SWOT analysis

SWOT stands for strengths, weaknesses, opportunities and threat s. This section provides guidance on properly conducting and using the result of a SWOT analysis, how to select the scope and range of this common assessment tool, as well as the common mistakes people make when using a SWOT analysis.

This technique involves the review and analysis of four specific areas of an organization: the internal strengths and weaknesses, and the external opportunities and threats. Once analysed, actions should be taken to:

• Develop, exploit and capitalize on the organization’s strengths
• Reduce, minimize or remove weaknesses
• Take maximum advantage of opportunities
• Manage, mitigate and eliminate threats.

SWOT analyses can be performed quickly and can be used to target a specific area rather than looking at the entire enterprise.

Purpose

A SWOT analysis is a strategic planning tool used to evaluate the strengths, weaknesses, opportunities and threats involved in a project, business venture or in any other situation requiring a decision. Sizing up a firm’s internal strengths and weaknesses and its external opportunities and threat s provides a quick overview of a firm’s strategic situation.

How to use

The first step is to define the desired end state or objective. This objective definition must be explicit and approved by all participants in the process.

Once the objective is identified, SWOT are discovered and listed:

• Strengths are internal attribute s of the organization that are helpful to the achievement of the objective.
• Weaknesses are internal attributes of the organization that are harmful to the achievement of the objective.
• Opportunities are external conditions that are helpful to the achievement of the objective.
• Threats are external conditions that are harmful to the achievement of the objective.

Correct identification of the SWOT is essential because subsequent steps in the process are all derived from the SWOT. To ensure a successful SWOT, it is a good idea to ensure that the objective follows the SMART principle which stands for specific, measurable, achievable, realistic and timely.

SWOTs are used as inputs to the creative generation of possible strategies, by asking and answering the following four questions many times:

• How can we use each strength?
• How can we stop each weakness?
• How can we exploit each opportunity?
• How can we defend against each threat?

Scope/reach and range

SWOT analyses can be done at various levels, from an individual perspective, to a departmental, divisional or even corporate perspective. It is important to consolidate the lower hierarchical management levels before proceeding to the next level.

For example, all the members of a functional team perform an individual SWOT analysis. Then a SWOT for the functional team is performed. Each functional team within the department does the same and a departmental SWOT is conducted and so on until a corporate SWOT is completed.

It is also possible to conduct a SWOT analysis for a service or a process.

Things to consider for strengths	Things to consider for weaknesses
Core competencies Financial resources Reputable buyers Acknowledged as market-leader Well-conceived functional-area strategies Access to economies of scale Little competitive pressure Proprietary technology Cost advantages Strong campaigns Product innovation Proven management Ahead on experience curve Better development /production capability Superior technology	No clear strategic direction Obsolete facilities Low profitability Lack of managerial depth and talent Missing some key competencies Poor track record for performance Falling behind R&D Too narrow product line Weak market image Weak distribution network Below-average marketing skills Unable to finance needed changes Higher overall unit cost s
Things to consider for opportunities	Things to consider for threats
Ability to serve additional customer groups or expand into new market or segments Ways to expand product line to meet broader range of customer needs Ability to transfer skills or technological know-how to new products or business es Integrating forward or backward Falling trade barriers in attractive foreign markets Complacency among rival firms Ability to grow rapidly because of strong increases in market demand Emerging new technologies	Entry of lower-cost foreign competitors Rising sales of substitute products Slower market growth Adverse shifts in foreign exchange rates and trade policies of foreign governments Costly regulatory requirements Potentially sudden deregulation Vulnerability to recession and business cycle Growing bargaining power of customers or supplier s Adverse demographic changes

Table 5.5 SWOT analysis

Strengths People with the right attitude, values and commitment Management commitment to CSI CSI manager in place	Weaknesses Reactive organization Immature processes Lack of monitoring and reporting tools Insufficient data
Opportunities Increased market share of current services Become a third-party service provider Efficiencies through more integrated operation s Be quicker to market with new products	Threats Competition New regulatory requirements New technology Lack of trained staff Lack of Knowledge Management

Table 5.6 Sample CSI SWOT analysis

Common pitfalls of a SWOT analysis

The failure to correctly identify the end state will result in wasted resources and possibly failure. It is therefore important to align the SWOT analysis with the organization’s vision, mission, goals and objective s. The following error s have been observed in published accounts of SWOT analysis. Making these errors can result in serious losses:

Дата добавления: 2015-10-02