SWOT analysis

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Abstract

This article will discuss different approaches when making a SWOT analysis.

Introduction

The SWOT analysis is a tool that provides a basic framework for situation analysis. It generates lists or inventories of strengths, weaknesses, opportunities and threats which can be used when generating strategies. There is no single guide or manual on how to perform a SWOT analysis - on the contrary many papers, books and articles have been issued describing, criticising and expanding on the usage of SWOT analysis combining it with other analytical approaches.

The SWOT analysis has a very simple structure which allows it to be performed in many contexts and on many levels of depth and accuracy. This versatility is also the basis upon which it it has been greatly debated and optimisingly treated. If the purpose of performing the SWOT analysis is to derive strategies for businesses or projects, a worse-case scenario could be "[...] a poorly structured, very general, hastily conducted exercise that produces unverified, vague and inconsistent inventories of factors[...]" .

This article will mainly look at the SWOT analysis from a project management point of view and seeks to present the reader with a guide on how to perform a conventional SWOT analysis as well as presenting a variant called the "TOWS matrix" - a variant of the SWOT analysis which utilises the inventory of SWOTs in a more systematic way than the conventional. The SWOT analysis will be presented on three different levels of depth and accuracy beginning on the lowest to motivate the points on which it has been criticised.

The history of SWOT

Although there is no single inventor/author of the SWOT analysis, early versions are developed in Harvard Business School by George Albert Smith Jr. and C Roland Christiensen in the 1950s and 1960s . The four factors that later became the Strengths, Weaknesses, Opportunities and Threats (SWOTs) were then called "opportunities" "risks" "environment" "problems of other industries". Another version was developed at Stanford University by Albert Humphrey which was based upon factors we know as SWOT today. The factors, represented by the acronym SOFT, were then: “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.”

The SWOT matrix

The SWOT analysis is usually presented in a 2X2 matrix which generates four boxes of inventories - one for strengths, one for weaknesses, one for opportunities and one for threats, see figure 1

Figure 1

The simplicity of the matrix also resembles the most criticisable approach to conducting the analysis. The analysis can be carried out in three steps:

Step 1 Gather information about the present. These are the strengths and weaknesses.

Step 2 Think of what might be in the future. These are the weaknesses and threats.

Step 3 Review the SWOT matrix with the aim of creating an action plan that involves the four areas like this:

Strengths - need to be maintained, built upon or leveraged

Weaknesses - need to be remedied, changed or stopped

Opportunities - need to be prioritized, captured, built on and optimized

Threats - need to be countered or minimized and managed

Another SWOT matrix takes into account the fact that the strengths and weaknesses are internal factors as well as the opportunities and threats are external factors. See figure 2. This indicates that there are more points to pay attention to implied when conducting a SWOT analysis. The following sections will summarise and elaborate on these implications for conducting a useful SWOT analysis.

Internal factors

The strengths and weaknesses are, as mentioned, not only factors regarding the present, they are also to be found within the project subject to the SWOT analysis. This means that the internal factors are all factors that the project is in control of. Often the internal factors can be found within these general areas:

Human resources - e.g. staff, volunteers and leaders

Physical resources - e.g. production facilities and equipment

Activities and processes - e.g. programs and systems you employ

Past experiences

External factors

Corresponding to the internal factors are the opportunities and threats not only factors regarding the future, they are also to be found outside the project subject to the SWOT analysis. The external factors can be found within the areas which are considered in the analysis tools Porter's Five Forces and PESTEL.

Obtaining adequate and truthful information

Stake holders on all levels of the project coalition.

Setting the objective

The SWOTs are relative to the objective. For example having an expert in tropic building technology on the project team is an irrelevant strength if the building is to build in the Arctic.