The SWOT Model

Posted on May 15 2009

Strengths, Weaknesses, Opportunities and Threats

Strategic planning is not a precise science – no Decision Making Tool , such as swot , is mandatory, nor do any lessons in strategic planning dictate which steps or tools to use. It’s a matter of sensible choice as to what helps best to identify and illustrate the issues.

The SWOT analysis is an extremely useful tool for understanding and decision-making for all sorts of situations in business and organizations. It is an acronym for Strengths, Weaknesses, Opportunities, Threats. The idea is that you identify the strengths and weaknesses of your service, pinpoint opportunities and note threats in order to make good decisions . SWOT is normally an assessment of a business or a proposition, whether your own or a competitor’s.

The diagram is most often drawn on paper or electronically; it is a two-by-two matrix, with the titles, Strengths, Weaknesses across the top two cubes, and Opportunities and Threats drawn across the bottom two cubes.

The Quadrants (Strengths, Weaknesses, Opportunities and Threats) provide a good framework for reviewing strategy, position and direction of a company or business proposition, or any idea. The analysis measures a business unit, a proposition or idea; a PEST PEST analysis measures a market. Completing the analysis is very simple, and is a good subject for a group workshop session.

The analysis is a subjective assessment of data which is organized into a logical order that helps understanding, presentation, discussion and decision-making. The four sections are a useful extension of a basic two heading list of pro’s and con’s, or a plus, minus and interesting points analysis.

The analysis is also a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. Strengths and weaknesses are internal to an organization. Opportunities and threats originate from outside the organization.

This model is usually used early in the project development process, helps organizations evaluate the environmental factors and internal situation facing a project. It may be performed on a competing business.

It may also be used in conjunction with other methods and/or tools . An example is with Cost Analysis or benchmarking in order to assess numerical values or facts so that SWOT may be applied against it. Another example is PEST PEST, which is generally useful before completing a SWOT – and not usually vice-versa. PEST PESTcan help to identify SWOT factors. There is overlap between both models, in that similar factors would appear in each. They are two different, yet related perspectives: PEST PEST assesses a market, including competitors, from the standpoint of a particular proposition or a business.

All businesses benefit from this analysis model, and all businesses benefit from completing an analysis of their main competitors, which can then be used to provide some feed back into the economic aspects of the PEST PEST analysis.

The analysis can be used for all sorts of decision-making, and our FREE SWOT tool template enables creative thinking, rather than relying on a problem analysis or reactions.

Some examples of good decisions in which to use SWOT Analysis

• Decision to pursue a business idea

• Decision to acquire a company or a product/service line

• Decision to take on a partner

• Decision to expand globally

• Decision to franchise the business

• Decision to change or engage a supplier/vendor

• Decision a method of sales distribution

Depending on the circumstances which predicated the use of a SWOT analysis, it can produce issues which be very readily translated into actions. SWOT essentially lists the pros and cons about a business or a particular proposition. If it’s a business, and the aim is to improve it, then work on completing action plans for:

Strengths (maintain, build and leverage), Opportunities (prioritize and optimize), Weaknesses (remedy or exit), Threats (defend and oppose)

If the SWOT analysis is being used to analyze the potential success or failure of a proposition, the result might be that it is too weak to warrant further investment. In this case it may require further action planning, other than exit, especially if compared with other SWOT’s for alternative propositions.

If the proposition is clearly strong, you should attempt to verify this using other methods as well. If this still rings true, you would proceed as for a business, and transfer issues into specific categorized actions, each with respective ownership by individuals or team(s).

• Decision on a product or brand

• Decision on a a strategic option, for example – enter a new market or launch a new product

• Decision to outsource a service or resource

• Decision on an investment opportunity

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