Also known as Situational Analysis and TOWS.
Variants include Porter’s Five Forces Analysis and 5C Analysis.
SWOT analysis is a structured planning tool for reviewing and assessing the position and health of an organization. It allows the organization to look deeply within itself to understand the factors that influence its ability to achieve its goals. It can be applied not only at the organizational level, but also to a business unit, division, department, project, and even in personal development and career progression. SWOT simply stands for Strengths, Weaknesses, Opportunities, and Threats.
In order to execute a strategy within an organization, it is important to understand the factors influencing the business performance, and this is where SWOT analysis comes in. It has become one of the most popular strategic planning tools, and often used before developing or updating the strategic plan. It allows to examine the gap between where an organization currently is, where it aims to be in the future, and where it currently stands within the industry and market.
SWOT analysis helps identifying the strengths, weaknesses, opportunities, and threats related to a business venture. It involves identifying the key internal and external factors that are helping or hindering reaching business goals. Internal factors are the strengths and weaknesses within the organization, whereas external factors are the opportunities and threats presented by the external environment. Results of a SWOT analysis workshop are often presented in the form of a four-field matrix.
SWOT analysis has many uses other than in strategic planning. It can be useful, for example, when evaluating strategic alternatives like an investment opportunity, or a potential joint venture, partnership or acquisition. It can also be useful in project management during the prioritization process of projects to see which projects are more likely to succeed or fail. This will increase the chances to select a project or the strategic alternative with the greatest benefits.
Conducting a SWOT Analysis
SWOT analysis is normally led by a facilitator who has considerable responsibility for executing the company’s strategy. The following steps describe how to conduct a SWOT analysis:
- Invite representatives from finance, operation, marketing, and any other key players.
- Clearly explain the purpose for conducting the SWOT analysis and how you will do it.
- Hang out four large flipcharts, one for each of the four SWOT categories.
- Brainstorm the strengths and weaknesses within your business, and the opportunities and threats present in your environment.
- Record inputs and ideas from the brainstorming session on the flipcharts.
- Clarify content and ensure the appropriateness and completeness of the recorded information.
- Share and communicate the outcomes to relevant stakeholders.
- Take actions and assign responsibilities to maximize strengths and opportunities and minimize weaknesses and threats.
The following example uses a four-field matrix to present the outcome of a SWOT analysis for an organization. Note that it is normal for any business to have weaknesses and potential threats. Attempts should be made to convert weaknesses into strengths and threats into opportunities.
Personal SWOT Analysis
Although SWOT analysis was originally made for businesses, it can be used with equal success to identify and understand a person’s strengths, weaknesses, opportunities and threats. The analysis can help you to better understand many things about yourself and your external environment. You can then apply personal development strategies to turn weaknesses into strength, take advantages of strengths and opportunities, and minimize or eliminate weaknesses and threats.
The following is an example that uses SWOT analysis to identify and assess a person’s strengths, weaknesses, opportunities and threats.
There are many tools that can help you to record your inputs from a SWOT analysis workshop. One of the simplest ways is to use this SWOT analysis template.
If you want to use the following three documents in your training courses, the PPTX versions are available to buy from our Shop page.