The SWOT analysis reviews organizational Strengths, Weaknesses, Opportunities and Threats.
The SWOT brings out the major issues to address in the strategic plan.
These strategic issues are few in number. They are huge in their effect on the performance of the organization. When they become clear the planning team can devise strategies to deal with them.
Remember the planning stages.
At the target setting stage and forecasting we find the performance gap. The gap analysis gives you the size of the strategic task.
Then comes the SWOT analysis.
This gives you the raw materials for making strategies of the right shape to close the gap.
The work is rigorous. It needs to be thorough. It paints a picture of the enterprise capabilities, and environmental challenges.
The planning team summarize the results of the SWOT analysis in a SWOT analysis template. The usual way is a cruciform chart like this.
Note we limit the number of items in each cell of the SWOT table to six. More than this and we are not listing big strategic factors. We are getting into operational problems. These may or may not be symptoms of 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.
The first half of the SWOT analysis is the Strengths and Weaknesses analysis. This looks inside the organization at its current activities. It lists the current capabilities, and shortcomings of the organization.
It is one of the most important parts of the strategic planning process. Why? We usually find the greatest number of issues in this part of the SWOT analysis.
To do this well we must go beyond the members of the planning team. At least include the top three levels of management. Involve them in an open, honest process. Have them help to identify the most important strengths and weaknesses.
If this is not possible, this may be pointing to a major issue. It may show weaknesses in culture, or management character and capability.
Such an inclusive and challenging procedure is almost always the best way to go. There are very few exceptions. See the box below.
Help is not far away!
Running a SWOT analysis workshop can be challenging for a Chief Executive Officer. Being a leader, participant, and facilitator all at the same time makes for a very busy day! It pays to have a facilitator to guide the process. Someone from outside can see and say things that the insiders do not feel able to discuss.
Like to talk to an experienced facilitator? Go here.
With a well-run workshop, key strengths and weaknesses will emerge. Usually a strong consensus emerges on what matters most within the organization. This will be a strong basis for the selection of strategies later on.
There are more technical and disciplined methods of identifying strengths and weaknesses. Often these may be too time-consuming for the planning team to use. The planning assistant or a special task team might use them in areas of particular concern.
Aids to clarify strengths and weaknesses include -
This part of the SWOT study views things from the other side of the window. In the first half, you identify the strategic issues inside the enterprise. Now the planners must focus outside. They study the trends and events external to the organization. These are beyond their control.
The top three management levels should now appraise the Opportunities and Threats.
It is important to have the same people involved, but the character of the exercise is different. With the Strengths and Weaknesses analysis, the executives are familiar with the territory. They will be less familiar with the Opportunities and Threats. There are so many areas to review.
Simple checklists help with the Strengths and Weaknesses analysis. The External Analysis will need a greater range of aids. The planners may also enjoy some external advice on particular areas.
Quite a few methods for analyzing and forecasting one's industry are available.
Once listed and described rank the factors by probability and by impact.
Survey trends in at least the Political, Economic, Social, and Technological areas. This is often called PEST analysis.
The planning team now gathers all its conclusions into a ‘big picture'. Use a Cruciform Chart or a table for this. This will helps them to get clear on their organization's key strategic issues.
There is sometimes only one of these, often two, sometimes as many as five or six, but never more.
Analysis of the SWOTs completes the data collection stage of the strategic planning process.
The team now know how urgent the strategies are. They know how large the gaps are. They know their outstanding abilities and disabilities. They know something of the trends in the world around them.
They are still not ready to make the final strategic selections. Before they do that there are two more steps to take.
Work on SWOT is not always helpful in planning. Some people think doing SWOTs is all there is to strategic planning. 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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