How to do a SWOT Analysis (Strategic Planning Made Easy)

“Strategic Planning” sounds a lofty pursuit and perhaps beyond our humble capabilities. Not so with a SWOT Analysis. Learn how to do a SWOT analysis using the SWOT matrix and become an effective strategic planner today, achieving your goals.
What’s Strategic Planning Anyway?

Strategic planning is just management speak for long term future planning. Strategic planning concerns anything that will bring results in anything from 1 year to 5 years or beyond. It’s good management practice to raise your head above the daily grind every now and then, and take action now to positively affect your future.

Definition of SWOT

As with most management models, the clue is in the name.

S = Strengths
W = Weaknesses
O = Opportunities
T = Threats

The SWOT Matrix Explained

All the best management models have four quadrants, and the SWOT matrix is no exception. You use each of the four quadrants in turn to analyze where you are now, where you want to be, and then make an action plan to get there.

 Regardless of whether you or your team are future planning for specific products, work, personal or any other area, the SWOT analysis process is the same.

Step 1 – In the here and now…
List all strengths that exist now. Then in turn, list all weaknesses that exist now. Be realistic but avoid modesty!

Step 2 – What might be…
List all opportunities that exist in the future. Opportunities are potential future strengths. Then in turn, list all threats that exist in the future. Threats are potential future weaknesses.

Step 3 – Plan of action…
Review your SWOT matrix with a view to creating an action plan to address each of the four areas.

In summary;
· Strengths need to be maintained, built upon or leveraged.
· Weaknesses need to be remedied or stopped.
· Opportunities need to be prioritised and optimised.
· Threats need to be countered or minimised.

SWOT Analysis Example

Here’s one I prepared earlier:

 Sow the seeds and reap the benefits

And that’s it! Not too complicated, I’m sure you’ll agree. The SWOT matrix is a useful tool for strategic planning and achieving your goals, individually or with a team. It’s easy to learn how to do a SWOT analysis – just try one out for yourself and reap the benefits.

How to Write a SWOT Analysis (Analyse a Company According to Its Internal And External Factors)

A Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis allows business management to formulate strategies to increase profits for a company. The SWOT analysis also helps a company and its employees to adapt to changing factors in the industry.

The SWOT can be classified into internal and external factors affecting a company. The Strengths and Weaknesses of the SWOT analysis represent the internal factors that influence the viability of the company. The Opportunities and Threats, on the other hand, are the external factors that may affect the company's performances.

What Are Examples of Internal Strengths of a Company?

A strength is essentially a factor from within the company that has resulted in the success of the organisation. For example, a management team with strong calibre denotes that the company is forward looking and is flexible to change. Both factors allow the company to presevere amongst competitors, especially when external threats, such as changes in regulation with respects to the industry, occur.

Another example of a company strength is a hefty financial cash flow. Companies that are liquid in cash are more likely to succeed in the long-run than companies that have invested in illiquid assets (such as heavy equipment / renovations in the office.) This is because working capital (cash) is required to sustain the company's ability to pay employees / suppliers / fund marketing campaigns.

What Are Examples of Weaknesses within a Company?

A weakness of an organisation can be detrimental to the survival of the company. A popular example is poor retention rate of employees. This equates to a high turnover with dissatisfied employees leaving for other job opportunities. The fact that this takes place can be due to a number of reasons. One of them may be poor compensation packages (due to lack of funds). Another example may be a weak organisational culture that inhibits employees from expressing their views and concerns.

An opportunity allows a company to increase profits by offering a gap in demand, a wider consumer base, or an opportunity to reduce costs. A company's strategic goal is to move forward to achieving opportunities that arise in the market. For example, a coffee house may find an opportunity when new suppliers of coffee beans enter into the market. This increases competition amongst coffee bean suppliers and thus, reduces costs for the coffee house. Opportunities are almost always found in shifts in consumer preferences. For example, with the increase of women penetrating the workforce, more clothing designers nab the opportunity to produce fashionable career attire for working women.

What Are the Threats Inherent in the Environment?

A threat can affect the company negatively, especially if the company is unable to adapt to the threat and mitigate its harmful effects. For example, a threat for small grocery retailers would be the emergence of a hyper-market in the area - Wal-mart - for instance. A common threat in any economy would be an economic recession, which reduces consumers' consumption. This threat generally reduces revenue in companies, regardless of the sector.

At the end of a SWOT analysis, the company's plans to move forward should be centred around the opportunities quadrant. Opportunities translate into opportunities to increase revenue as well as to reduce costs; this, in turn, is transformed into higher profits. To achieve success in the opportunities quadrant, the company should look at capitalising on its strengths, such as an effective marketing strategy. By using their strengths, companies should also be able to strategise against the threats that are inherent in the market. Threats are extinguishable but steps to mitigate them can be taken to protect the operations on the company. Although companies always capitalise on their strengths, they should not ignore their weaknesses. Weaknesses represent loopholes within their organisational structure / operations. A company should resolve to fill in their weaknesses in the long-run to ward off aggressive competition. 

When to Use (Not ) SWOT Analysis in Project Management

In 2008 Project Manager at Volvo IT (Peter C) give a question about when to use and when not to use SWOT analysis in project management? And from the discussion on the Linked In there is a few a good answer, and this is the all answers:

    * SWOT is useful as a portion of the strategy development for a business. It is only a portion of the strategy and everything needs to be researched to be sure that this isn't just brainstorming from non-experts. To better answer your specific question:

   1. Use SWOT when you have real experts stating real facts or you are asking questions which require research for the analysis. Even then, take this information as a portion of the strategy in alignment with other factors like real benchmarking data, customer response data and customer research including forecasting.
   2. Don't use SWOT if you don't have real subject experts in the room and if there is a tendency to move from brainstorming to actions without research.

    * As a principal it is vital for analysis to be done through SWOT mentality. Thinking of scenarios and solutions in terms of strengths, weaknesses, opportunities, and threats gives analyst a perception that would include all dimensions. Of course, there are cases where SWOT is not fully applied. The only place I would not use SWOT is when we are in the realm of hypothetical... especially when these are far-fetched thoughts. SWOT requires some form of comprehension that may not exist in these cases.


    * SWOT's are always important to utilize both prior to, during, and after completing projects. The key is "objectivity". This can be very difficult to do in a high pressure situation where time is cirtical or in a culture that doesn't re-examine itself for the sake of improvement. If the SWOT is done objectively and supported by 3rd party non-biased market research, "last minute" risks or problems are generally uncovered before they occur. Checking in periodically on your assumptions throughout the project will enable you to further refine the outcome and avoid major mis-steps and ensure quality output. If the project duration is long term, it is good practise to continually evaluate more current market research to support or to adjust your strategy/direction. Finally, re-examining your SWOT with your final outcomes will enable you to learn what works and what doesn't. Doing so will enable you to become more effective in utilizing SWOTs.


    * SWOT is almost always useful, but too many companies see it as the end of the project instead of the beginning. SWOT establishes a good framework and context, but in and of itself, it does not point to the future...it isn't strategy. There are "next steps" that some companies don't take.


    * I found SWOT to be used all too often as a lazy approach to diagnosing a problem (real or perceived). It is too high level to coalesce thinking about the nature of the problem, the place where and when it appears, its frequency and its severity. If used as a sole rationale behind a change and/or project, chances of successfully addressing what ails your organisation are pretty small. It is useful to communicate with people who want to see an "analysis-on-a-page", but as previous contributors said, it is just one of many diagnostic tools that you have to use to analyse the situation(s) you are facing.


    * I think SWOT is more useful when you are analyzing a particular company or business. However, if you wish to analyze an industry, you can use Porter's five forces analysis. Also, SWOT is mostly applicable for static conditions of business. For dynamic or rapidly changing businesses such as knowledge intensive industries, SWOT may not be that helpful. Alternatively, use of BCG matrix or GE/Mckinsey Matrix along with SWOT can give better results.


    * I believe that SWOT, while always useful, is frequently not a sufficient exploration of the situation. For large, company strategy type issues, you might look at a Porter Five Forces model which takes in aspects of the landscape. While SWOT's OT portion looks at the landscape, I think the Five Forces looks deeper and more usefully. Similarly, I like Porter's Diamond of International Competition for a lot of things, like new product entry and predicting a team's chances for success in the playoffs. It takes some tweaking to move Land, Location, Labor, Population and Resources to a world of products and baseball, but you work your own analogues.I try to work every project through the Theory of Constraints. It's a solid theory and works very nicely to figure out what needs fixing. But, generally speaking, SWOT is always a good place to start. At the very least, it's a good exercise that can lead you to a more useful model for looking at the project.

Conducting a SWOT or (TOWS)

What is it? Justify Full
The granddaddy of focus group data gathering processes is the traditional SWOT and its updated offspring, TOWS Analysis. You can SWOT (or TOWS) a concept, a program, a department, a school, or a new initiative. You can even SWOT a person, although one must be careful when doing so.
When doing SWOT Analysis, remember that the S and the W are INTERNAL and the O and T are external. Traditionally, facilitators begin with the organization’s Strengths and Weaknesses and then move out to the external Opportunities and Threats. Recent thinking prompts consideration first of the opportunities and threats existing in the "outside world" against which the institution can leverage its strengths and find conviction to correct its weaknesses. We like this reversal of the traditional order because it helps an organization place itself in context.

Method
Group Process Technique: Brainstorming

Purpose: To generate a large quantity of ideas in response to a stated problem or question.
The group is asked to generate as many responses to the following questions within a limited time frame (10-20 minutes per question). All responses are recorded verbatim and ideas are not judged until evaluation time.

Group Size: Can be used with any number of participants (large groups can be broken into smaller groups of 6-10 to maximize output)

Resources: Flip chart and markers

Procedure
1. Explain basic rules of brainstorming:

Don’t evaluate the idea; defer judgment.
Quantity is the goal.
The wilder the better.
Record each idea verbatim. Tagging on or combining ideas is okay.


2. Begin brainstorming by asking the following questions:

a. What opportunities exist in our external environment?
b. What threats to the institution exist in our external environment?

Brainstorm these along the lines of:

    * Political, economic, social, technology

    * Market size and behavior

    * Constituent behavior

    * Benefits sought

    * Potential new entrants

    * Direct competitors’ performance, strategies, capabilities, intentions


c. What are the strengths of our institution?

d. What are the weaknesses of our institution?

Brainstorm these along the lines of:

    * Ability to design/innovate

    * Ability to source and produce

    * Ability to market and service

    * Ability to finance

    * Ability to manage


4. Record all ideas verbatim.

5. After all ideas have been storyboarded and the time limit is up, categorize ideas into thematic groupings.

Facilitator Notes To Wrap Up

Prioritization is a key factor in obtaining useful SWOT (OTSW) data, as the output from brainstorming will be significant.

At the end of the small group reports, reduce the list of strengths and weaknesses to no more than five distinctive competencies and debilitating weaknesses:

1. Strengths that are distinctive competencies
Are those few things that your institution does best that constituents really care about and that set it apart from other market entries. Core competencies usually attract widespread agreement. An organization will focus on capitalizing on its distinctive competencies.

2. Weaknesses that are debilitating

Are those areas in which constituents expect and demand performance or competency and the institution is dangerously lacking. Debilitating weaknesses frequently attract widespread agreement. An organization will focus on correcting its debilitating weaknesses.

Reduce threats and opportunities to the five most critically important of each.

Questions to Consider when evaluating OTSWs or SWOTs:

1. What will the institution gain if it does nothing? What will it lose?

2. What will the institution gain if it launches a successful initiative? What will it lose if it does not?

SWOT (OTSW) MATRIX

    * What are the Threats and Opportunities present in the external marketplace that effect this school, department, program, project?

    * What are the Strengths and Weaknesses present inside the institution that effect this school, department, program, project?

SWOT ANALYSIS

The SWOT analysis, which stands for "Strengths, Weaknesses, Opportunities and Threats," is used to outline goals for yourself or your business, as well as detail where your strengths lie, what you need to improve and how your goals might be hindered by external elements. If you've never created a SWOT analysis, or if it's been a while since you last compared your current status with a previous SWOT analysis, filling out a fresh SWOT analysis matrix could be beneficial to you or your company.

The SWOT Analysis Matrix

One of the most popular methods of SWOT analysis review is the SWOT matrix. This matrix is comprised of a two-column, two-row table with strengths and weaknesses listed in the top two boxes and opportunities and threats outlined in the bottom two boxes.

Each row and column in the SWOT matrix has a label. The row with strengths and weaknesses is named "Internal Origin," defining parts of your business or persona that you control. The row with opportunities and threats is labeled "External Origin," since you have no real control over the environment that provides these elements.

The left column, which houses the strengths and opportunities categories, is known as the "Helpful" column, as these benefit your initiative. The right column, which contains the weaknesses and threats categories, is called "Harmful," since these can work against your objective.

To obtain the most desirable results from a SWOT analysis, fill out each of your strengths, weaknesses, opportunities and threats in the most honest, objective way possible. For instance, if you're writing about your company include details about your employees as well as yourself. If this SWOT analysis regards your own personal goals, list the ways your skills can contribute to your goal in the "Strengths" section, but don't forget to cite any necessary improvements or skill deficiencies in the "Weaknesses" category.

Outlining Strengths in the SWOT Matrix

Mindtools.com recommends beginning with the strengths you or your company possess. Begin making a list of any advantages your company provides over competitors as well as positive personality characteristics you maintain. Anything considered to add to your bottom line or your unique selling proposition (USP) should be categorized under strengths.

Outlining Weaknesses in the SWOT Matrix

Defining your weaknesses can show you where you need to improve. Mindtools.com says you should use this section to face the truth about how well you're doing as a company or as an individual. Be sure to list any aspect that could be perceived as a turn-off or disadvantage to potential customers. This includes your personality or that of your employees as well as any product or service that appears sub-par when compared to your competitors.

Defining Opportunities in the SWOT Matrix

According to netmba.com, opportunities often arise with changes in your environment. For instance, if one of your competitors relocated its business several states away, this could be considered an opportunity. Write down any aspect about the current market environment, the economy, or new government policies that make your company stand out or look better than your competitors

Defining Threats in the SWOT Matrix

Threats to a business occur in much the same way opportunities do; they just affect your business in a negative direction. Let's take the above example of your competitor moving away. If a competitor moves into your location and begins providing a product or service on par or better than yours, this is a threat. According to netmba.com, similar threats occur with changes in market trends and government regulations. If your company is affected by these changes, list them in the threats category.

The Marketing Environment

What is the marketing environment?

The marketing environment surrounds and impacts upon the organization. There are three key perspectives on the marketing environment, namely the 'macro-environment,' the 'micro-environment' and the 'internal environment'.

The micro-environment

This environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading. In this context, micro describes the relationship between firms and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence.

The macro-environment

This includes all factors that can influence and organization, but that are out of their direct control. A company does not generally influence any laws (although it is accepted that they could lobby or be part of a trade organization). It is continuously changing, and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market. Globalization means that there is always the threat of substitute products and new entrants. The wider environment is also ever changing, and the marketer needs to compensate for changes in culture, politics, economics and technology.

The internal environment.

All factors that are internal to the organization are known as the 'internal environment'. They are generally audited by applying the 'Five Ms' which are Men, Money, Machinery, Materials and Markets. The internal environment is as important for managing change as the external.

The internal environment analysis

The internal environment assessment and analysis is conducted after  the external environment analysis. While the external environment analysis seeks to identify opportunities and threats in the external environment, the internal environment analysis seeks to identify the strengths and weakness in your business. Note that it focuses on factors that are internal to your business, some of which can be easily changed or improved upon. The 7's model is particularly useful when identifying internal factors in your business. It looks at the following:

   1. Strategy
   2. Structure
   3. Style
   4. Staff
   5. Skills
   6. Systems
   7. Shared values

Using the model is simple, you simply check for the degree to which your business possess the above 7's. Access which 'S' is a strength or weakness in your business. For example, if your business has the right number of people (Staff) and these people possess the right kind of skills, competence and expertise (Skills), then these are considered to be the internal strengths of your business. Where your business lacks shared values and systems, these are considered to be weaknesses. This is discussed further below:

1.    Strategy

- Do your strategies take into account the short term, medium term and long term?

 2.   Structure

    * - Do you have a formal organisational structure in place?
    * - Are clear lines of reporting or communicating present?
   
3.    Style of leadership

What is your style of leadership?

    * - Participative leadership style
    * - Democratic leadership style
    * - Autocratic leadership style
    * - Dictatorship leadership style
    *

4.    Staff

    * - Do you have competent, skilled and experienced staff to work with?
    * - How can you manage to keep staff in the current environment ?
    * - How do you recruit your staff ?
    * - How trustworthy are your employees?
    * - Do your staff work long hours?
    * - How do you retain quality employees?
   
5.    Skills and competencies

What skills and competencies are present in your business?
This may encompass:

    * - Leadership skills
    * - Management skills
    * - Technical skills
    * - Interpersonal skills
    * - Intra personal skills
   
6.    Systems, processes and procedures

What systems, processes and procedures do have in place or intend to have in place?

    * - Performance management system
    * - Financial management system
    * - Management information system
    * - Accounting information system
    * - Quality control system
    * - Health and safety
    * - Stock control system
    * - Cash control system
    * - Accounting system
    * - Expense control system
    * - Debtors control system
    * - Creditors control system
    * - Production related systems

7.    Shared values

What qualities or attributes do you base your actions on?  What attributes defines the culture of your business? What are the core values of your business? Examples of values include:

    * - Timeliness
    * - Reliability
    * - Convenience
    * - Driving internal efficiency
    * - Effectiveness
    * - Efficiency
    * - People
    * - Customer satisfaction
    * - Customer intimacy
    * - Transparency
    * - Accountability
    * - Brand and business reputation
    * - Quality
    * - Innovation
    * - Creativity