SWOT analysis is an uncomplicated but effective tool that is used to assess an organization’s strengths, weaknesses, opportunities, and threats in both internal and external environments.
SWOT analysis is used to identify the general state of an organization both
internally and externally. The language used in a SWOT analysis is short, specific, practical, and proof based.
SWOT analysis evaluates an organization against identified success elements. SWOT can be used in any aspect of an enterprise such as the divisions, business units, projects, or individuals.
A SWOT analysis can be used to do the following:
- Assess an organization’s current environment.
- Share knowledge with the stakeholders.
- Identify the best possible options to meet an organization’s needs.
- Identify possible obstructions to success and create action plans to overcome these obstructions.
- Modify project plans throughout the project as new needs appear.
- Identify areas of strength that will help an organization in executing new strategies.
- Create criteria for assessing a project’s success based on a given set of requirements.
- Identify areas of weakness that could erode project goals.
- Create strategies to address outstanding threats.
SWOT is an acronym which stands for Strengths, Weaknesses, Opportunities, and Threats and it means:
• Strengths (S): this is anything that the evaluated group does well. It may include its employees, effective processes, IT systems, customer
relationships, or any other internal factor that leads to its success.
• Weaknesses (W): these are the functions that the evaluated group does badly or not at all.
• Opportunities (O): these are the external factors which the evaluated group may be able to take advantage of. It may include entry into new markets, procuring new technology, changes in the competitive marketplace, or other forces.
• Threats (T): these are the external factors that could negatively influence the evaluated group. They may include factors such as the new competitor entry, economic downturns, or other forces.
Starting a SWOT analysis with opportunities and threats provides a basis for identifying its strengths and weaknesses.
SWOT matrices have their strengths and limitations which include the following:
Strengths
• It is an important tool which helps in understanding the organization, product, process, or stakeholders.
• It enables the business analysts to direct the stakeholders’ focus on elements that are important to the business.
Limitations
• The results of a SWOT analysis only provide an overview; more detailed analysis is often required.
• Unless a clear context is defined, the results may be unfocused and contain factors which are not relevant to the current situation.