SWOT analysis is a very common and useful strategic planning tool. It is simply an acronym for Strengths, Weaknesses, Opportunities and Threats. Its an exercise often used by the team tasked with putting together the strategic plan to explore Strenghts and weaknesses of a company that are often called internal drivers as well as Opportunities and Threats that are called external drivers.
Since strengths and weaknesses come from within the organization, the strategic planning team members will be able to identify them in the interview process or perhaps in a brainstorming session set up for that purpose.The facilitator may choose to ask the members to identify strengths and weaknesses directly, or may choose to simply pull them from the interview data and list them as planning assumptions in the executive summary.
Opportunities and threats are harder to identify. Ideally, the leader should ask few subject matter experts to address the strategic planning team on relevant subjects prior to the off-site. A relevant subject is one pertaining to the organization’s strategic goals. The reason this is not done during the initial planning session is because the planning team has not yet identified what is important, i.e., their strategic goals.
What is meant by opportunities and threats?
Theoretically, anything outside the organization that impacts its future, such as actions by Congress, new laws passed..etc. But, unless they are limited to the vital few, the group may never get past the analysis stage. The vital few opportunities and threats are those that directly relate to the business the organization is in—those that, if changed today, would alter the way it does business, i.e., create a paradigm shift.
Why is a SWOT analysis important?”
Once the team reaches consensus on its strengths, weaknesses, opportunities, and threats, they will want to develop new goals that will allow the organization to maximize its position relative to each. Think of this as a tune up and alignment for the company's strategy it will help identify where we are right now and which path should we be heading.
SWOT Analysis – Generic Template
| Strengths S1- Strong R & d S2- Dealers Force S3- Low Cost |
Weaknesses W1- Customer Complaints W2- Long Cycle Time W3- Service Recovery |
|
| Opportunities O1- Growing Market O2- Positive Brand Image O3-Moving to High Tech |
SO Strategies: Use internal strengths to take advantage of external opportunities |
WO Strategies: Improve internal weakness and take advantage of external opportunities |
| Threats T1- Economic Slow Down T2-AFTA T3 – Buyer’s Market |
ST Strategies: Use internal strength to avoid or reduce the impact of external threats |
WT Strategies: Defensive tactics: Reduce internal weakness, Avoid environmental threats. A firm faced with external threats and internal weakness may indeed be in a precarious position |
SWOT Analysis – Typical example of Strategies - 1
| Strengths S1- Strong R & d S2- Dealers Force S3- Low Cost |
Weaknesses W1- Customer Complaints W2- Long Cycle Time W3- Service Recovery |
|
| Opportunities O1- Growing Market O2- Positive Brand Image O3-Moving to High Tech |
SO Strategies: S1O1: Develop New Product ahead of competitor for growing market |
WO Strategies: W1O2: Setup Customer Enhancement Initiative to Improve Brand Image |
| Threats T1- Economic Slow Down T2-AFTA T3 – Buyer’s Market |
ST Strategies: S2T2: Strengthen Dealers for Asian (Open) Market |
WT Strategies: W2T1: Improve Cycle Time to Attract New Customer |
SWOT Analysis – Typical example of Strategies - 2
| Strengths S1- Experience Workforce S2- Financially Sound S3- Production Flexibility S4- Strong External Mgmt Support S5- Wide Product Range |
Weaknesses W1- High Changeover W2- Lack Technical Competency W3- Limited Capacity W4- Weak Appraisal System W5- Limited Sourcing |
|
| Opportunities O1- AFTA By 2003 O2- Competitive Pricing O3- High Margin on Small Volume Counters 04- Cash and Quantity Discount |
SO Strategies S1O1- Penetrates to Asian Countries by Experienced Workforce S1O2- Unit Cost Reduction Driven by Experience S2O4- Pay Cash to Enjoy Cash S303- Production Flexibility S5O1- Wide Product Range |
WO Strategies W1O2- Product Focus to Achieve Low Unit Cost W2O1- |
| Threats T1- Sole Supplier T2-Lost Market Share Due to Product Substitution T3-Downstream Industries T4- Rapid Growth in Bopp Attract New Competitors T5-Lost Market Share due to Inconsistent Quality and Poor OTD |
ST Strategies S1T1 |
Wt Strategies W1T1 |
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