What does SWOT stand for in planning?
Historically, corporate planning has always been difficult. Many organizations have failed at trying to get everyone on the same page and agree to the details of a plan—more often than not, their efforts proved to be both ineffective and time consuming. Something had to be done. Show
Albert Humphrey of the Stanford Research Institute determined in the 1960s to identify why corporate planning consistently failed. Thus the origination of the SWOT analysis. Today, the SWOT analysis is one of the most important concepts in the business world and is widely used by all types of organizations to help build a strategic plan. So, what is a SWOT analysis, and what do you do with it? In this article, we’ll explain it all (and share some SWOT analysis examples to boot) from start to finish. In This Article
After completing your SWOT analysis, jump right into outlining your strategy with these free strategic planning templates.What is a SWOT analysis?A SWOT analysis is a high-level strategic planning model that helps organizations identify where they’re doing well and where they can improve, both from an internal and an external perspective. SWOT is an acronym for “Strengths, Weaknesses, Opportunities, and Threats.” SWOT works because it helps you evaluate your business by considering multiple factors:
Organizations use SWOT to plot out a future course that plays on their strengths and minimizes risks. Taking the time to look at your organization from different perspectives and honestly assess your future prospects is a worthwhile activity; the insights you glean as a result you should then use constructively as part of the strategic planning process. How do you conduct a SWOT analysis?To help you get started, we’ve created this step-by-step SWOT analysis template. The examples below are specific to the airline industry (since that’s the example we use in our grid), but the SWOT analysis exercise is applicable to all businesses. You’ll notice we divided our hypothetical examples for strengths, weaknesses, opportunities, and threats based on the four Balanced Scorecard perspectives. You don’t have to use the Balanced Scorecard to be successful with your SWOT analysis, but this method does provide a strong framework for your discussion. Not using the Balanced Scorecard? Look to the guiding principles of whatever strategic management framework you are using for ways to think about your business. For example, the VRIO framework emphasizes value, rarity, imitability, and organization; you can conduct a SWOT analysis through the lens of these criteria instead. 1. Create a SWOT matrix.This is the grid-like matrix that will house the information you gather. As you can see in the SWOT analysis template below, each quadrant features one of the four elements you’ll be focusing on—strengths, weaknesses, opportunities, and threats. Using a matrix helps present your findings in a clear, easy-to-understand way. 2. Gather the right participants.Pull people from all departments to participate in the analysis. Your entire leadership team should be involved because they can provide a broad view of the organization and offer insight into the competitive landscape. But having lots of different perspectives is beneficial, and that means including leaders from every department—and anyone else you think might have valuable input. The more diverse the group, the better insights you’ll generate. Not all ideas will make it to the final list, but it’s important to consider them all. 3. List your strengths.Ask the group: What are we good at? How are we better than our competitors? These are broad questions, but in the beginning stages of your discussion, you should accept all answers. Examine these questions in relation to the Balanced Scorecard perspectives. For the fictional company Upward Airlines, the discussion might look like this:
Having considered these questions for your own organization, you might come up with multiple responses in some categories. Below is a sample of the strengths portion of the SWOT analysis for Upward Airlines: 4. List your weaknesses.Ask the group: What are we not good at? Where can we grow? What are we lacking? The Upward Airlines discussion might look like this:
5. Identify your opportunities.Ask the group: Where do we see big (and small) possibilities for our organization? What do we see happening in the future? The Upward Airlines group might discuss the following:
Upward Airlines’ opportunities for the foreseeable future might be: 6. Identify your potential threats.Ask the group: What do we see as a threat? What obstacles do we anticipate? What is changing that could hurt us? As a travel-related company in a tough economy, Upward Airlines might uncover a number of potential threats:
The external threats deemed most imminent for Upward Airlines might be: 7. Examine your matrix for connections.In looking at your SWOT matrix, do some of your strengths naturally support the identified opportunities? If you eliminate weaknesses, would that present additional opportunities? Your SWOT analysis is now complete! At this point, we recommend running a “brown paper exercise”—print your SWOT matrix in large size, and ask employees to add post-it notes in any or all of the matrix’s four boxes if they feel the leadership team missed something. (You can also ask employees to add their names next to their suggestions so leadership can follow up with them.) Not only is this exercise great for inter-office discussion, but it also gives leaders the chance to consider opinions from staff in the field. Done correctly, the SWOT analysis is another valuable tool in your toolbox for improving business performance and minimizing threats and weaknesses going forward. It can also prompt organizations to be more innovative with their strategy—new ideas may emerge that leadership would not normally have considered without such a thorough examination of the business from all angles. Complement SWOT With PESTA SWOT analysis is a way of understanding and evaluating all facets of your company so you’re in a better position to make decisions about the future. But there are also external factors that will impact your company’s future; these things are beyond your control but still require consideration as you map out your strategy. That’s why many organizations choose to complement a SWOT analysis with a PEST analysis—together, they provide a complete picture of your business environment for effective strategic planning. PEST stands for political, economic, social, and technological—the four key areas outside your business that are likely to impact it. These factors tend to play out over long time frames. An economic slowdown, for instance, could take years to resolve, but you can take action to address staff training issues fairly quickly. Thus, a PEST analysis is more valuable than SWOT when it comes to formulating longer-term plans and business strategies. Our recommendation is to do a SWOT analysis first, followed by a PEST analysis, to get a complete picture of the business landscape. What should you do with your SWOT analysis?Congratulations! Hopefully, you understand your business a little better after completing your SWOT analysis; now it’s time to put those insights to good use. Your ideas on how to use your strengths and overcome your weaknesses should inform your strategy. Developing a strategy is in and of itself a big step. It involves defining objectives for your company to move toward, creating priority initiatives (projects) to help make them a reality, and identifying measures to make sure the strategy is unfolding the way it should. Our Upward Airlines SWOT analysis example, for instance, lists four weaknesses:
Some of these weaknesses are easier to address than others, such as improving employee satisfaction and your project management practices. Others, like the lack of direct travel routes, may be difficult to address in a time when COVID-19 is severely limiting travel and profits are low. Similarly, you want to continue supporting your current strengths. While you shouldn’t let your excellent training program lapse, it needn’t be a focus if you expect the number of new hires over the next year to be low. However, improving your virtual communication practices will most likely prove to be beneficial moving forward. Therefore, the Upward Airlines SWOT analysis above might drive strategy in the following ways:
Make sure there is a clear and strong link between your SWOT analysis and your strategy map. For example, if you’re a for-profit organization, your financial perspective will be the top priority—build your analysis into your map in a manner that drives those finances in the right direction. Maybe your SWOT analysis foretold an opportunity to hit a new line of business or forecast that a line of business would dry up. Your strategy needs to reflect that information. SWOT Analysis Best PracticesTo create the most accurate and effective SWOT analysis, we recommend the following best practices:
Download our strategic planning tools—including a SWOT analysis template.If you need some guidance with this process, download our free strategic planning booklet. It includes eight of the most popular templates to build strategic plans, including a SWOT analysis template. The strategic plan you develop from your SWOT analysis is powerful, so once you’ve created it, don’t let it sit! Use strategy execution software like ClearPoint to track your progress over time. (Read more about strategy execution and how you can use ClearPoint for tracking here.) And as you continue using ClearPoint, you’ll also gain great insights into your strengths and weaknesses for future SWOT analyses. So, download the templates—or check out our learning center for other helpful resources—and start planning for the future now! a What are the 4 dimensions of SWOT analysis?The four dimensions are: Strengths, Weaknesses, Opportunities, and Threats. a When and where should you develop a SWOT analysis?You need a few uninterrupted hours to conduct a strong SWOT analysis. You should conduct a SWOT analysis around the same time of your strategy refresh. Include key leaders within the company to get comprehensive insight on the current state of your business. a How do you use your SWOT analysis?Use your SWOT analysis to influence your strategic plan! Don’t let the insights from your SWOT analysis just sit in a shelf. Learn how to utilize your strengths to achieve your long-term goals, and make plans to strengthen your weaknesses. a Why should I conduct a SWOT analysis?A SWOT analysis offers many benefits for your organization. It allows you to better understand your business. By taking the time to identify where your company succeeds, and where they struggle, you can create plans to leverage your strengths and mitigate risks in your weaknesses. a What’s the difference between a SWOT and PESTEL analysis?A SWOT analysis is conducted to assess internal factors that affect your business. A PESTEL analysis focuses solely on external factors.
What does SWOT stand for in construction?SWOT stands for strengths, weaknesses, opportunities, and threats. It's a strategic planning technique that project managers use to help them analyze their projects' strengths and weaknesses, as well as to analyze and review any opportunities and threats they may face in the upcoming future.
Is SWOT analysis part of planning?SWOT analysis can help your business identify what it's doing right and what needs to change in the organization — and the process is surprisingly simple. SWOT analysis is a planning methodology that helps organizations build a strategic plan to meet goals, improve operations and keep the business relevant.
Why SWOT analysis is important in planning?A SWOT analysis will help you identify areas of your business that are performing well. These areas are your critical success factors and they give your business its competitive advantage. Identifying these strengths can help you make sure you maintain them so you don't lose your competitive advantage.
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