The SWOT analysis involves the study of organizational Strengths, Weaknesses, Opportunities and Threats.
This strategic analysis is the key stage for flushing out the major strategic issues to be addressed in the strategic plan.
These corporate strategic issues are few in number, and huge in the importance to the performance of the organisation. With these elephant like issues clearly identified from the SWOT, a planning team can devise strategies to achieve the organisation's overall purpose, within a specific bracket of targets.
At the purpose and target setting stage preceding the SWOT analysis, targets and forecasts of current strategic performance gives a picture of the gap to be closed by new strategies.
The gap analysis gives you the overall size of the strategic task over time.
Then the SWOT analysis gives you the raw materials you need to make strategies of the right shape and pattern to close the gap.
A kind of strategic quilt!
However, the work is not patchwork! It involves a rigorous, comprehensive, and very thorough review of the enterprise capabilities, and environmental challenges.
The results of the SWOT analysis can be summarise in a SWOT analysis template, or cruciform chart like this.
Notice that we have limited the number of items in each cell of the SWOT analysis table to six. Our experience strongly suggests that more than this and we are not listing really big strategic factors. We are probably getting into operational problems which may or may not be symptoms of really big strategic issues.
The first half of the SWOT analysis is the Strengths and Weaknesses analysis. This is a look inside at the current activities, capabilities, and shortcomings of the organization.
It is one of the most important parts of the strategic planning process. Why? The Strengths and Weaknesses analysis is where we usually find the greatest number of major strategic issues.
However, there is a proviso.
For the real issues in terms of the internal resources and capabilities of the organisation to be addressed, the search must be opened up beyond the corporate management level strategic planning team. At a minimum where the organisation is large enough, the top three levels of management at least should be involved in a very open, honest and participative process to identify the real strengths and weaknesses of the organisation.
If this is not possible, then this fact itself may be pointing to weaknesses in culture, or management character and capability.
Such a participative, and it must be acknowledged, challenging procedure is almost always the best way to go. There are a very few exceptions however.
With a properly run workshop to identify the key strengths and weaknesses will emerge with a strong consensus on what really matters within the organisation.
This will be one of the strongest planks in the platform required to underpin the selection of strategies later on.
There are more technical and disciplined methods of identifying strengths and weaknesses, which may be too time-consuming for the planning team to employ. The planning assistant or a special task team might well find them useful in areas of particular concern.
A few aids to clarifying the strengths and weaknesses at this stage include the following.
This part of the SWOT analysis is carried out by viewing things from the other side of the window. In the first half, planning team were trying to identify the really big strategic issues inside the enterprise. Now they must turn their focus outside, to the trends and events external to the organisation, which are mostly beyond their control.
Having engaged the executives from at least the top three management levels to describe the strengths and weaknesses of the organization, the same group should then also be asked to carry out the External Appraisal of Opportunities and Threats.
Although it is important to have the same people involved, the character of the exercise is different. With the Strengths and Weaknesses half of the SWOT analysis, the executives involved are very familiar with the territory. They will not be as on top of things with the Opportunities and Threats back half of the SWOT analysis to the extent they were with the Internal Appraisal. The areas to be addressed are too many and extensive.
Whereas the Strengths and Weaknesses part of the analysis can usually be covered using simple checklists, and shared understanding of the organisation as embodied in businesses model representations, the External Analysis will probably require a greater range of aids, including occasionally, some external advice on particular areas.
Quite a few methods for analysing and forecasting one's industry are available.
Having completed the data-collection stage in the corporate strategic planning process, the planning team should gather all its conclusions together in some methodical manner such as a Cruciform Chart or a table showing the 'strategic totality', or big picture. This will assist them to reach a very succinct description of their organization's key strategic issues.
There is sometimes only one of these, often two, occasionally as many as five or six, but never more.
With the end of the External Appraisal the data collection stage of the corporate strategic planning process is complete.
The team will now know how urgent the strategies are, they will know how large the gaps are, they will know their outstanding abilities and disabilities, and they will know something of the trends in the world around them.
They are still not ready to make the final strategic selections; however, before they do that there are two more steps to take.
Work on SWOT is not always helpful in planning. This is because something that is simple becomes complicated by confusing ti with other things. See 'What is SWOT Analysis?' for more on this.
If you wonder about how SWOT Analysis came into use try this article.
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