SWOT Analysis

Business Analyst Techniques #1 SWOT Analysis

SWOT AnalysisThe SWOT analysis can be described as the foundation of developing your strategies and tactics which can later become a road-map for writing any business plan or case. SWOT is the strategic planning used to evaluate Strength, Weakness, Opportunity and Threat involved in a project or business speculation. It is advisable to set the business objective after the SWOT analysis has been performed. This would allow achievable goals or objectives to be set for the organization.

  • Strengths: characteristics of the business, or project team that give it an advantage over others
  • Weaknesses (or Limitations): are characteristics that place the team at a disadvantage relative to others
  • Opportunities: external chances to improve performance (e.g. make greater profits) in the environment
  • Threats: external elements in the environment that could cause trouble for the business or project.

Users of SWOT analysis should have capability to generate meaningful information for each category (strengths, opportunities, weaknesses, and threats) in order to maximize the benefits. SWOT analysis groups key pieces of information into two main categories:

  • Internal factors – The strengths and weaknesses internal to the organization.
  • External factors – The opportunities and threats presented by the external environment to the organization.

The above categories and their relation with SWOT can better be understood by the following diagram:

Strengths (Internal) Weaknesses (Internal)
Opportunities (External) (Quadrant 1)Focus on areas where an organization’s strengths align with market opportunities for rapid growth and profitability. (Quadrant 2)If particularly profitable market opportunities exist then the organization may want to eliminate weaknesses in this area to take advantage of these opportunities.
Threats (External) (Quadrant 3)When an organization’s strengths align with market threats, these strengths can be use to avoid or mitigate these market threats. (Quadrant 4) When an organization’s weaknesses are in the same area as market threats, steps should be taken to eliminate these vulnerabilities immediately.

An organization should usually focus their efforts on quadrants 1 and 4 first.  Quadrant 1 delivers the most amount of gain for the least amount of effort since it takes advantage of existing strengths of the organization.  Quadrant 4 will likely require a lot of effort, but if left unattended, could result in detrimental outcomes for the company.

The usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis may be used in any decision-making situation when a desired end-state (objective) has been defined. Examples include: non-profit organizations, governmental units, and individuals. SWOT analysis may also be used in preventive crisis management and also be used in creating a recommendation during a survey.

Happy Reading!

Leave a Reply