SWOT Analysis


SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is a technique that can be used in a variety of scenarios to discover Strengths and Weaknesses and to uncover new Opportunities and the Threats you, your project or your organization face.

This method can be incorporated into the strategic planning of an organization, but it can also be applied successfully to personal career planning.

SWOT

Organizational Strategic Planning – SWOT in a Business Scenario

A SWOT analysis can be used to determine approaches to achieve a given strategic objective. In this scenario it is important that the objective be know beforehand and the SWOT analysis is performed according to the following tenets:

  • Strengths: attributes of the organization that are helpful to achieving the objective.
  • Weaknesses: attributes of the organization that are harmful to achieving the objective.
  • Opportunities: external conditions that are helpful to achieving the objective.
  • Threats: external conditions which to the objective.

As an example we’ve compiled a set of appropriate questions from relevant sources to help get you started in filling in the four quadrants of the SWOT analysis.

Strengths

An organizations Strengths are it’s resources and capabilities that provide a competitive advantage. The questions below can help you identify these key assets.

  • What makes your organization stand out from it’s competitors?
  • What advantages does your company have over other businesses?
  • What do you do better than anyone else?
  • Does your company have a strong brand?
  • What unique or lowest-cost resources do you have access to?
  • Is your organization able to adapt and change?
  • What do people in your market see as your strengths?
  • Is your organization able to innovate?

Strengths might include (but are not limited to) patents, strong brand recognition, excellent customer and partner reputation and trustworthiness, specialized and unique know-how, unique resources or favorable distribution networks.

Weaknesses

Weaknesses are the attributes of the organization that expose it competitively. They can also be the flip side of certain strengths, which can include lack of patent protection, a weak brand name, or a poor reputation among customers. Use the following questions as a guide to identify your major weaknesses.

  • What could you improve?
  • What should you avoid?
  • What do your customers complain about?
  • Is your organization able to withstand price pressure from competitors?
  • What are people in your market likely to see as weaknesses?
  • Is the company able to attract talent?
  • Is marketing / advertising effective?
  • Is your company able to raise money when it needs to?
  • What factors lose you sales?

Both Strengths and Weaknesses should be formulated as internal characteristics of your organization, but in determining these attributes you should consider external viewpoints as well (i.e. from business partners, competitors, the market, etc.).

Opportunities

Opportunities are characteristics of the external environment that can be used to the advantage of your organization as opportunities for growth and profit.

  • What favorable circumstances is your organization facing?
  • What are the interesting trends you are aware of?
  • Is your organization positioned to take on these trends?
  • Is there a product or service that others have not yet covered?

Consider how the environment around your organization has changed, is changing or could change. Particular areas are worth considering attentively since historically they have been the source of global social and economical change. Some examples include:

  • Technology
  • Government policy
  • Lifestyle
  • Social patterns

Threats

Threats are changes to the external environment that may negatively impact your whole organization (not only it’s bottom line).

  • What obstacles do you face?
  • What is your competition doing that you should be worried about?
  • Are your competitors becoming stronger?
  • Are the required specifications for your products or services changing?
  • Is changing technology threatening your position?
  • Do you have bad debt or cash-flow problems?
  • Could any of your weaknesses seriously threaten your business?
  • Is your IP capital in danger?

Threats might include a fundamental shift in consumer tastes, emergence of new products, new regulations or political and macro-economic changes.

Identifying Strategies

A SWOT analysis can be used as a basis to help generate strategies to achieve the desired business objective. One approach involves looking at each quadrant and use the following questions as a guide to uncover strategies:

  • How can we make the most of our strengths?
  • How can we circumvent or improve our weaknesses?
  • How can we capitalize or benefit from each opportunity?
  • How can we manage and mitigate each threat?
    A next step is to match opportunities and strengths and convert threats and weaknesses into opportunities and strengths. A simple way of representing these strategies is by creating a TOWS matrix. A TOWS matrix is an externally focused SWOT matrix that emphasizes the external environment and helps you better understand the strategic choices your organization faces.

TOWS2

To help you fill in the TOWS matrix consider the questions above and identify strategies according to the following patterns:

  • S-O Strategies are Max-Max strategies that should take into account the use of your organization’s strengths in order to maximize the identified opportunities. S-O strategies pursue opportunities that are a good fit to your organization’s strengths.
  • W-O Strategies are Min-Max strategies that minimize weaknesses by capitalizing on identified opportunities.
  • S-T Strategies are Max-Min strategies that take advantage of your organization’s strengths to mitigate threats, reducing it’s vulnerabilities to the external environment.
  • W-T Strategies are Min-Min strategies that minimize your organizations weaknesses and avoid identified threats. These are defensive strategies that can help protect your organization from loss. They won’t, however, create success nor generate profit.

SWOT analysis, together with other tools can be effectively leveraged in the development of corporate strategies, focusing on maximizing your organization’s strengths and developing plans to minimize weaknesses, avoid threats and capitalize on emerging opportunities.


References:
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