6 to 10 people may be enough, especially in a SWOT workshop, but upto 25 or 30 can be useful if one of the aims is to get staff to see the need for change. | |
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| 3. | Allocate research and information gathering tasks
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Background preparation is a vital stage for the subsequent analysis to be effective and should be divided among the SWOT participants. This preparation can be carried out in two stages: explanatory, followed by data collection; and detailed, followed by a focused analysis. | |
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| • | Gathering information on strengths and weaknesses should focus on the internal factors of skills, resource and assets, or the lack of them. |
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| • | Gathering information on opportunities and threats should focus on external focus such as social, market or economic trends over which you have little control. | |
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| 4. | Create a workshop environment
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If compiling and recording the SWOT lists takes place in meetings, then exploit the benefits of the workshop sessions. Encourage an atmosphere conducive to uninhibited flow of information and to participants expressing what they think, free from blame. The facilitator has a key role and should allow time for free flow of thought, but not too much. Half an hour is enough to spend on strengths, for example before moving on. It is important to be specific, evaluative, and analytical at the stage of compiling and recording the lists- mere description is not enough. |
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| 5. | List Strengths
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Strengths can relate to the organization, to the market environment, to public relations, and precipitations to market shares, or to people. " People" elements include staff skills, capabilities and knowledge that can provide a competitive edge or explain past successes. Other strengths include: |
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| • | Friendly, co-operative and supportive staff. |
| • | A staff development and training scheme. |
| • | Appropriate levels of involvement through delegation and trust.
Organizational elements include. |
| • | Customer loyalty. |
| • | Capital investment and strong balance sheet.
| | • | Effective cost control programmes. |
| • | Efficient procedures, systems and well developed social responsibility. | |
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| 6. | List weakness
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This session should not constitute an opportunity to criticize the organization, but should elicit an honest appraisal of the way things are. Key questions include the following: |
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| • | What obstacles prevent progress? |
| • | What elements need strengthening? |
| • | Where are the complaints coming from? |
| • | Are there any real weak links in the chain? |
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| This list for action could include: |
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| • | A lack of new products or services |
| • | A declining market for your main product |
| • | Poor competitiveness and higher prices |
| • | Noncompliance with or non awareness of appropriate legislation. |
| • | A lack of awareness of the company's mission, objectives, and policies. |
| • | Staff absenteeism |
| • | The absence of methods for monitoring success or failure.
It is not unusual for 'People' problems-poor communication, inadequate leadership, lack of motivation, too little delegation, no trust, the left hand never knowing what the right is doing - to feature among the major weakness. | |
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| 7. | List Opportunities
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This step is designed to assess socio-economic, political, environmental, and demographic factors, among others to evaluate the benefits they may bring to the organization. Examples include: |
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| • | The availability of the new technology. |
| • | New markets |
| • | A new government |
| • | New programmes for training or monitoring quality. |
| • | Changes in interest rates |
| • | A growing population of the Young |
| • | Strengths and weakness of competitors |
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| Bear in mind just how long opportunities might last and how the organization may take best advantage of them. | |
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| 8. | List threats
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The opposite of opportunities- all the above may, with a shift of emphasis or perception, have an adverse impact. Other threats may include: |
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| • | The level of unemployment |
| • | Environmental legislation |
| • | Political uncertainty or instability in offshore manufacturing sites or foreign markets. |
| • | Exchange rate fluctuations. |
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| It is important to have worst case scenario. Weighing threats against opportunities is not an exercise in pessimism, it is rather a question of considering how possible damage may be limited or eliminated. A factor such as Information technology may emerge as both a threat and opportunity. Most external factors are in fact challenges, and whether staff perceive them as opportunities or threats is often a valuable indicator of morale. | |
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| 9. | Evaluate Ideas listed against objectives
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With the lists complied, sort and group facts and ideas in relation to objectives. It may be necessary for the SWOT participants to select the five most important items from the list in order to gain wider view. Clarity of objectives is the key to this process, as evaluation and elimination will be necessary to cull the wheat from the chaff. Although some aspects may require further information or research, a clear picture should start to emerge at this stage in response to the objectives. |
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| 10. | Carry your findings forward
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Make sure that SWOT analysis is used in subsequent planning. Revisit your findings at suitable intervals to check that they are still valid. |
For Performing SWOT Analysis:
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| • | | Choose the right people for the Exercise |
| • | | Select a suitable SWOT leader or facilitator |
| • | | Be analytical and specific. |
| • | | Record all thoughts and ideas in step 5-8 |
| • | | Take a wide ranging view or external influences and trends. |
| • | | Be selective in the final report |
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| Don't: |
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| • | | Don't try to disguise weakness. |
| • | | Don't merely list errors and mistakes |
| • | | Don't allow the SWOT to become a blame-laying exercise. |
| • | | Don't ignore the outcomes at later stages of the planning process. |
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References: |
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| 1. | Organization performing a SWOT analysis- Business "The Ultimate Resources", Bloomsbury. |
| 2. | Dynamic SWOT analysis by D. T. Richards |
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