Posted by tac_admin, September 4, 2013

SWOT Analysis and Why It's Important


A SWOT analysis quickly analyzes the business area under consideration for change or improvement. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. While almost deceptively simple, according to BABOK®, the SWOT analysis assists in strategic planning, opportunity analysis, competitive analysis, and business and product development.

BABOK®’s steps in performing a SWOT analysis are as follows:

1. Draw a grid or matrix.
2. Describe the issue or problem under discussion at the top of the grid.
3. Conduct a brainstorming session to complete each section in the grid. Strengths and Weaknesses are factors internal to the organization, organizational unit, or solution, while Opportunities and Threats are external factors.

Strengths are anything the business area performs well, no matter how seemingly small or insignificant. It could include staff expertise, IT systems, customer retention, marketing, or any other internal factor that leads to success.

Weaknesses are anything the business area performs poorly in, as well as those things the group does not do at all. This may include customer follow-up, referral procurement, accounts receivable collections, or any other internal process that is weaker than it should be.

Opportunities areexternal factors that the business can take advantage of to grow or reach goals. These could include penetrating new markets, collaborating with a similar but non-competing company, new products in the market, or other external forces.

Threats are any external factors that can negatively affect the business area, and may include new competitors on the horizon, a product recall, default of a major supplier or major client, or other external issues. Threats are often out of the business’ control.

After completing the matrix, discuss the results, and realize that this is a surface-level analysis. Deeper study with quantifiable data is typically needed to validate the actual characteristics. After thorough analysis, the group brainstorms potential solutions to the issue.

A close look at the internal strengths and weaknesses vs. the external opportunities and threats will often show a clear path to follow so strategies can be planned.

The main advantage of SWOT analysis is that it’s a fast analysis of several possible factors. You get the big picture quickly, which helps you understandthe current state of the organization prior to identifying potential solution options. But that high-level view is also SWOT’s downfall, asdetailed analysis is almost always needed.

How do you use SWOT analysis?

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