What is SWOT Analysis?
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. By using these four areas to identify an organization’s characteristics and climate, a SWOT Analysis offers a high-level evaluation of your company’s pros and cons.The goal of a SWOT Analysis is to help an organization to identify strategies for success. It is generally displayed in a boxed matrix similar to this:
Generally, strengths (such as the ability to change quickly) and weaknesses(such as a slow customer service response time) are internal to the organization, while opportunities and threats tend to be external (competition, regulations, market share, and so on).
A SWOT Analysis may help an organization to identify a success strategy such as taking advantage of a new market opportunity based on internal strengths, eliminating an internal weakness to make one’s organization less vulnerable to market threats, or some other combination of evaluating strengths, weaknesses, opportunities and threats. According to BABOK, it can help an organization assess “how current capabilities and limitations (Strengths and Weaknesses) match up against the influencing factors (Opportunities and Threats).”[1]
While its high-level nature makes it generally not useful for in-depth analysis, SWOT Analysis has many applications. According to BABOK, it can serve as “a framework for strategic planning, opportunity analysis, competitive analysis, business and product development." It can also help “demonstrate how the solution will help the organization maximize strengths and minimize weaknesses.”
Check out some samples of SWOT analysis (minus the diagram) for well-known organizations here: http://www.marketingteacher.com/lesson-store/lesson-swot.html#.
Do I really need it?
Much of the business of business analysis is in the details, and most business analysts are by nature detailed, systematic thinkers. Occasionally most organizations, though, have times when they can’t see the forest for the trees. That is when the high-level, broad-range view that SWOT Analysis affords is just as useful in avoiding costly errors as unambiguous requirements. (“International languages! Why didn’t we think to build it in other languages before we rolled out this entire million-dollar system? We’re perfectly positioned to capture the Asian market, and now our competitor’s about to scoop us!”) As one site notes, “What makes SWOT particularly powerful is that, with a little thought, it can help you uncover opportunities that you are well placed to exploit. And by understanding the weaknesses of your business, you can manage and eliminate threats that would otherwise catch you unawares.”[2] Here are some specific ways SWOT Analysis can help you do your work:
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Identifying business potential–SWOT Analysis is also great for long-term, broad scope strategy. One site notes, “SWOT analysis should distinguish between where your organization is today, and where it could be in the future.”[3]
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Narrowing your options -When an organization has multiple solutions from which to choose, SWOT Analysis can form a framework for a solution.One site notes that SWOT helps “determine where change is possible. If you are at a juncture or turning point, an inventory of your strengths and weaknesses can reveal priorities as well as possibilities” and help you “adjust and refine plans mid-course.”[4] According to BABOK, “The SWOT analysis helps quickly analyze various aspects of the current state of the organization and its environment prior to identifying potential solution options.”[5]
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Kick-starting a new assignment–SWOT Analysis is easy to do quickly and with little to no planning or preparation—perfect for a project that you’ll begin meeting about almost as soon as it’s assigned. SWOT Analysis can also give structure to a focus group or brainstorming session during discovery or any other phase of a project.
How do I do it?
You can do SWOT Analysis alone, if you wish, but a group is likely to offer more thorough and prolific results. If you lead a group using SWOT Analysis, here’s a flexible template to get you started.
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Identify what you are analyzing by providing an overview of the problem. You may wish to write this at the top of the white board or whatever tool you’re using.
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Next, display a grid with four quadrants, with each quadrant labeled with one of the four areas being analyzed. Briefly explain each of the four areas. Advise your colleagues that it will be helpful to give as much quantifiable data as possible to back up the information they contribute.
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Avoid writing a treatise on any of these areas, both for space and also because SWOT Analysis is by nature not an in-depth exercise. Though in-depth verbal discussion may be useful with brainstorming, ideas must be condensed into concise, simple thoughts.
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Start by naming organizational strengths that are intrinsic to your organization.Ask yourselves, why do your customers choose your product or service? What do you offer that no one else does? What do you do best? Where are your competitors scrambling to catch up? Are you strategically located? Some ideas for strengths would include a loyal customer base, proprietary software, or experts in the field, to name a few.
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Identify weaknesses specific toyour organization. After checking your egos at the door, ask yourselves, what do customers complain about the most to your customer service staff? What reasons do sales reps get that customers do not renew your service or continue to buy your product? (These answers may be external to your organization and go under Threats as well.) What is difficult for your organization to do quickly? What difficult patterns do you repeat?
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Next, focus on positive opportunities that are relevant in your organization’s competitive environment and the world at large. Ask yourselves, what areas are we poised to take advantage of? Where do we have a reach that no one else does? How are government policies, technologies, international standards and emerging markets changing to our advantage? As BABOK clarifies,“Opportunities exist beyond the scope of control of the assessed group; the choice is whether or not to take advantage of one when it is identified.”Examples of these could be developing opportunities in a country or region where you already have an office, or an emerging technology waiting to be utilized.
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Finally, list the threats associated with the issue, whether they be in the competitive environment or in the world at large. Threats are also outside of the group’s control. Ask your colleagues, in what areas are we especially vulnerable? Are we in a position to deal with global or local economic challenges? How are government policies, technologies, and emerging markets changing to our disadvantage? What areour competitors doing that we have been consistently behind in? Are we vulnerable to the weather (no off-site back-ups, for example)?Examples could be a growing competitor, customers operating on smaller budgets, and so on.
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Discuss what you’ve identified and brainstorm solutions. Ask yourselves, where do these characteristics cross-relate? Do some of your strengths place you in a position to exploit market opportunities? Can you shore up some of your weaknesses to prevent market threats from possibly harming you?Look for symbiosis between the various areas, such as agility being an internal strength and a new technology being available to bring it to market in your field.
SWOT Analysis has many applications, and is an easy-to-learn, easy-to-apply evaluation method to add to your arsenal of business analysis tools. It also has the potential to involve stakeholders, your colleagues and other members of your organization in the brainstorming and planning process, helping them invest in the final solution and help them take ownership of its implementation.
Author: Morgan Masters is Business Analyst and Staff Writer at ModernAnalyst.com, the premier community and resource portal for business analysts. Business analysis resources such as articles, blogs, templates, forums, books, along with a thriving business analyst community can be found at http://www.ModernAnalyst.com
[1] A Guide to the Business Analyst’s Body of Knowledge® (BABOK® Guide), Version 2.0, International Institute of Business Analysis, Toronto, Ontario, Canada, ©2005, 2006, 2008, 2009.
[2] http://www.mindtools.com/pages/article/newTMC_05.htm
[3] http://www.marketingteacher.com/lesson-store/lesson-swot.html#
[4] http://ctb.ku.edu/en/tablecontents/sub_section_main_1049.aspx
[5] A Guide to the Business Analyst’s Body of Knowledge® (BABOK® Guide), Version 2.0, International Institute of Business Analysis, Toronto, Ontario, Canada, ©2005, 2006, 2008, 2009.