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Tool: SWOT

Typical use (type of issue/project)

To evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project. It is used to specify the objective of the project and to identify the internal and external factors that are favorable and unfavorable to achieving that objective. SWOT analysis may be used in all decision-making situations where a desired end-state (objective) has been defined.

Ease of use rating

Used by

Yourself and your team, or a cross-functional team.

Tips for effective use

Group key information into two main categories: internal factors, the strengths and weakness within your organisation, and external factors, the opportunities and threats presented by that what lies outside your organisation.

Signals of successful use

Matching your firm’s resources and capabilities to the competitive environment it operates in.

Signals of unsuccessful use

Confusing SWOT with possible strategies. SWOTs are descriptions of conditions as is, whereas possible strategies are actions to be taken.

Links to other tools

Project lifecycle, Brainstorming, McKinsey 7S, Prioritising tasks and initiatives, and Connecting initiatives to business outcomes.

 

SWOT

SWOT stands for:

  • Strengths

What a company does best (in relation to the competitors)

  • Weaknesses

Restricts what a company can accomplish

  • Opportunities

Situations where the company’s strengths and other external factors can be leveraged in addressing the problem identified in the issue question.

  • Threats

Situations which may adversely impact a company’s ability to address the problem identified in the issue question.

In addition to your own SWOT, it is important to complete a SWOT for each major competitor or potential competitor. In developing a SWOT, either for yourself or a competitor, consider these points:

  • Generally, even in the most complex situations, there should be no more than three or four conclusions for each category of a SWOT (in other words, three or four strengths, three or four weaknesses)
  • Both strengths and weaknesses are internal; they are within the direct control of the company.
  • Both opportunities and threats are usually external; they are outside the direct control of the company.
  • By definition, a key point for one category cannot be a key point for another category.
  • Strengths and weaknesses are relative and have limits. No strengths or weakness applies against all competitors in all market situations.

Strengths and weaknesses are derived from the analysis of the internal situation. Opportunities and threats are generally derived from the analysis of the external situation.

Therefore, there should be no new information in a SWOT analysis. Instead, it is a concise synthesis of the detailed analysis that has preceded it. SWOT does not simply repeat the conclusions from the analysis developed earlier; it is developed.

SWOT demonstrates the most critical considerations and interrelationships of the problem.

In making use of a SWOT, start with overall strengths and weaknesses, then find the best combination of relative strengths (and the absence of critical weaknesses) to use against specific competitors in specific markets.

Comparing SWOTs:

Comparing the competitors’ SWOTs to your own SWOT can be very enlightening in determining how to address the problem identified in the issue question.

These comparisons can also help to identify true strengths and opportunities for you and the competition. For example, if your analysis identified the same strength for you and a key competitor, it is possible that it is not a strength for either of you, but is rather a requirement for competing in this market.

Summarising the SWOT

Your SWOT and the competitor SWOTs can be further synthesised by identifying:

  • Business implications
  • Key leverage points
  • Sustainable competitive advantage