How to do a swot analysis

How to do a SWOT analysis

SWOT Analysis

A SWOT is a planning tool used to understand the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business. It involves specifying the objective of the business or project and identifying the internal and external factors that are supportive or unfavourable to achieving that objective.

SWOT is an acronym for Strengths, Weaknesses, Opportunities, Threats.

There are several ways of graphically representing the SWOT analysis matrix or grid. Several versions are shown on this page – use the one which is best suited to your application.

While at first glance the SWOT looks like a simple model and easy to apply, I can say from experience, that to do a SWOT analysis that is both effective and meaningful, requires time and a significant resource. This cannot be done effectively by just one person. It requires a team effort.

The term “SWOT ANALYSIS” is in itself an interesting term. To my understanding, the SWOT is not an analysis. It is a summary of a set of previous analyses – even if those were not more than 15 minutes of mini-brainstorming with yourself in front of your computer.The analysis or more correctly interpretation comes after the SWOT summary has been produced.

SWOT Analysis Tools & Presentation

The SWOT Model

Strengths Weaknesses

Opportunities Threats

Offensive -make the most of these	Defensive -watch competition closely
Adjust -restore strengths	Survive-turn around

Definition of SWOT

A SWOT analysis generates information that is helpful in matching an organization or group’s goals, programs, and capacities to the social environment in which it operates.

Strengths

• Positive tangible and intangible attributes, internal to an organization.
• They are within the organization’s control.

Weakness

• Factors that are within an organization’s control that detract from its ability to attain the desired goal.
• Which areas might the organization improve?

Opportunities

• External attractive factors that represent the reason for an organization to exist and develop.
• What opportunities exist in the environment, which will propel the organization?
  Identify them by their “time frames”

Threats

• External factors, beyond an organization’s control, which could place the organization mission or operation at risk.
• The organization may benefit by having contingency plans to address them if they should occur.
• Classify them by their “seriousness” and “probability of occurrence”.

Introduction to SWOT

The SWOT analysis tool is great for developing an understanding of an organization or situation and decision-making for all sorts of situations in business and organizations.

The SWOT analysis headings provide a good framework for reviewing strategy, position and direction of a company or project.

Doing a SWOT analysis can be very simple, however its strengths lie in its flexibility and experienced application.

Applications of SWOT

A SWOT Analysis can be used for:

• Workshop sessions
• brainstorm meetings
• Problem solving
• Planning
• Product evaluation
• Competitor evaluation

The SWOT is a great tool that can be used in association with PESTLE

Overview of SWOT

	POSITIVE/ HELPFULto achieving the goal	NEGATIVE/ HARMFULto achieving the goal
INTERNAL Originfacts/ factors of the organization	StrengthsThings that are good now, maintain them, build on them and use as leverage	WeaknessesThings that are bad now, remedy, change or stop them.
EXTERNAL Originfacts/ factors of the environment in which it operates	OpportunitiesThings that are good for the future, prioritize them, capture them, build on them and optimize	ThreatsThings that are bad for the future, put in plans to manage them or counter them

Aim of a SWOT analysis

• Reveal your competitive advantages
• Analyse your prospects for sales and profitability
• Prepare your company for problems
• Allow for the development of contingency plans

A SWOT analysis is a process to identify where you are strong and vulnerable — where you should defend and attack. The result of the process is a ‘plan of action’, or ‘action plan’.

The analysis can be performed on a product, on a service, a company or even on an individual.

Done properly, SWOT will give you the BIG PICTURE of the MOST IMPORTANT FACTORS that influence SURVIVAL and PROSPERITY. As well as a PLAN to ACT ON.

How to do a SWOT

Irrespective of whether you or your team are future planning for specific products, work, personal or any other area, the SWOT analysis process is the same.

• Step 1 – Information collection – In the here and now…
  List all strengths that exist now. Then in turn, list all weaknesses that exist now. Be realistic but avoid modesty!
  • You can conduct one-on-one interviews. Or get a group together to brainstorm. A bit of both is frequently best.
  • You’ll first want to prepare questions that relate to the specific company or product that you are analyzing. You’ll find some questions and issues below to get you going.
  • When facilitating a SWOT – search for insight through intelligent questioning and probing

• Step 2 – What might be…
  List all opportunities that exist in the future. Opportunities are potential future strengths. Then in turn, list all threats that exist in the future. Threats are potential future weaknesses.
• Step 3 – Plan of action…
  Review your SWOT matrix with a view to creating an action plan to address each of the four areas.

SWOT in summary:

• Strengths need to be maintained, built upon or leveraged.
• Weaknesses need to be remedied, changed or stopped.
• Opportunities need to be prioritized, captured,built on and optimized.
• Threats need to be countered or minimized and managed.

A SWOT analysis can be very subjective, and two people rarely come-up with the same final version of SWOT. It is an excellent tool however, for looking at
the negative factors first in order to turn them into positive factors. Use SWOT as guide and not a prescription.

Simple rules for a successful SWOT analysis

• Be realistic about the strengths and weaknesses of your organization.
• The Analysis should distinguish between where your organization is today, and where it could be in the future.
• Be specific. Avoid gray areas.
• Always analyze in relation to your competition i.e. better than or worse than your competition.
• Keep your SWOT short and simple.
• Avoid complexity and over analysis.

What makes a SWOT analysis work?

Due to the collaborative nature of this tool, your working group will need certain qualities to succeed:

• Trust – The questions that SWOT will bring up, particularly in the Weaknesses and Threats categories may be uncomfortable. Your group must be at a point in its working relationship where weaknesses and potential threats can be faced openly and objectively.
• Ability and willingness to implement change.
• Diversity – The team conducting the SWOT analysis should be representative of your entire planning team.
• Time – Taking time to do a thorough SWOT assessment will help your group move forward in developing a workable plan.

Steps/ Process

• Establish that your coalition has the necessary components to successfully conduct a SWOT analysis (above).
• Assemble the group that will conduct the SWOT
• Set up meeting times (if the SWOT is not going to be completed in one ‘sitting’
• Distribute/ complete the tool individually
• In the group meeting, combine individual answers. Collaborate on each category. Complete the analysis.
• Discuss how to use the information gathered from the SWOT to inform your next steps.

Using SWOTs with an Objective or Goal

If a SWOT analysis does not start with defining a desired end state or objective, it runs the risk of being an exercise for the sake of an exercise (i.e. useless).

A SWOT analysis may (should) be incorporated into a strategic planning model.

If a clear objective has been identified, SWOT analysis can be used to help in the pursuit of that objective.

In this case, SWOTs are:

• 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 that are harmful to achieving the objective.

Decision makers can then determine whether the objective is attainable, given the SWOT’s. If the objective is NOT attainable a different objective must be selected and the process repeated.

Use of SWOTs: Generating Strategies – get them USED

When the desired objective has been deemed attainable, the SWOTs are used as inputs to the creative generation of possible strategies, by asking and answering each of the following four questions, many times:

• How can we Use each Strength?
• How can we Stop each Weakness?
• How can we Exploit each Opportunity?
• How can we Defend against each Threat?

Ideally a cross-functional team or a task force that represents a broad range of perspectives should carry out the SWOT analysis. For example, a SWOT team may include an accountant, a salesperson, an executive manager, operational staff and an engineer,

What strengths and weaknesses are examined
The strengths and weaknesses analysis is an internal examination that focuses on your past performance, present strategy, resources and capabilities. It is based on an analysis of facts and assumptions about the company, including:

• People (Human Resources)
  • People and skills (in particular marketing, export experience)
  • staff development
• Properties (Buildings, Equipments and other facilities)
• Processes (Such as quality, finance, M.I.S etc.)
  • Financial resources (debt to asset ratio and personal equity)
  • Governance
  • Management/ leadership
  • Staff development
  • Communication
• Products (Publications etc.)
  • Sales
  • Products
  • Markets
  • Capabilities/scaleability
  • Capital structure suppliers
  • Customers (market research)
  • Intellectual property

In other words -

• Strengths
  • What do you do well? Is there anything you do better than most? Better than anyone else?
• Weaknesses
  • What should be improved? What do you do poorly? What should you avoid, based on mistakes in the past?

What opportunities and threats are examined

The opportunity and threat analysis is carried out by examining external factors in your domestic and export market(s). This is usually broken down into environmental factors and competitors, including:

Environmental Factors	Competitor Factors
Demographics Economic Political/legal Sociological Environmental Technology Cultural	Capability Resources Ownership New entrants Market segments Products Prices Promotion Distribution Substitute products Suppliers customers Product life cycle Risk and cost of intellectual property violation of your product

Opportunities and threats are often taken from a PESTLE analysis

In other words -

• Opportunities
  • Where can you find, or create, a competitive advantage? What are some major trends in your business?
    - Consolidation / Diversification?
    - Specialization / Generalization?
    - Changes in technology. Such as computer software that lets you perform services that others can not.
    - Changes in the types of businesses in your potential market, such as the demand for healthcare or telecommunications expertise.
    - Changes in social patterns, population profiles, lifestyle.
    - Changes in creative trends.
    - Changes in demand for certain types of services, perhaps related to interactive / Internet.
• Threats
  • What obstacles do you face? What are your competitors doing that may result in a loss of clients, customers, market share? Are the required specifications for your job, products or services changing? Is changing technology threatening your position? Do you have cash-flow problems?

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Is the defined objective attainable?

Since historical and trend data are not given, it is difficult to judge whether the business can be doubled as that would require an annual growth rate of 26 per cent per year.  Therefore, it would be more realistic to restate the objective as: “To increase the business over the next three years.”  The same SWOT details apply.

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More examples of SWOT in use and types of application

		INTERNAL
		Strengths willingness of staff to change good location of facility perception of quality of services	Weaknesses staff lack of motivation small building paperwork and bureaucracy cultural differences with users
E X T E R N A L	Opportunities support of local government high felt need of users little competition internationally funded projects	SO Options training of staff in interactive techniques of quality improvement coordination with other providers to cover all user needs	WO Options remodeling of facility with local government funds and international help
	Threats low income of users bad roads low salaries lack of budget paradigms of providers	ST Options cost recovery of products/ services with user fees payment of incentives to staff based on performance	WT Options review of procedures for decreasing costs and waiting times and increasing perceived quality

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SWOT Examples

You know the situation, you are asked to undertake a simple SWOT analysis of a department.  You are given a little time and are aware of certain factors which may or may not impact. So lets have a look at the first initial SWOT:

A SWOT on a Human Resource function:

Strengths	Weaknesses	Opportunities	Threats
Developed techniques for dealing with major areas of HR, job evaluation, psychometric testing and basic training	Reactive rather than pro-active; needs to be asked rather than developing unsolicited ideas	New management team, wanting to improve overall organizational effectiveness through organizational development and cultural management programmes	HR contribution not recognized by top management who by-pass it by employing external consultants

Or from another point of view:

Strengths	Weaknesses	Opportunities	Threats
Able to react to changing conditions effectively	Reliant on specific individuals with key skills and external tools which may change without our control	To use external consultants as a channel to influence senior management	New management team want to make their own mark and have a history of outsourcing

So as you can see there is no right or wrong answer to any section, it is down to your analysis of the situation.

SWOT Analysis are more effective when undertaken as a team activity with people from varying backgrounds and experiences. The very best application of a SWOT analysis is when a task team or change team is assembled to undertake the data capture and analysis. A team approach will help to ensure a balanced approach and that one aspect is not emphasized inappropriately.

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SWOT Examples continued

SWOT analysis approach can be used for:

• Business Planning
• Career development
• Competitor analysis
• Situational analysis
• Strategic planning
• Personal development
• Managing people
• Innovation
• Problem Solving

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What is a SWOT analysis?

When undertaking a traditional strategic planning process, debating future direction, or assessing existing opportunities for the organization, a board or management team can rely on a SWOT analysis for help. During the analysis, the team lists and assesses the organization’s Strengths, Weaknesses, Opportunities, and Threats. Each of these controlling forces prompts the team to consider factors that might easily be overlooked as it shapes the future of the organization.

This process provides insights to the organization’s internal and external positioning, examining internal and external elements that must be factored into future decision making. It prohibits the organization from becoming too insular and functioning without proper feedback.

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Conduct a SWOT analysis on your company.

Conduct a SWOT analysis on your product

Conduct a SWOT analysis on your services

Conduct a SWOT analysis on yourself.

Conduct a SWOT analysis on your web site.

Conduct a SWOT analysis on your intranet site.

Conduct a SWOT analysis on your competitors

Offer a SWOT analysis to your current clients.

Offer a SWOT analysis to your current customers.

Note

“Management tools can help to better understand particular aspects of an organization or its environment. For the following step – the analysis of insights provided by the models – however, there is no model. Management models are effective only if their users are able to realize connections and gaps and to draw appropriate conclusions.” – Dagmar Recklies

For a complete Internal SWot, look at our Business Improvement Review or access the limited function free version here

Find out more about our proven diagnostic tools:

Please visit our main SWOT analysis page for more information

This page has been developed by Mike Morrison – Principle consultant at RapidBI.  You are free to use any of the SWOT tools on this page, however if you wish to use this page on a web site please credit us and link to our home page, and keep all links intact.

Based upon information from www.businessballs.com www.wikipedia.com, Albert S Humphrey, Stanford Research Institute,

Armstrong. – M. A handbook of Human Resource Management Practice (10th edition) , Armstrong.M – Management Processes and Functions
J. Scott Armstrong – “The Value of Formal Planning for Strategic Decisions”. Strategic Management Journal, Gower handbook of Management Skills, Handy – Understanding Organizations, Hill, T. & R. Westbrook – “SWOT Analysis: It’s Time for a Product Recall”. Long Range Planning
Menon, A. et al. – “Antecedents and Consequences of Marketing Strategy Making”. Journal of Marketing, and many other sources.

No copyright is assumed. This page is provided for educational purposes only. RapidBI Ltd cannot accept any responsibility for the actions taken using this or any of the tools provided on this site. Please note this page is updated on a regular basis.  The more feedback we get the more we will develop this and similar pages for people studying CIPD and other HR and management programmes.

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RapidBI is an organizational effectiveness consultancy based in the UK but working internationally.
© RapidBI & Mike Morrison 2011 - this article/ page is free to copy and use on the condition that an active link back and reference is made to this site and page. Thank you for your understanding and co-operation.

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