SWOT analysis in project management

SWOT analysis is a common used tool in project management. It was developed by Harvard economists during the 1960s. This method is very powerful for all types of projects if it is applied correctly. Indeed, it is a strategic business analysis tool that combines the study of the strengths and weaknesses of a project with the opportunities and threats of its environment, in order to help define a development strategy. They are known as internal and external factors.3,6

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. These are the four key areas to be identified and assessed in order to develop an efficient business or project. The SWOT analysis usually ends up by building a matrix 2 by 2 where each cells corresponds to an area. Other tools such as the PEST method 5 could be associated with the SWOT analysis in order to have a broader view of the assessment of threats and opportunities.

In this Wiki article, you will find information on how to use this powerful tool in project management and under what circumstances as well as an example to show how to use the SWOT analysis in an efficient way.

The theory of SWOT Analysis

Why do we use a SWOT Analysis ?

The SWOT method is mainly used during the early stage of a project in order to analyse the situation. It combines the analyse of the current state with the analysis of the future state. Indeed, we start by identifying the strengths and weaknesses (internal point of view) and the opportunities and threats (external point of view). Then, by analyzing the matrix, we are able to get a better view of the future state of the project.

The SWOT matrixes are usually performed for different purposes in companies. Here is a list of some area of applications 1 :

• Performance analysis : To identify and to measure the influence of the internal operations and the external impacts on how the company is performing
• Situation analysis : To assess internal and external conditions affecting the company at the beginning of a project
• Cause analysis : To evaluate what tools need to be developed and what methods should be improve
• Business analysis : To identify markets opportunities and threats and find how to deal with it.

The use of the SWOT analysis is not only limited to companies as it can be used for any type of project (professional or personal). For instance, you can do a SWOT matrix for yourself to prepare for a job interview or when you are planning a road trip.

When do we use a SWOT Analysis ?

In a system-oriented problem solving project, there are several steps divided on the outcome of each phases1 :

• Situation analysis : The goal of this first step is to clearly identify the issue and to frame the project. Gathering data, identifying factors that may influence the project, analyzing the current state and predicting the future state are among the main tasks.
• Goal definition : The outcome of this phase is to clearly define objectives for the project. At the end of the first two steps, the project should be framed and the issues to solve identified.
• Searching for solutions : During this phase, the project team should elaborate potential feasible solutions by brainstorming and then conducting data-driven analysis to see if it is feasible.
• Selection : The end phase of the methodology of system-oriented problem solving consists on making a decision by elaborating a set of criteria and assessing each potential solutions.

SWOT analysis is used in the situation analysis phase to analyse the current state and to predict the future state. It is usually one of the last tool used during this phase after demarcating the system, analyzing the stakeholders and gathering data. The figure 1 shows when to apply the method in the system-oriented problem solving process.

FIGURE 1 TO PUT

Assessing the factors

The first step of SWOT analysis consists of assessing the four factors 3 : Strengths, Weaknesses, Opportunities and Threats. The first two factors are internal : they are depending only on the company. As an analogy with a personal SWOT matrix, they correspond to the qualities and defaults of the person. On the contrary, opportunities and threats are external. As examples, those external factors can be governments policies, a new concurrent rising, new business opportunities or even a worldwide pandemic such as the COVID-19 crisis.

Internal factors

Strengths

The strengths are the positive internal aspects that the company can control. As an example for a company, it could be high quality products, a worldwide implementation or a dynamic and experienced project team. 3

Usually, you can identify your strengths by collecting data from inside and outside the company. In order to assess the strengths, here are some questions that could generate global ideas6 :

• What are your advantages ?
• What are your forces according to an external point of view ?
• Do you possess unique resources and what are they ?

Weaknesses

On the contrary, weaknesses are the negative internal aspects that the company can control. They have usually a huge potential to be improved if time and money are provided. For instance, a bad communication leading to less visibility or a lack of financial stability could be considered as weaknesses. 3

As for strengths, weaknesses are usually identified by collecting data. To get ideas, here are some questions that you could answer6:

• What could you improve ?
• Where do we have less resources than the concurrent  ?
• What are you not doing well ?

External factors

Opportunities

Opportunities are the positive external effects that can be taken advantage of in the context of current strengths and weaknesses. They develop outside the project’s sphere of influence or at the margin. For instance, a change in global consumer tastes regarding a country's production, economy growth of a country where you to implement or the development of online shopping can be considered as opportunities.3

Threats

Threats are external problems, obstacles or limitations that can prevent or limit the development of the project. As opportunities, threats are often outside the project’s sphere of influence or at the margin. As examples, we can take the loss of interest of customers for a product or the COVID-19 worldwide pandemic for the majority of companies.3

A tool for assessing external factors : PEST analysis

In order to assess those external factors, we can use the PEST analysis method. The goal of this tool is to identify potential external factors. Thus, it is very useful for the assessment of opportunities and threats in the SWOT analysis. PEST stands for Political, Economic, Social and Technological. PEST methods focuses on those four areas5 :

• Political : All factors that are related to policies and laws. For instance, we can take taxes, employment or a new law regulating the market of the company.
• Economic : Factors that may affect the economy of the company. For example, taxes, inflation or economic growth of a country can be either a threat or an opportunity for the company.
• Social : These factors are mainly related to the customer behavior. As an opportunity, we can take the example of a young generation willing to try new things for the development of an extreme sport whereas a social threat could be the fear that it provokes to potential customers. It can also be related to the country with the education system and its own culture.
• Technological : These factors are related to the scientific point of view. For instance, the level of innovation in the company and its R&D activity can be either an opportunity if it is well developed or a threat if it is the contrary.

A template of the PEST analysis is shown in figure 2. There is also more and more people that are adding two areas of analysis : Environmental and Legislation.5 By using this tool and its structure, you will be able to find threats and opportunities for your project.