A SWOT Analysis is a simple, but effective tool when strategic planning. Many individuals, groups and organizations use the SWOT Analysis to evaluate Strengths, Weaknesses, Opportunities and Threats when faced with a project that has a specific objective in mind.
SWOT can be categorized into two distinct categories; they are internal and external forces. For instance, internal forces include strengths and weaknesses, external forces include opportunities and threats. Many times a SWOT Analysis can be viewed as a matrix; however, you can also choose to view a SWOT Analysis in tree structure form or simply listed as categories within a document.
Creating a SWOT Analysis
In order to create a SWOT Analysis, you must first come up with an objective to achieve. For instance, many organizations and entrepreneurs use the SWOT to achieve goals such as launching a new business, product line, rolling out new employee procedures, etc. For instance, if you are thinking about launching a new business (e.g. fast food restaurant) your SWOT Analysis might proceed as follows:
Create a Clear Objective
It is important to first create a clear objective for your SWOT Analysis; in this case it is to launch a new fast food restaurant that will be profitable.
Analyze your Internal attributes such as Strengths and Weaknesses
It is important to go through the SWOT Analysis and list the attributes that fit into each category. The more attributes you list, the deeper your analysis will be.
Strengths: are those things that are inside your organization or internal to your business that can help you achieve your business goals. Strengths in this situation can consist of strong leadership with years of fast food experience, appropriate financing available, a good location secured to open your business, franchise services and support available, etc.
Weaknesses: These are the attributes that are also inside your organization or internal to your business, but they can be harmful or work against you in achieving your ultimate objective. Weaknesses in this situation can consist of a short time table to launch your business, feuding of partners involved with the business launch, etc.
Opportunities: are considered external forces that just like strengths can be very helpful to achieving your goals. In this case, it can include a low amount of competition in the area, large student population in the area that are generally more prone to purchasing fast food, etc.
Threats: Finally, threats must be assessed to determine what external conditions can be harmful to achieving your goals. In this case an external threat could be the high cost of labor in the area, lower economic growth forecasted for the area and a possible strike looming at food producing plants.
Analyze Your SWOT Matrix
Once Strengths, Weaknesses, Opportunities and Threats are listed, now the decision makers must go through the attributes in the listed categories. In each of the categories a more thorough analysis of each attribute listed must take place. The most important outcome from a SWOT Analysis is to determine if a goal or objective can be achieved. If it can’t, you might want to repeat the process including new strengths and opportunities, digging deeper into your analysis.
However, if looking at the SWOT Analysis, you, the decision makers feel that the goal or objective can be achieved, you can start by using the analysis to create a strategy to achieve your goal. One of the ways to get the most out of your SWOT Analysis is to ask basic questions using SWOT. For instance, look at your strengths and figure out how you can maximize each strength to achieve your goals. Look at your weaknesses and figure out how to minimize each weakness. Continue on with external opportunities, figure out the best ways to take advantage of each opportunity and reduce the threats that can cause failure when trying to achieve your goal.
Inherent Weaknesses of the SWOT Analysis
It should be noted that while the SWOT Analysis can be an extremely important strategic planning tool, it does have its downsides. First off, it should be looked at as just one of the many productive tools to consider achieving objectives. Because the SWOT Analysis for the most part is a list making tool, many times more energy can be consumed creating lists, instead of actively solving problems. In addition, in order for a SWOT Analysis to work, you do need a clearly defined objective. Without a clearly defined objective, it will be difficult to focus on the problem or plan a way to achieve your goal. You should also make sure you separate opportunities that are external to the company with strengths that are internal to the company. Clearly defining each category will help you better plan your overall strategies.