SWOT (Strengths, Weakness, Opportunities, and Threats) analysis is an analytic modifier used to categorize internal and external forces in order to simplify strategy discussions and development. Internal forces are divided into strengths and weaknesses, while external forces are categorized into threats and opportunities. SWOT analysis is both an operational and intelligence tool. While operational personnel are primarily concerned with the organization’s strengths and weaknesses (the internal forces), intelligence personnel are focused on the opportunities and threats (the external forces).
1. Overrides “silos” within organizations by serving as a platform to externalize ideas previously entrenched within a division or unit in a structured way for preliminary analysis.
2. Provides a snapshot of the organization’s competitive traits and relates them to external forces.
3. Prioritizes courses of action likely to yield the most success to the organization by integrating the organization’s perception of strengths and weaknesses with estimates of external opportunities and threats pulled from the research collected in the structured process.
4. Indirectly adds value to strategic planning by integrating intelligence and operational variables into categories for further discussion and analysis.
5. Ability to combine the output of a SWOT with other techniques such as STEEP and competitor analysis for any application that look at internal and external capabilities, resources, and forces to determine future decisions likely to produce success for the organization.
1. The simplicity of this modifier may create an unactionable product
2. Management may not utilize the SWOT information provided
3. The validity of this modifier is questioned
4. Companies list an excessive number of strengths and weaknesses when completing SWOT
5. No straightforward methodology for identifying strengths and weaknesses
6. Strengths and weaknesses are not listed in a hierarchy
7. SWOT examines a company at the moment the analysis is completed and does not monitor changes over time
Step by Step:
Note: There is no agreed upon step by step action to complete a SWOT analysis. This step by step process was identified as a common one across different articles:
- A group of individuals must be assembled to complete a SWOT analysis.
- The group begins by examining itself internally by listing 9-12 strengths and weaknesses of their company, group, or whomever they represent. When listing strengths and weaknesses, it is important to list only those the company directly causes.
- The group continues by then listing external opportunities and threats that will directly impact the success of the group.
- The group then identifies strategies for how its strengths can be used to address the present opportunities and threats
- The group then identifies strategies for how its weaknesses can be mitigated while addressing the present opportunities and threats
Classmates were tasked with helping a leisure center identify new strategies based off the results of a SWOT analysis. The participants were given a list of fourteen statements (for list of statements, please use hyperlink provided below) about the leisure center as well as the external environment. Individually, the participants used the fourteen statements to identify the strengths and weaknesses of the leisure center and the external opportunities and threats facing the company.
The participants came together as a group and combined their responses into one SWOT product. For example, the group identified that the leisure center had a highly respectful staff and had been awarded a grant for quality assurance. Weakness of the center included a poor food court and a lack of certain equipment, such as whirlpools. External opportunities included higher life expectancy in the area as well as a scuba vendor looking for a new venue. The local area has been experiencing a declining birth rate over the last ten years, which poses a threat to the center.
After completing the SWOT analysis, the class looked to leverage the center’s strenghts and weaknesses to either take advantage of certain opportunities in the market or mitigate external threats. The class determined the overall strategy should be to target the older population as the company had been awarded a grant for special ramps and changing rooms for the disabled and people, in general, have higher life expectancies. In total, four strategies were developed by the group.
Documents used as part of this exercise included...
Market Teacher SWOT Exercise