SWOT Analysis – Sarenna Benjamin

February 3, 2011

We are all gathered here today to take an in-depth look at SWOT analysis. For those of you who may be unfamiliar with the acronym, it stands for Strength, Weaknesses, Opportunities and Threats.

Albert S. Humphrey is considered the father of SOFT analysis, which was used in a research project he led at Stanford University in the 1960s and 1970s. “Humphrey and the original research team used the categories, “What is good in the present is Satisfactory, good in the future is an Opportunity; bad in the present is a Fault and bad in the future is a Threat” (SOFT).” (3) I know you are wondering … what in the world does the history of SOFT have to do with SWOT? I am so glad you asked. In 1964, the “F” was changed to “W”; the lettering was rearranged and thus SOFT became SWOT.

For clarification, allow me to provide a somewhat technical definition of the technique — “SWOT Analysis is a strategic planning technique used to assess the internal and external environment in which a company operates and competes.” (1) In short, a SWOT Analysis is a technique companies use to help them sift through all the data relating to their business operations (internal factors) and their competitors (external factors) and categorize them into strengths, weaknesses, opportunities and threats. “The SWOT analysis provides information that is helpful in matching the firm’s resources and capabilities to the competitive environment in which it operates.” (2)

The Rapid Business Improvement site offered a very help chart and some basic “how to” steps for performing a SWOT analysis:

Overview Matrix:

POSITIVE/ HELPFUL

to achieving the goal

NEGATIVE/ HARMFUL

to achieving the goal

INTERNAL Origin

facts/ factors of the organization

Strengths

Things that are good now, maintain them, build on them and use as leverage

Weaknesses

Things that are bad now, remedy, change or stop them.

EXTERNAL Origin

facts/ factors of the environment in which the organization operates

Opportunities

Things that are good for the future, prioritize them, capture them, build on them and optimize

Threats

Things that are bad for the future, put in plans to manage them or counter them

How to do a SWOT:

Irrespective of whether you or your team are future planning for specific products, work, personal or any other area, the SWOT analysis process is the same.

  • Step 1 – Information collection (in the here and now)
    List all strengths and weaknesses that exist now. Be realistic but avoid modesty!
  • You can conduct one-on-one interviews or get a group together to brainstorm — A bit of both is frequently best.
  • You should begin by preparing questions that relate to the specific company or product you are analyzing.
  • When facilitating a SWOT – search for insight through intelligent questioning and probing
  • Step 2 – What might be…
    List all opportunities and threats that exist in the future. Opportunities are potential future strengths while threats are potential future weaknesses.
  • Step 3 – Plan of action…
    Review your SWOT matrix with a view to creating an action plan to address each of the four areas.

SWOT analysis can be very useful to help business better facilitate their strategic planning and get a clear idea of the appropriate path to chart for their business. According to Mind Tools (4), some key points to remember are:

· SWOT Analysis is a simple but useful framework for analyzing your organization’s strengths and weaknesses, and the opportunities and threats that you face.

· It helps you focus on your strengths, minimize threats, and take the greatest possible advantage of opportunities available to you.

· SWOT Analysis can be used to "kick off" strategy formulation, or in a more sophisticated way as a serious strategy tool.

· You can also use it to get an understanding of your competitors, which can give you the insights you need to construct a coherent and successful competitive position.

Mind Tool also recommends you be realistic and rigorous when carrying out your SWOT Analysis. (4) “Apply it at the right level, and supplement it with other option-generation tools where appropriate.” (4)

References

(1) http://www.modernanalyst.com/Resources/BusinessAnalysisGlossary/tabid/231/Default.aspx#S

(2) http://www.quickmba.com/strategy/swot/

(3) http://rapidbi.com/management/swotanalysis/

(4) http://www.mindtools.com/pages/article/newTMC_05.htm

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4 Responses to “SWOT Analysis – Sarenna Benjamin”

  1. Jason Chuang said

    Why do you think are the reasons they changed it from SOFT to SWOT?

  2. Paru said

    Because it is a strategic term?

  3. Subbu Bodem said

    Interesting article, captured most of the points about SWOT analysis.

  4. Chae York said

    Great blog….we use SWOT heavily at my job and it was one of the things that I could relate to with this class.

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