Management Tools
SWOT Analysis
LMC explains SWOT Analysis
SWOT analysis is a management tool used to identify and evaluate the essential considerations for a project or business venture. The key considerations are strengths, weaknesses, opportunities and threats and are typically arranged and displayed in the management tool as the letters S,W,O and T.
Strengths comprises existing attributes of the organisation that are helpful to achieving the overall objective. Weaknesses in contrast, are existing attributes of the organisation that are harmful to achieving the objective. Opportunities represent all external conditions which can be perceived as helpful to achieving the objective, whilst threats are again external conditions, harmful to achieving the company objective.
The four components of this management tool are arranged in a grid so that the components can be grouped in two ways:
- Internal / external factors (residing or originating inside or outside the company)
- Helpful / harmful factors (having direct influence on the achievement of company objectives).
Key analytic questions
A SWOT analysis is used to generate a strategy and guide the decision process for gauging how attainable or feasible an important business objective might be. The analysis comprises of asking fundamental questions of the company's objective, based on the four components:
- How can we maximise each strength?
- How can we stop or limit each weakness?
- How can we exploit each opportunity?
- How can we stop, reduce and defend against each threat?
A key consideration whilst posing these questions against company objectives is that what may be a strength with regards to one objective, may be deemed a weakness with regard to another. In this situation, the matter requires input from the relevant departments or authorities concerned and a discussion to rate the relative importance of the factors involved must be carried out.
The SWOT analysis should ideally involve input from key authoritative business personnel from all departments. Therefore, a typical team may include an Accountant, a Sales Manager, a Marketing Manager, an Executive Manager, an Operations Manager and an Ombudsman.
The overall importance or success of a SWOT analysis is typified by the value to the business of the strategies it generates.
