What Is SWOT Analysis?

Basic and rather easy to follow, SWOT analysis is a marketing concept that some consider under-appreciated in the world of business. Such experts as Anthony C. Danca note that the letters in the title stand for strengths, weaknesses, opportunities and threats.

The key is honest analysis of each, knowing what a company can do, what it can’t do, conditions that are favorable and conditions that are unfavorable. In the end SWOT analysis is used to decide if the business or organization can proceed in a particular direction or adjusts the sights for a different objective.

A quick look at the four basic pieces of the SWOT analysis is often enough to understand the areas that should be analyzed. The key is being almost brutally honest about what the strengths and weaknesses are, as well as being realistically about the opportunities and obstacles.

But first, the SWOT concept originated in a research effort at Stanford University beginning in the 1960s, with a man named Albert Humphrey in the lead. In one illustration of the technique, a square is shown, with the S, W, O and T each occupying one-fourth of the space. The strengths and weaknesses are identified as internal factors, while the opportunities and threats are listed as external influences.

Users of SWOT analysis are urged to begin with a clearly stated goal or take the chance that the analysis may not have the desired results. Because SWOT is considered business strategy, and strategy must have a specific objective, planners ignore this note of caution at their peril. An additional note in the analysis urges planners to be sure the objective is realistic and can be obtained.

One of the more interesting details of SWOT associates additional descriptive words to each of the four categories. Strengths must be capitalized on, weaknesses must be improved, opportunities must be exploited to the benefit of the company and threats must be mitigated (made less threatening).

Humphrey’s Stanford plan strongly recommends bringing in representatives from all areas of the organization before proceeding with SWOT analysis. With this in place, the SWOT team may want to use the match-and-convert procedure within the overall analysis.

In this section, the team matches strengths to opportunities, effectively connecting the first two major factors of any analysis. The conversion process tries to move threats/weaknesses to the strength or opportunity category. A key step following any analysis is to determine if, at each step, the results are taking the analysis in the desired direction.

Management teams coupled with production teams using SWOT must take care not to be satisfied with just listing items in the four categories. The individual items must be considered with honesty and a clear view to improving and growing.

SWOT-program designers emphasize that it is sometimes tempting to toss out ideas that may actually need to be in one of the four corners of the planning square. These seemingly trivial or unimportant factors may prove to be essential as the process moves along. It’s also wise to consider that some on the team may consider a factor to be a strength while others may think of the factor as weakening the company effort. Consensus is important, though inability to reach complete agreement should not halt the process altogether.

Written by Lucas Beaumont

Generalist. Wikipedia contributor. Elementary school teacher from Saskatchewan, Canada.

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