SWOT Analysis

I’ve been using SWOT Analysis for strategic planning lately and I thought I’d share the basics of it.

What is a SWOT Analysis

SWOT is a strategic planning tool. The acronym SWOT stands for:

S= Strengths

W = Weaknesses

O = Opportunities

T = Threats

The importance of a SWOT Analysis

A SWOT Analysis is a great exercise to help determine your tactics or execution of an objective.

The more you can prepare before you jump into your tactics (or execution), the better off your results will be.

How to do a SWOT Analysis

First, pick your topic (e.g. your topic might be broad such as on your business/company overall (a “Company SWOT Analysis” or something more specific such as a department in your business (e.g. a “Marketing SWOT Analysis) or it could be for yourself as an individual (a “Personal SWOT Analysis”).

Next you pick your objective. For example, if you’re doing a Company SWOT Analysis your objective may be to double the business within the next three years.

Now do the Strengths, Weaknesses, Opportunities and Threats related to that topic or objective:

• Strengths — These are attributes that you or your company possess that would be helpful in achieving the objective.
• Weaknesses — These are attributes that you or your business have that are harmful to achieving the objective.
• Opportunities — These are the external circumstances that are helpful to you achieving the objective.
• Threats — These are external circumstances that could damage the performance of your objective.

Next, ask yourself if your objective is achievable given your strengths, weaknesses, opportunities and threats.

Is SWOT objective achievable?

If the answer is no, you have to revise your objective and do another SWOT.

If your answer is yes, then you can now move into discussing the tactics related to your strengths, weaknesses, opportunities and threats.

Specifically, you’ll want to ask yourself the following questions:

1. How can we leverage each one of our strengths?
2. How can we improve upon each weakness?
3. How we can capitalize on each opportunity?
4. How can we minimize each threat?

A SWOT Analysis Example

[Check out my SWOT Analysis Examples posting to see larger company SWOT Analysis examples]

Here’s a summary of a general Business SWOT Analysis I did on our start up Mojam about ten years ago.

Our objective was to double the revenue of the business within twelve months.

Strengths

• Amazing team
• Large quantity of product
• Well-connected investors
• Good at partnering

Weaknesses

• Low amount of capital
• Mediocre product quality
• Geographically fragmented team

Opportunities

• Yahoo is interesting in partnering with us
• Company can turn a profit with just a few more customers
• Smaller competitor is distressed and may want to sell
• New revenue sources such as merchandise sales are right around the corner

Threats

• A small new competitor has entered the space
• We may not make payroll if we can not raise more capital or grow our business

When we asked ourselves if the objective of doubling our business was achievable given these strengths, weaknesses, opportunities and threats, the answer was yes…so we moved on to answering the four questions on each SWOT.

E.g.:

• How can we leverage our amazing team?
• How can we exploit our large quantity of product?
• How can we grow our capital?
• How can we improve our product quality?
• How can we close the Yahoo deal?
• How can we start merchandising as a new revenue source?
• How can we combat the new competitor that entered the space?
• How can we buy more time to make payroll?

Now you’re into tactics and execution and that requires prioritization, time lines, business plans, etc….or, in other words, you just go do all the things you just said you shoud do in your answers!

Who should carry out the SWOT Analysis exercise?

Ideally it’s a cross functional team (e.g. someone in sales, marketing, finance, technology, etc.)

Who Invented SWOT?

Most people credit Albert S. Humphrey, a business and management consultant who also founded the Stakeholder Concept and Team Action Management (TAM) Concept.

note: Some people mistakenly call it “SWAT” Analysis (SWAT is an acronym for special weapons and tactics started by the Los Angeles Police Department around 1968 (coincidentally, Albert Humphrey began popularizing SWOT right around the same time (in the late 1960’s!))

A great definition of SWOT can be found at SWOT Analysis Wikipedia.

Good luck with your SWOT!