SWOT Analysis

A SWOT analysis (alternatively SWOT matrix) is a structured planning method used to evaluate the strengths,
weaknesses, opportunities, and threats involved in a project or in a business venture. A SWOT analysis can be
carried out for a product, place, industry or person. It involves specifying the objective of the business venture or
project and identifying the internal and external factors that are favorable and unfavorable to achieve that
objective.

Setting the objective should be done after the SWOT analysis has been performed. This would allow achievable
goals or objectives to be set for the organization.

 Strengths: characteristics of the business or project that give it an advantage over others.
 Weaknesses: characteristics that place the business or project at a disadvantage relative to others
 Opportunities: elements that the project could exploit to its advantage
 Threats: elements in the environment that could cause trouble for the business or project

Strengths and weaknesses are internal to an organization —things that organization have some control over and
can change. Examples include who is on team, organization’s patents and intellectual property, and location.

Opportunities and threats are external—things that are going on outside of an organization, in the larger market.
The organization can take advantage of opportunities and protect against threats, but it can’t change them.
Examples include competitors, prices of raw materials, and customer shopping trends.

Identification of SWOTs is important because they can inform later steps in planning to achieve the objective.

First, the decision makers should consider whether the objective is attainable, given the SWOTs. If the objective
is not attainable a different objective must be selected and the process repeated.

Users of SWOT analysis need to ask and answer questions that generate meaningful information for each
category (strengths, weaknesses, opportunities, and threats) to make the analysis useful and find their
competitive advantage

Some authors credit SWOT to Albert Humphrey, who led a convention at the Stanford Research Institute
(now SRI International) in the 1960s and 1970s using data from Fortune 500 companies. However,
Humphrey himself did not claim the creation of SWOT, and the origins remain obscure. (Wikipedia)
Conducting the SWOT Analysis

Ideally, in a group or workshop, brainstorm each category and capture the strengths, weaknesses, opportunities,
and threats pertinent to the situation, context, strategy or project. Aim to only include key points and make sure
these are backed up with evidence ― but don’t be too rigid.

Also, don’t spend too much time capturing this information and don’t over analyze. As with all brainstorming
exercises the aim is to capture ideas pertinent to the current business situation.

Finally, highlight the most important issues and then rank them in order of importance before using our SWOT
analysis example as a checklist for your own SWOT.

Checklist of Possible SWOT Factors ― SWOT Analysis Example

Internal Factors
Strengths Weaknesses
 Leadership and management skills  Lack leadership and management skills
 Core competences  Key skills gaps
 Resources  Weak finances
 Reputation  Low quality and reputation
 Product or service quality  Products or services not differentiated
 Market position
 Capacity
External Factors
Opportunities Threats
 Economic growth  Economic downturn
 New products or services  New market entrants
 Weak competitors  Increased competition
 Demographic change  Slow growth
 Change in political and economic environment  Change in political and economic environment
 Market growth  Technological threat
 Global influences  Global warming/ weather
 New technology developments  Demographic change

Developing a Strategic Plan

The next stage of the analysis is to take the highest ranking strengths, weaknesses, opportunities and threats
and answer the following questions:

1. How do you use your strengths to take advantage of opportunities?

2. How do you overcome weaknesses preventing you from taking advantage of opportunities?
3. How can your strengths reduce the probability of threats?
4. What can you do about your weaknesses to make the threats less likely?
As you answer these questions you will begin to understand the external forces you contend with and how to
tackle them. Use your understanding of the implications to develop a plan of action.

Benefits and advantages

The SWOT helps any organization to decide its future strategy. An organization can develop its strategy build
upon its strengths in order to utilize the opportunities as well as eliminating weakness and protecting itself from
any threat.
The SWOT analysis in social work practice framework is beneficial because it helps organizations decide
whether or not an objective is obtainable and therefore enables organizations to set achievable goals, objectives,
and steps to further the social change or community development effort. It enables organizers to take visions and
produce practical and efficient outcomes that effect long-lasting change, and it helps organizations gather
meaningful information to maximize their potential. Completing a SWOT analysis is a useful process regarding
the consideration of key organizational priorities, such as gender and cultural diversity and fundraising
objectives.

Limitations

SWOT is intended as a starting point for discussion and cannot, in itself, show managers how to achieve a
competitive advantage. Because the SWOT analysis is a snapshot of the firm at a particular moment in time, the
analysis might obscure the fact that both the internal and external environment are rapidly changing.

Some authors have critiqued the misuse of the SWOT analysis as a technique that can be quickly designed
without critical thought leading to a misrepresentation of strengths, weaknesses, opportunities, and threats within
an organization's internal and external surroundings. If a firm becomes preoccupied with a single strength, such
as cost control, they can neglect their weaknesses, such as product quality.

Another limitation includes the development of a SWOT analysis simply to defend previously decided goals and
objectives. This misuse leads to limitations on brainstorming possibilities and "real" identification of barriers.

Summary

The SWOT analysis is about capitalizing your strengths, overcoming weaknesses, exploiting opportunities, and
countering threats. Moreover, it is about identifying the most important issues, setting priorities, appraising the
options, and taking action.This should all be done in the context of the organization, project or situation and
customer.

So you see, the output of the SWOT analysis is not simply a matrix or grid but rather a concise report containing
clear goals and activities that should be communicated to your stakeholders.

Figure: SWOT matrix