SWOT Analysis

SWOT analysis stands for strengths, weaknesses, opportunities, and threats. It is a structured approach for assessing a project, new business venture, ongoing concern, or similar situation.

By itself, SWOT analysis has limited utility. It has much more value when used with a purpose, such as a product launch, an annual strategy session, or when deciding whether to venture into a new industry.

Generally speaking, any tool that structures a planning process has value. It prevents you from overlooking something important.

The downside of SWOT analysis is that it requires that you already know something. Quantitative tools can teach you something new about a situation. For example, you can track data on a run chart and look for patterns that can uncover problems.

In tools that require a bit of brainstorming, you have to already have an inkling of an idea. For example, you have to already understand the threats in your industry or be aware of opportunities that you have. This tool helps organize your thoughts, not create them.

That said, there is still a great benefit in using this tool, especially in the team setting. The act of consolidating the ideas of several people within each of these categories not only captures what you already know but can spur ideas for further research.

SWOT Analysis Categories

• Strengths: Strengths obviously refer to the things that you are already good at. Special emphasis should be placed on those items that give you a competitive advantage. It is not enough to be strong. You have to be stronger than those you are up against.
• Weaknesses: It is important to know where you need work. Like strengths, the most important weaknesses to pay attention to are those where you stack up poorly against the competition.
• Opportunities: In this category, the key is to identify the things that you can capitalize on. Note that opportunities are not assessed in a vacuum. Strengths, weaknesses, and threats all affect what you think you can accomplish.
• Threats: The key here is to be broad in your assessment of where the threats can come from. You may have internal issues that you are facing, such as aging equipment or a disgruntled workforce. You may have competitors that present a large risk to you. There may be industry specific problems that you face, such as the challenge that buggy manufacturers were up against as the automobile was introduced. And there may be far-reaching threats such as global upheaval or economic downturn.