SWOT Analysis

 

SWOT Analysis: A framework to Assess Your Organization

 

 

Before going ahead to develop a complete strategic plan, it is very important to assess your current situation, where do you stand actually. Understand your internal and external environment.  

SWOT Analysis is a useful technique for understanding your strengths and weaknesses, and for identifying both the opportunities open to you and the threats you face. Used in a business context, it helps you shape a sustainable position in your market. Used in a personal context, it helps you develop your career in a way that takes the best advantage of your talents, abilities and opportunities.

What makes SWOT particularly powerful is that it can help you uncover opportunities that you are well-placed to exploit. And by understanding the weaknesses of your business, you can manage and eliminate threats that may affect your progress.

More than this, by looking at yourself and your competitors using the SWOT framework, you can start to make a strategy that helps you distinguish yourself from your competitors so that you can compete successfully in your market.

How to Use this Framework

Originated by Albert S. Humphrey in the 1960s, the tool is as useful now as it was then. You can use it in two ways – as a simple icebreaker helping people get together to develop a strategy, or more systematically as a serious strategy tool.

Strengths and weaknesses are often internal to your organization, while opportunities and threats generally relate to external factors. For this reason, SWOT is sometimes called Internal-External Analysis and the SWOT Matrix is sometimes called an IE Matrix.

Strengths

• What advantages does your organization have?
• What do you do better than anyone else?
• What unique or lowest-cost resources can you draw upon that others can't?
• What do people in your market see as your strengths?
• What factors mean that you "get the sale"?
• What is your organization's Unique Selling Proposition (USP)?

Consider your strengths from both an internal perspective, and from the point of view of your customers and people in your market.

Also, if you're having any difficulty identifying strengths, try writing down a list of your organization's characteristics. Some of these will hopefully be strengths!

When looking at your strengths, think about them in relation to your competitors. For example, if all of your competitors provide high-quality products, then a high-quality production process is not a strength in your organization's market, it's a necessity.

Weaknesses

• What could you improve?
• What should you avoid?
• What are people in your market likely to see as weaknesses?
• What factors lose you sales?

Again, consider this from an internal and external perspective: Do other people seem to perceive weaknesses that you don't see? Are your competitors doing any better than you?

It's best to be realistic now, and face any unpleasant truths as soon as possible.

Opportunities

• What good opportunities can you spot?
• What interesting trends are you aware of?

Useful opportunities can come from such things as:

• Changes in technology and markets on both a broad and narrow scale.
• Changes in government policy related to your field.
• Changes in social patterns, population profiles, lifestyle changes, and so on.
• Local events.

A useful approach when looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you could open up opportunities by eliminating them.

Threats

• What obstacles do you face?
• What are your competitors doing?
• Are quality standards or specifications for your job, 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?

When looking at opportunities and threats, PEST Analysis can help to ensure that you don't overlook external factors, such as new government regulations, or technological changes in your industry.

• Internal environment by SWOT analysis
• External environment by PEST Analysis (We will discuss it later)

SWOT Analysis Template  

 

State what you are assessing here ____________________________________________________________________________________________________________   (This particular example is for a new business opportunity. Many criteria can apply to more than one quadrant. Identify criteria appropriate to your SWOT situation.)
Criteria examples   Advantages of the plan of action? 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, behavioural? Management cover, succession? Philosophy and values?	Strengths:	Weaknesses:	Criteria examples   Disadvantages of the plan of action? 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.? Management cover, succession?
Criteria examples   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: eg, surprise, major contracts? Business and product development? Information and research? Partnerships, agencies, distribution? Volumes, production, economies? Seasonal, weather, fashion influences?	Opportunities:	Threats:	Criteria examples   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?

 

 

 

Alternate SWOT Analysis Framework

Strengths (List here anything you can think of that makes your organization amazing!  What can you rely on to deliver your services?)	Weaknesses (What isn’t quite the way it should be yet?  What is missing?)
Opportunities (List here any potential opportunities to push your organization forward that you have not yet taken advantage of.)	Threats (List here anything that might get in your way of achieving your goals – such as funding you aren’t sure of yet, relationships that might break down, etc.)

 

 

Conclusion:

SWOT Analysis is a simple but useful framework for analyzing your organization's strengths and weaknesses and the opportunities and threats that you face. It helps you focus on your strengths, minimizes threats, and take the greatest possible advantage of opportunities available to you.

It can be used to "kick-off" strategy formulation, or in a more sophisticated way as a serious strategy tool. You can also use it to get an understanding of your competitors, which can give you the insights you need to craft a coherent and successful competitive position.

When carrying out your analysis, be realistic and rigorous. Apply it at the right level, and supplement it with other option-generation tools where appropriate.