SWOT analysis

This article will discuss two different applications of SWOT analysis - the "conventional" and a variant called the TOWS matrix, which utilises the inventory of SWOTs in a more systematic way than the conventional.

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. The strengths and weaknesses are internal factors representing the present environment of a system. The opportunities and threats are external factors which have the potential to influence a system in the future. The factors are universal which makes the SWOT analysis applicable in many organisational contexts like businesses or projects.

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 elaborating on the applications of the SWOT analysis . The criticism is often based upon the fact that it has a simple structure and does therefore, in itself, not provide a rigorous framework that ensures reliable inputs to strategic planing. An analysis can thus, if not carefully conducted, consist of poorly structured inventories containing very general or vaguely formulated factors that are inconsistent and hard to verify .

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.”

Different applications of SWOT analysis

The conventional 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 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

. 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.

The TOWS matrix

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.