SWOT analysis is an analytical method, which is used to identify and categorise significant internal factors (i.e.

strengths and weaknesses) and external factors (i.e. opportunities and threats) an organisation faces. Page contents:

Description When is this method appropriate? Who is it for? Who is usually involved? Main steps Resources Outputs Pros and cons Variations Complementary methods Checklist References

O v e r a l l des c r i pt i o n
SWOT analysis is an analytical method which is used to identify and categorise significant internal (Strengths and Weaknesses) and external (Opportunities and Threats) factors faced either in a particular arena, such as an organisation, or a territory, such as a region, nation, or city. It provides information that is helpful in matching the firms' resources and capabilities to the competitive environment in which it operates and is therefore an important contribution to the strategic planning process. It should not be viewed as a static method with emphasis solely on its output, but should be used as a dynamic part of the management and business development process.

W h e n is t h is me t ho d ap p r op r ia t e?
SWOT analysis involves the collection and portrayal of information about internal and external factors that have, or may have, an impact on the evolution of an organisation or business. It generally provides a list of an organisation's Strengths and Weaknesses as indicated by an analysis of its resources and capabilities, plus a list of the Threats and Opportunities identified by an analysis of its environment. Strategic logic requires that the future pattern of actions to be taken should match strengths with opportunities ward off threats and seek to overcome weaknesses. SWOT analysis is not necessarily a Foresight approach but can be a good starting point for the discussions in Foresight. Another possibility is matching your own strengths and weaknesses against different Foresight results. The different viewpoints can be a starting point for a discussion of the real threats and opportunities.

W h o is t h i s a p pr o ac h ap p r op r ia t e f o r ?
For those who want to improve the competitiveness of a company, region or country.

W h o is t y p i c a l l y i nv o lv e d ?
People directly involved in various hierarchical levels of decision making in an organisation or business, or a wider sample of actors if the SWOT analysis concerns a whole region or nation. Representatives from a variety of

stakeholders groups should be involved, as they would bring in the analysis their own particular perspectives. At least one expert in SWOT analysis should take part or moderate the process.

S t e p -by -s t e p gu i d e
Drawing up Opportunity and Threat matrices encourages an assessment of the likely probability and impact any factor may have on the organisation. A scoring system can be used to assign importance to factors. A factor with a high score on both 'probability of occurrence' and 'likely impact on the organisation or business', would have to be one worthy of close attention and play a significant part in the development of a strategic plan. Similarly, Strengths and Weaknesses can be assessed against a scoring system that allows the factors to be identified according to their significance (i.e. major, minor, neutral) and level of importance (high, medium, low). It is possible to represent this analysis in a Performance-Importance matrix that highlights those factors which are both important and in which performance of the organisation/ business is low. It is towards these factors that strategy should be addressed. To be more specific, the set of questions that needs to be answered should be similar to the following:

Strengths

What are your advantages? What do you do well? What relevant resources do you have access to? What do other people see as your strengths?

Consider this from your own point of view and from the point of view of the people you deal with. Don't be modest. Be realistic. If you are having any difficulty with this, try writing down a list of your organisation's characteristics. Some of these will hopefully be strengths! In looking at your strengths, think about them in relation to your competitors - for example, if all your competitors provide high quality products, then a high quality production process is not a strength in the market, it is a necessity.

Weaknesses

What could you improve? What do you do badly? What should you avoid?

Again, consider this from an internal and external viewpoint: Do other people seem to perceive weaknesses that you do not see? Are your competitors doing any better than you? It is best to be realistic now, and face any unpleasant truths as soon as possible.

Opportunities

Where are the good opportunities in front of you? What are the interesting trends you are 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, lifestyles, etc. Local Events

A useful approach to 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 is your competition doing? Are the required 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?

Carrying out this analysis will often be illuminating - both in terms of pointing out what needs to be done, and in putting problems into perspective.

R e s o u rc es n e ed e d (t im e, bu dg e t , l a b o ur f o rc e , s k i l ls )
A SWOT analysis is based on hard facts. These can be time-consuming and costly to gather. People are needed who have a good knowledge of the sector, region, area or country, etc. under analysis in the specific exercise.

O ut p ut s
The main tangible output is a matrix presenting the most important strengths, weaknesses, opportunities and threats for the area, sector, region, country examined and aiming at giving a reasonable overview of major issues that can be taken into account when subsequently drawing up strategic plans for an organisation.

P r os a n d c o ns
The success of this method is mainly owed to its simplicity and its flexibility. Its implementation does not require technical knowledge and skills. SWOT analysis allows the synthesis and integration of various types of information which are generally known but still makes it possible to organise and synthesise recent information as well. It is worth pointing out that whereas SWOT analysis is often not seen strictly speaking as a Foresight method, it is fruitful to consider it from this perspective. Indeed, Foresight is particularly useful for addressing the OT dimensions, whereas SWOT analyses often fail because of poor examination of OT (opportunities and threats). A correlation is made between the internal factors, strengths and weaknesses of the organisation, and the external factors, opportunities and threats. An effort can be made to exploit opportunities and overcome weaknesses and at the same time for the organisation to protect itself from the threats of the external environment through the development of contingency plans. The most common drawbacks of SWOT analysis are:

The length of the lists of factors that have to be taken into account in the analysis; Lack of prioritisation of factors, there being no requirement for their classification and evaluation;

No suggestions for solving disagreements; No obligation to verify statements or aspects based on the data or the analysis; Analysis only at a single level (not multi-level analysis); No rational correlation with the implementation phases of the exercise.

Moreover, there are risks of:

Inadequate definition of factors; Over-subjectivity in the generation of factors (compiler bias); The use of ambiguous and vague words and phrases

One has to be aware that this method is very commonly used by consulting firms and that for this reason some people in the public/quasi-public sector have an aversion to it.

P os s i b l e v a r i at io n s of ap p r oac h
A SWOT analysis could be performed in other contexts than those of an organisation, for instance in the case of an individual facing major decisions such as professional orientation.

P os s i b l e c om p le m e nt a ry m et ho d s
The brainstorming technique can be used within this method. SWOT analysis can be used prior to scenario building to highlight some important factors, prior to aDelphi survey to help focus the questionnaire.

" I s it f o r me ? " - C h ec k l is t
You should use SWOT analysis if:

You need to identify the strengths and weaknesses of your organisation, sector, area, region, country, etc; You need to identify what are the main threats and opportunities faced by your your organisation, sector, area, region, country, etc; You need to decide what are the most appropriate methods and tools to be used for the implementation of a foresight exercise.

SWOT analysis is a framework for analysing your strengths and weaknesses, and the opportunities and threats you face. This will help you to focus on your strengths, minimise weaknesses, and take the greatest possible advantage of opportunities available.

R e f e r e nc es

Strategic Management and Business Policy-Entering the 21st century Global Society, Thomas L. Wheelen & J. David Hunger, Addison Wesley, 1998. Businessballs personal and organisational development website[http://www.businessballs.com/swotanalysisfreetemplate.htm] Planonline.org strategic planning website[http://www.planonline.org/planning/strategic/swot.htm] The "Communicator" online journal [http://www.amputee-coalition.org/communicator/vol2no4pg1.html]

SWOT Analysis + PO
A SWOT analysis offers you an overview of a small companys state of affairs at a given time.

Related answers:

Having evaluated and recognised your companys state of affairs, you are in a better position to work out a strategy for your future busin

A SWOT can also be used to evaluate other things than a private company. It could e.g. help you evaluate a new product or a marketing SWOT + PO This SWOT analysis is expanded to include PO (Possibilities & Obstacles). This is done in order to qualify the issues in the OT (Opportunities, Threats) and it may point to issues in the strategy. It works like this The SWOT + PO analysis is structured as shown below:

The companys internal capabilities (Strengths & Weaknesses) External parameters affecting the company (Opportunities & Threats) Qualifying the Opportunities & Threats with Possibilities & Obstacles

INTERNAL - within the business reach STRENGTHS

Strengths are what your company is good at at present. It is a snap photo of the present situation. Such as: Personal competencies, core area knowledge, family support, good reputation, well-situated premises, sound economy, good relationship with the bank, special organisation, cooperation partners, business concept, high turnover, high gross profit, alternative products/services, novel products, advanced technology, unique marketing....

WEAKNESSES
Weaknesses could be something your company does not have at the moment or is less good at compared to your competitors.
Such as: Personal qualities, lack of core area knowledge, family doesnt support, bad reputation, adverse location, bad economy, sceptical banker, special organisation, cooperation partners, business concept, proceeds, turnover, alternative products/services, outdated products, obsolete technology, no marketing..

EXTERNAL outside the businesss reach OPPORTUNITIES

Opportunities in the market can be seized or missed. You cannot change them, you have to adapt to them. Such as:

THREATS
Threats are external parameters threatening your companys business strengths. Such as:

New customer groups move to your area, increased purchasing power, high birth rates, expansion of public institutions, new trends, advanced technology, dying competition, capital infusion, timing, network, grants/ subsidies, suppliers credit, swift market penetration, new legislation, Asian progress

Customers moving or go bankrupt, weakened purchasing power, low birth rates, building freeze, new trends, new technologies, new competition, timing, networks disintegrate, grants/ subsidies, supplier restrictions, new legislation, a country goes bankrupt..

+ PO Go back and look at your OT (Opportunities and Threats). You have probably mixed the external opportunities and threats with possibilit (PO) within the company.

Move all issues that the company can have influence on from Opportunities to Possibilities Move all issues that the company can have influence on from Threat to Obstacles

You will now be able to focus on the external OT issues that you have no influence on. The PO might point out some of the issues your company could work on to overcome some of the challenges.

INTERNAL - within the business reach POSSIBILITIES

Possibilities are what the company could be good at if plans and hard work turned out right. Such as: Become the chairman of the local football club, your daughter steps into the company, you persuade the shop owner across the street that you can take over the lease or you finally make your invention work, you get an article in the perfect industry magazine .

OBSTACLES
Obstacles are what could happen if things dont turn out as you expect and planned. Such as: You fail your exam, dont manage to make your obsolete machine work, you dont have time enough to work hard in your company, old debt suddenly has to be paid, you have to leave the country .

How to use SWOT + PO The SWOT + PO analysis is a tool allowing you to evaluate your company and may give you the possibility to see directions for your com The most important questions that the SWOT analysis sheds light on:

Does the company have core areas to base a strategy on? Does the company have weaknesses that make it vulnerable and are there means to cure this? What market opportunities does your company have with its present knowledge and resources? (Opportunities not backed by re illusions)

What external threats must the company be aware of?

Strategy Opportunities and Threats affect your companys rate of activity. Thus, a strategy must include the below features:

Focused on market opportunities using your companys strength Be a defence against external threats

Core business The secret of all strategic planning is the ability to boil down your companys strengths of management, services/products, marketing, de your companys core business. The core business is the specific variation of your product or service that makes it unique compared to o products. The core business of www.dynamicbusinessplan.com is to Deliver business essentials for entrepreneurs

Core Competence Core competence is the features that make your company differ from your competitors. Often, the core competence is to be found in a person possessing, great trade skills or specialised manufacturing know-how within an ar Only rarely does core competence derive from a physical object. There are many features of core competence:

Professional and competent manufacturing process / performance of service Friendly and competent staff Confidence-inspiring sales attitude Profound expertise Growth orientation Concise sales letter formulating capacity Gift of seizing business opportunities Effective salesmanship One of three with expert knowledge within a field Well-situated premises Large network within the product line

- Free download of SWOT analysis