Thursday, March 12, 2009

European Commission Joint Research Centre (JRC): SWOT Analysis


The European Commission Joint Research Centre’s Online Foresight Guide summarizes SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis as an analytical method that is used to illustrate and prioritize internal factors (strengths & weaknesses) and external factors (opportunities & threats) within an organization or territory. The main purpose of conducting a SWOT analysis is to improve the competitiveness of a company or territory. Improving an organization’s competitive edge is achieved by collecting and portraying the internal and external factors that may, in one way or another, have an impact on that organization. The list of strengths and weaknesses is typically derived through an analysis of the organizations resources and capabilities while the opportunities and threats emerge through an analysis of the organizational environment/culture. To successfully improve competitiveness, strengths should be paired with opportunities while simultaneously warding off threats and overcoming weaknesses.

After strengths, weaknesses, opportunities, and threats are identified and listed, they are organized in a matrix. The matrix allows for the most important factors to be displayed and compared against the other categorical factors.

The JRC states that SWOT analysis is not necessarily a forecasting method; however, this particular analytical method is a good starting point for discussions concerning foresight.

The Pros:
  • Simple & flexible
  • Does not require technical knowledge or skill to implement
  • Allows for synthesis and integration of general knowledge and developing knowledge
  • Demonstrates a correlation the internal factors (SW) and external factors (OT)
  • Allows for clearer contingency plans for an organization to overcome threats and weaknesses
The Cons:
  • The list of factors (which are oftentimes lengthy) must be taken into account when analyzing
  • Can be time consuming
  • No method for prioritizing the factors
  • No method for solving disagreements if conducting SWOT analysis in a team
  • Single level analysis – not multi-level
  • Can be risky if factors are too vague and ill-defined, or if compiler bias is inserted into the process

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