Revision as of 14:07, 6 May 2023

Uncertainty is a critical factor in project, program, and portfolio management. It can impact all aspects of a project, program, or portfolio, such as scope, schedule, budget, and quality, leading to delays, cost overruns, and quality issues. To manage uncertainty effectively, project managers must identify sources of uncertainty, their route course and develop contingency plans. It is crucial for managers navigating uncertainty to assess potential risks and opportunities and make decisions based on the organization's strategic objectives and risk appetite. In other words, anticipating uncertainty is an essential aspect of project programme, and portfolio management and is indispensable in order to ensure the success of the operations within. As uncertainty has been a topic of interest for experts and practitioners for centuries, a vast portfolio of different tools and theories has been developed to help managers navigate. One of the best-known, and well-discussed, tools of this topic is the SWOT analysis.

The SWOT analysis, also known as TOWS (Threats, Opportunities, Weaknesses, and Strengths) ^[1] or SWOC (Strengths, Weaknesses, Opportunities, and Challenges) ^[2] is a widely used strategic planning tool in project, programme, and portfolio management. The tool is aimed at evaluating both internal and external factors that may affect an organisation, a project, or an individual. In general SWOT analysis is perceived as a straightforward and simple, yet still powerful tool used by businesses to assess their current position, determine areas of improvement, and set goals for the future. The purpose of this tool is to provide decision-makers with a comprehensive overview of the project and help identify key factors that may impact its success or potential failure, as well as assist in setting goals for the future ^[3].

Overview of the SWOT analysis process

The SWOT analysis is usually performed in a four-quadrant matrix, where the internal factors (Strengths and Weaknesses) are listed in the top row, while the external factors (Opportunities and Threats) are listed in the bottom row. The matrix is created to provide an accessible overview of the project, program or portfolio's internal and external factors that may impact its success or potential failure.
An example of the said matrix can be seen in Figure 1, in which general areas of interest for the SWOT analyser are shown.

To get a better understanding of each of the fields of the matrix the following section briefly explains the purpose of the SWOT parameters.

Figure 1: SWOT Analysis Matrix

Strengths

Strengths refer to the internal factors of the organization or project that provide an advantage over competitors or contribute to achieving the desired outcomes.
Identifying strengths can provide the project team with a clear understanding of what they do well and what areas they can leverage to achieve success.
Examples of strengths could include technology, product quality, management talent, low debt, business networks, or efficient project management processes ^[4].

Weaknesses

Weaknesses refer to the internal factors of the organization or project that may hinder its success or prevent it from achieving its desired outcomes.
By identifying weaknesses, project managers can take steps to mitigate the risks associated with those areas and address them proactively.
Examples of weaknesses could include a lack of resources, limited expertise in a specific area, or inefficient project management processes. ^[1].

Opportunities

Opportunities refer to external factors that may contribute to achieving the desired outcomes or provide new avenues for growth and success.
By identifying opportunities, project managers can develop strategies to leverage those factors and take advantage of them to achieve success.
Examples of opportunities could include changes in technology, government policy and social patterns, or from within your organisation^[5].

Threats

Threats refer to external factors that may hinder the success of the organization or project or pose a risk to achieving desired outcomes.
By identifying threats, project managers can develop risk management strategies to mitigate the impact of those factors on project outcomes.
Examples of threats could include changes in government regulations, economic downturns, the life cycle of the project, or emerging competitors^[4].

Conducting a SWOT Analysis

When conducting a SWOT analysis under uncertainty, it is important that the mission or project objective is operations-specific and well-defined, limiting the risk of misinterpretations. Clarifying the objective is important because it helps to ensure that the analysis is relevant and focused on the organisation's specific needs and goals. This Ensures that the outcome of the analysis provides meaningful insights that can be used to improve performance and achieve strategic objectives of the future state.

Pre-Analysis

Creating a well-defined objective requires multiple iterations through several review sessions in order to make sure the objective is tailored to the problem at hand. To assist in the revision of the objective, some of the more common steps to take into consideration are listed as follows:

1. Determine the purpose of the analysis:
   Identify why you are conducting the SWOT analysis and what you hope to achieve. For example, are you analysing a company's competitive position, assessing a new product launch, or evaluating a business strategy? This will help to clarify the desired outcomes of analysing the imposing factor.
2. Align the objective with the company's goals:
   Ensuring that the objective of the SWOT analysis is aligned with the company's overall goals and objectives will help to prioritize the most critical factors relevant to the organization's success.
3. Make it specific and measurable:
   Making the objective of the SWOT analysis specific and measurable will help to track progress and identify areas for improvement. This will help the organization to monitor its performance and adjust its strategies and tactics accordingly.
4. Seek input from stakeholders:
   Engage key stakeholders in the objective-setting process to ensure that their perspectives and priorities are considered. This will help to ensure that the analysis is comprehensive and that the resulting insights and recommendations are relevant and actionable.
5. Revise the scope:
   Investigate if the scope is too broad. A good way of doing so is to check if it is applicable to anybody’s mission statement. If this is the case, it will likely not produce any beneficial outcomes, as having an objective that is too broad, imposes the risk of creating an analysis which is too general causing it to lack any meaningful insights or actionable tasks that can improve the project or organization's performance ^[4]. In essence, a broad objective makes it challenging to identify specific areas that require attention or improvement, and this will not help the organization to make well-informed decisions based on the SWOT analysis.

While the steps to revise the objective may vary depending on the scale and focus of the SWOT analysis, they can serve as a helpful guideline for a general purpose. By implementing these steps, you can ensure that the objective of your SWOT analysis is focused, relevant, and aligned with the company's goals and objectives.

Points of Consideration

Having ensured a suitable objective, the next step is to acknowledge and account for the potential risks and uncertainties that may impact the project. This can be done by considering various scenarios and potential outcomes Here are some key considerations when conducting a SWOT analysis:

1. Be comprehensive: Consider a wide range of internal and external factors that may impact the project, including potential risks and uncertainties. Think critically and gather as much information as possible to ensure a comprehensive analysis.
2. Consider multiple scenarios: Anticipate different scenarios and potential outcomes, including best-case, worst-case, and most likely scenarios. This can help in identifying potential risks and opportunities under different circumstances.
3. Evaluate the likelihood and impact of uncertainties: Assess the likelihood and potential impact of uncertainties on the project. This can help in prioritizing risks and opportunities based on their significance to the project's objectives.
4. Use qualitative and quantitative data: Utilize both qualitative and quantitative data in your analysis to ensure a balanced and informed assessment. Quantitative data can provide concrete evidence, while qualitative data can capture subjective factors and expert opinions.
5. Involve key stakeholders: Engage key stakeholders in the SWOT analysis process to gather diverse perspectives and insights. This can help in identifying potential risks and opportunities that may not be apparent to the project team alone.
6. Update and review regularly: Keep the SWOT analysis updated and review it regularly throughout the project lifecycle. Risks and uncertainties may change over time, and it is important to continuously monitor and reassess the SWOT analysis to ensure its relevance and effectiveness.
7. Be innovative: Often when people fill in the model, they tend to stick to it. This is a risk and a threat in itself, as the model might create blind spots or impose confirmation bias leading to unexplored areas of analysis. The results of the SWOT analysis should be regarded as guides rather than prescriptions ^[5]. For this reason, it is important to keep in mind that Strengths and Weaknesses or Opportunities and Threats can be inverted on each other. Hence, a threat can be perceived as an opportunity, or the other way around. ^[4].

By considering these key factors during the SWOT analysis process, project managers can effectively evaluate the internal and external factors that may affect the project, identify strengths, weaknesses, opportunities, and threats to project objectives and goals, and make informed decisions in the face of uncertainty

Tools to Assist the SWOT Analysis

As the SWOT identification process can be complex, the model risks being limited by the user to a descriptive exercise that yields a sense of accomplishment but serves no larger purpose ^[6]. Combining the SWOT analysis with other tools can help manage the complexity and ensure a thorough analysis. Some examples of well-documented tools that can assist in conducting a SWOT analysis under uncertainty are:

1. Scenario planning: A tool that involves creating different scenarios and potential outcomes to anticipate risks and opportunities in uncertain situations ^[7].
2. Risk assessment matrix: A tool that allows for evaluating the likelihood and impact of uncertainties on the project, and prioritizing risks based on their significance ^[8] or the Stakeholder Engagement Matrix ^[9].
3. Data collection and analysis tools: Tools that facilitate the gathering and analysis of qualitative and quantitative data to ensure a balanced and informed assessment. For example, gathering data through surveys or interviews and visualising them through Tableau for a holistic overview ^[10].
4. Stakeholder engagement techniques: Techniques that involve actively involving key stakeholders in the SWOT analysis process to gather diverse perspectives and insights. This could include the stakeholder matrix ^[11].
5. Project management software: Software that enables regular updates and reviews of the SWOT analysis throughout the project lifecycle to monitor and reassess risks and uncertainties. A project management software proposal could be Microsoft Project ^[12].

Limitations

While SWOT analysis can be a valuable tool for mitigating uncertainty, there are limitations that can impact its effectiveness. One key factor is the scale at which the analysis is conducted. As mentioned in ^[13], SWOT analysis does not have to be carried out on a large scale. However, if the analysis is not conducted in-depth and with sufficient consideration of all relevant factors, the results may not accurately reflect the situation, leading to incorrect conclusions and ineffective decision-making. SWOT analysis is most effective when it is used as part of a comprehensive analysis process and not solely relied upon as the sole basis for strategic decision-making.

Dependence on Data Quality:

A limitation of SWOT analysis is its dependence on accurate and detailed information. The effectiveness of the analysis is heavily reliant on the quality of the data used, as inaccurate, incomplete, or outdated data can lead to flawed conclusions and misguided strategies. Therefore, it is critical to ensure that the data used in the SWOT analysis is reliable, up-to-date, and relevant to the situation being analysed. Without accurate and comprehensive data, the results of the analysis may be skewed or incomplete, leading to incorrect conclusions and recommendations. To obtain accurate and meaningful results, it is important to prioritize data quality in the SWOT analysis process.

Subjectivity and Bias:

The four categories of the SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) are subjective and open to interpretation. What one person may consider a strength; another person may view as a weakness. The analysis can be influenced by personal biases, opinions, and perspectives of those conducting the analysis, which may result in biased or incomplete assessments. Bias can also arise in the process of prioritizing and ranking factors within each category. If not addressed, bias can lead to inaccurate assessments and skewed strategies. It is of the highest importance to ensure that the SWOT analysis is conducted by a diverse group of stakeholders to minimize bias and ensure a more balanced and comprehensive analysis.

Lack of Structured Action Plan:

While SWOT analysis provides valuable insights into the internal and external factors affecting a project, it does not inherently provide a structure roadmap for acting on the outcomes of the analysis. It identifies the strengths, weaknesses, opportunities, and threats, but does not provide clear guidance on how to capitalize on strengths, address weaknesses, exploit opportunities, or mitigate threats. Additional analysis and planning are required to develop a structured action plan based on the SWOT analysis findings.

Limited in-depth Analysis:

SWOT analysis provides a high-level overview of the internal and external factors that may impact a project, but it may not provide an in-depth analysis of each factor. The nature of the model tends to make scenarios or results look very rigid and can risk causing more damage than good, or lead the analysts to leave opportunities on the ground, if not used correctly ^[4]. It may not uncover all the nuances and complexities associated with each factor, and further analysis may be required to gain a deeper understanding of their potential impact on the project.

Lack of Flexibility:

SWOT analysis is typically conducted at a specific point in time and may not capture changes in internal or external factors that may occur during the course of a project. It may not be adaptable to changing circumstances, and its findings may become obsolete over time. It is important to update the SWOT analysis periodically to reflect changing conditions and ensure its relevance throughout the project lifecycle. Apart from the influence of projects' ever-changing nature the rigidity of the model often tends to make the analysis fixate on the terms of the four categories. In that context, some managers have found it helpful to use a more organic SWOT model, in which the rules are open and adjustable for the organisational context. Some even go to the extent of preferring not to distinguish between strengths, weaknesses, opportunities, and threats, but only to confront external with internal factors. The reason is that these factors often are hard to quantify due to their subjective nature ^[14].

Limited Focus on Opportunities and Threats:

SWOT analysis tends to focus more on internal factors (Strengths and Weaknesses) than external factors (Opportunities and Threats). Opportunities and Threats are often considered in a broader context and may require additional analysis and evaluation to fully understand their potential impact on the project. It is important to ensure that Opportunities and Threats are thoroughly evaluated and considered in the SWOT analysis to avoid overlooking critical factors. This is largely the reason that the TOWS (Threats, Opportunities, Weaknesses, and Strengths) model was invented, as it starts with assessing the external factors in order to proactively utilise the internal factors to mitigate the identified threats and enhance the identified opportunities ^[1].

Alternatives to the SWOT model

While SWOT analysis is a commonly used tool for setting the strategy of the future state, there are several alternative tools that can be used to analyse a company's internal and external factors and might be more suitable given the specific situations. Some of the most popular alternatives to SWOT analysis are:

PESTLE

PESTLE Analysis is an analysis model that examines the external factors that can affect a project, such as Political, Economic, Social, Technological, Legal, and Environmental factors. PESTLE analysis is an alternative to SWOT analysis because it focuses on external factors that can affect a project rather than internal factors. It is particularly useful when conducting market research or when working on projects that are affected by external factors beyond the control of the organization. ^[15]

Porter's Five Forces Analysis

Porter's Five Forces Analysis focuses on the competitive environment of a project and examines the bargaining power of suppliers and customers, the threat of new entrants, the threat of substitutes, and the intensity of rivalry among existing competitors. Porter's Five Forces Analysis is an alternative to SWOT analysis because it focuses on the competitive environment of a project rather than the internal strengths and weaknesses of the organization. It is particularly useful when working on projects that are affected by intense competition or when assessing the feasibility of a new project. ^[16]

GAP Analysis

GAP Analysis compares the current state of a project with the desired future state and identifies the gaps between the two. GAP Analysis is an alternative to SWOT analysis because it focuses on the gaps between the current state and the desired future state of a project rather than the internal strengths and weaknesses of the organization. It is particularly useful when working on projects that require significant changes or improvements to meet the desired outcomes. ^[17]

Risk Analysis

Risk Analysis is a systematic process of identifying and assessing potential risks that can affect a project. While Risk Analysis can assist in conducting a SWOT analysis, it can also act as an alternative. If it is identified that the goal of the analysis should be more focused on the risks the Risk Analysis is preferred over SWOT as it focuses on potential risks that can affect a project rather than analyzing the internal strengths and weaknesses of the organization. It is particularly useful when working on projects that are affected by high levels of uncertainty or when working in high-risk industries. ^[18]

Balanced Scorecard

The Balanced Scorecard is a performance management tool that aligns project goals with organizational objectives and examines four perspectives: financial, customer, internal business processes, and learning and growth. The Balanced Scorecard is an alternative to SWOT analysis because it focuses on the performance of a project across multiple dimensions rather than just analyzing the internal strengths and weaknesses of the organization. It is particularly useful when working on projects that require a comprehensive performance management system or when working on projects with multiple stakeholders. ^[19]

References

1. ↑ ^{1.0 1.1 1.2} Weihrich. H THE TOWS MATRIX - A TOOL FOR SITUATIONAL ANALYSIS. Long Range Planning 1982
2. ↑ Aithal P. S., Kumar P. M., Applying SWOC Analysis to an Institution of Higher Education. International Journal of Management, IT and Engineering, Volume 5, Issue 7, July 2015
3. ↑ Rainer Züst, Peter Troxler. No More Muddling Through Mastering Complex Projects in Engineering and Management
4. ↑ ^{4.0 4.1 4.2 4.3 4.4} Larson, E. W., & Gray, C. F. Project management: The managerial process (Seventh Edition). McGraw-Hill Education
5. ↑ ^{5.0 5.1} Pearce, Chris (2007), Ten steps to carrying out a SWOT analysis: Chris Pearce offers a guide to help nursing leaders analyse their activities. Nursing Management (Harrow, London, England: 1994) — 2007, Volume 14, Issue 2
6. ↑ Teece, David J. (2017), The Palgrave Encyclopedia of Strategic Management. Palgrave Macmillan UK
7. ↑ Joseph F. Coates. Scenario Planning. Technological Forecasting and Social Change
8. ↑ Susan L. Murray, Katie Grantham, Siddharth B. Damle. Development of a Generic Risk Matrix to Manage Project Risks. Journal of Industrial and Systems Engineering
9. ↑ https://project-management.info/stakeholder-engagement-matrix/
10. ↑ http://fernfortuniversity.com/term-papers/swot/nyse/3479-tableau-software--inc-.php
11. ↑ http://www.mindtools.com/pages/article/newPPM_07.htm
12. ↑ https://www.microsoft.com/en-us/microsoft-365/project/project-management-software
13. ↑ WHO. (2016). Strategizing national health in the 21st century: a handbook
14. ↑ van Wijngaarden JD, Scholten GR, van Wijk KP. Strategic analysis for health care organizations: the suitability of the SWOT-analysis. Int J Health Plann Manage. 2010
15. ↑ Rashain Perera, The Pestle Analysis, Nerdynaut 2017
16. ↑ GORDON SCOTT, Porter's 5 Forces Explained and How to Use the Model, https://www.investopedia.com/terms/p/porter.asp
17. ↑ Callison (2023, April 14) Conducting A Gap Analysis: A Four-Step Template
18. ↑ Terje Even, Risk Analysis, 2015 John Wiley & Sons
19. ↑ Alice C. Stewart and Julie Carpenter-Hubin, The Balanced Scorecard, Planning for Higher Education, Winter 2001