What is SWOT Analysis

Calendar April 8, 2009 | Posted by lmfoong

 

 

SWOT Analysis

is an abbreviation for Strengths-Weaknesses-Opportunities-Threats. It is a tool widely used as an integral part of a Strategic Planning Process. In many cases, it is presented in a form of template and example. There are many ways how a SWOT analysis template | matrix is used.

Although I provide some example, it is not my intention to compare what are the differences but to share how I used the example of SWOT Analysis Template | Matrix during my Strategic Planning workshops.

Strengths
Is is represented at the left top quadrant of the SWOT Analysis Template | Matrix. This is an internal factor deals with the strengths in an operation. It is internal because it takes into considerations of the level of competency for their internal capability. They are many factors in an operation that can be considered as strengths. For example; skillful workforce, financial independence etc. It is normally highlighted during brainstorming among management members.

When the list of factors for Strengths may become too many, then it should be grouped using Stratification method. Then reduce it further to three to five items using appropriate tools such as , multi-voting, Selection grids etc. Once it is done, rank these items by comparing own company with better competitors. Force ranking is sometime used an alternative to multi-voting. Example of STRENGTHS in Internet Business:-

  • Able to design simple website or blog
  • Good knowledge in Strategic Planning Process

Weaknesses
Is is represented at the right top quadrant of the  SWOT Analysis Template | Matrix. Similar to the above, it is an internal factor deals with the weaknesses of the operation considering the level of competence as compared to their better competitors. For example: high machine downtime, failure in delivery etc. With weaknesses identified by way of brainstorming, the factors might be too many.

When the list of factors for weaknesses is too many, then it should be grouped using Stratification method. Then reduce it further to three to five items using appropriate tools such as , multi-voting, Selection grids etc. Once it is done, rank these items by comparing own company with better competitors. Force ranking is sometime used an alternative to multi-voting. Example of WEAKNESSES : -

  • No sure how to drive traffic to own website
  • Limited fund

Opportunities
Is is represented at the left bottom quadrant of the SWOT Analysis Template | Matrix. This is an important factor to identify opportunity as a result of external influence. It is often leads to more business or investment as well as opportunity for innovation of products and services. For example: New market emerge, high demand in new product etc. Due to the fact it is external, many assumptions is used.

However, given the constraints, one should try to quantify the assumptions so that the conclusion of this factor is real. In real life application, there are cases where opportunities derived from operation are park in this section. Rightfully, it can be rephrased such that it became a Strength instead. Example of OPPORTUNITIES in Internet Business:-

  • Internet Market demand is very big
  • Free website, template and tutorial is available

Threats
Is is represented at the right bottom quadrant of the SWOT Analysis Template | Matrix. This is another important and critical factor to deal with. For example: Economic downturn, forex uncertainty etc. It has great influence to the success or failure of an organization if not dealt with appropriately.

This section look for factors that can put an organization in a loss-loss situation. Example it may either reduce the market share or its profitability. Once again, since it is an external factor, its reality is assumed. However, in many cases, they can be verified by announcement, publications etc. On the other hand, if organizations act on these factors, it may not always mitigate the threat because the threat is not real. One example is the Y2K issue. Example of THREATS :-

  • Virus attack
  • Search Engines may ban my website

In summary, the SWOT Analysis Template | Matrix provides a guidelines to understand the tools better. It is for you to provide objective input pertaining the four factors of SWOT. The higher the quality, the more realistic a strategy can be formulated. Click SWOT Analysis in Graphic Illustrations to read this article with graphic illustration !

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