A SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. The technique is credited to Albert Humphrey, who led a convention at the Stanford Research Institute 1960s and 1970s using data from Fortune 500 companies.
By applying a SWOT analysis you are able to define the:
- Strengths: characteristics of the business, or project team that give it an advantage over others
- Weaknesses: are characteristics that place the team at a disadvantage relative to others
- Opportunities: external chances to improve performance in the environment
- Threats: external elements in the environment that could cause trouble for the business or project
So when you are conducting a SWOT analysis you will be required to write down answers to the following questions:
- Strengths, what do you do well? What are your advantages? Consider this from your point of view and that of others. Be realistic but not modest, add to this a list of your characteristics, hopefully some of these will be strengths.
- Weaknesses, what is done badly? What could be improved? What should be avoided? Consider this question from and internal and external perspective – is it possible others see weaknesses you do not? Are your competitors doing better? Be realistic, looking any unpleasant truths face on.
- Opportunities, what are the interesting trends? Where are the opportunities available to you?
- Threats, what obstacles to you face? How are your competitors fairing? Could changes in technology threaten your position? Do you have bad debt or cash-flow problems?
The differentiation between internal and external factors
Strengths and weaknesses are internal factors. Opportunities and threats are external factors – often identified through a PEST or PESTLE analysis. PESTLE is an acronym for Political, Economic, Social, Technological, Legal and Environmental factors, which are used to assess the market for a business or organizational unit strategic plan.
SWOT techniques can be used on
- Individuals – for development or career decisions
- Teams – for development and performance management
- Organizations – for business planning, strategic decision making
I also did a short presentation on the SWOT analysis. You can watch the slides below or download them via visiting my Slideshare account…