Drive Better Decision Making with SWOT Analysis
- What is a SWOT Analysis?
- Who should do a SWOT Analysis?
- Benefits of SWOT Analysis
- Characteristics of a SWOT Analysis
- How to do the SWOT Analysis
- How to use the final SWOT Analysis results
- Other strategies like SWOT
Companies start a project to reach or obtain an objective that will address a need coming from different sources. It can come from an external source, such as customer demands or fierce competition, or an internal source, such as invention or innovation. At the initiation phase of the project, the team identifies and scopes the need or objective. At this phase, the team investigates and analyzes several things, such as its capabilities, priorities, and strategies.
What is SWOT Analysis?
SWOT analysis is a simple yet effective process for identifying positive and negative forces at work that can affect the successful completion of a project. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. It allows the project leader to assess areas that are working well and areas that need improvement. If project management is managing a movement from one state to another, then a SWOT analysis lets a team know where they are currently so they can go where they want to be.
Who should do a SWOT Analysis?
For a SWOT analysis to be effective, it must have complete, accurate, and unbiased information. Depending on the scope of the project, the team conducting the analysis should have senior leadership with enough overview of the organization and business. A project with a greater scope should involve a leader with a higher position making the analysis. Additionally, a project with a greater impact to the whole business should involve more participants across the organization’s different departments. For a more accurate assessment, creating a team with diverse perspectives is essential. For instance, a team that includes personnel from customer service together with sales and marketing will provide better information than with sales and marketing teams only.
Benefits of SWOT Analysis
Companies do a SWOT analysis before they commit to any action or project plan. This way, they can answer questions such as ‘can we do the project?’ or ‘should we do the project?’ SWOT analysis provides teams and organizations the following benefits:
- Creates honest assessments of their strengths and weaknesses
- Provides new perspectives on the company and its business
- Gives insight on how to maximize what is available, address limitations, make additional investments, and avoid risks.
- Confirms the needed validation and justification for initiating the project
- Builds supporting documents for the project plan
- Provides an effective strategic planning tool when done regularly
Characteristics of a SWOT Analysis
In a SWOT analysis, teams focus on the four elements of the acronym as they identify the forces and conflicts that influence and affect the project. Some teams create a 2×2 grid while others create a document with 4 columns. Strengths and weaknesses are internal factors that a team or organization has, while opportunities and threats are external factors that they have lesser control of. The document places strengths and opportunities side-by-side, and weaknesses with threats. This makes it easily visible if teams can maximize strengths to create more opportunities or if eliminating a weakness can help avoid a threat.
How to do the SWOT Analysis
Strengths are what you excel at more so than your competitors. Strengths are integral to your organization, so it can be a pool of talented people, a solid business process, a proprietary technology, or an excellent work culture. Any aspect of your company that brings an advantage is a strength.
Weaknesses are the things that create disadvantages to your team or organization. These are inherent features that can be present in personnel, procedures, systems, or culture. If there is a policy or practice that you want to remove or replace by something better, it would probably be a weakness.
Opportunities are favorable external factors that can help you gain an advantage. They are available openings or chances that your team can pursue with additional effort or investment. It can be a proper timing, special offer, an easing of restriction, or a recently released application.
Threats can be any external factor that affects the project, team, or business negatively. They are obstacles to your workflow, schedule, budget, or end product or service. A new technology, a recent regulation, or the success of a competitor can all be threats.
Questions to help inspire analysis
- Does the organization have all the necessary talent in-house?
- Is the budget sufficient to complete all the tasks involved?
- What are the benefits of completing the project?
- Has the project manager handled similar projects in the past?
- How experienced are the team members?
- Does the organization have the resources to provide contingency funding?
- If the team doesn’t have all the necessary skills, is outsourcing an option?
- Is the schedule realistic?
- What are the potential drawbacks of the project?
- Will this project take advantage of competitor weaknesses?
- What are the latest trends in the industry?
- Are there new technologies that the organization should be aware of?
- Can this project help in different areas of the business?
- Are the team members difficult to replace?
- Did the new technology passed testing or has successful adoption?
- Could changing trends affect the project?
- Can competitors copy the capability?
How to use the final SWOT Analysis results
After the SWOT analysis activity, teams can now summarize the results. From these results, they can form a strategy that will maximize available strengths to take advantage of opportunities. They can reduce or eliminate existing weaknesses to avoid threats. The strategy can be a basis in how teams will build their project plans.
A SWOT Analysis example
In this example, a medical startup company plans to develop and market a non-invasive, optical-based blood glucose monitor. The company wishes to offer its patient population a better way to monitor and manage their blood sugar levels without painfully pricking fingers using traditional home electronic glucose meters.
- The company has patents on the optical blood glucose monitor technology.
- The technology and device are FDA-approved.
- They have industry experts with extensive experience in the different aspects of the technology, including medicine, optics, electronics, and manufacturing.
- The company lacks funding.
- As a startup, they don’t have a distribution network or a relationship to one.
- The device is expensive to build.
- There is an untapped market for non-invasive blood glucose monitors.
- Due to a diabetes endemic, the demand for monitors are increasing yearly.
- Major scientific institutions and enterprises are expressing interest in conducting joint research.
- Existing competitive and emerging products have strong market presence.
- Prices of devices are going down.
Actions to take:
From the SWOT analysis, the company needs to consider obtaining capital from interested investors. This will include venture capitalists and angel investors. Also, the company needs to quickly build relationships with medical device distributors by attending conferences and developing incentives for distributors. They can also take advantage of joint researches and publications with institutions and enterprises that may have existing distributor networks.
Other strategies like SWOT
It is important to have a clear objective during SWOT analysis sessions. Participants or stakeholders should understand the whole team’s expectations from everyone. The analysis at the initial phase helps identify the elements that will later support the project plan. But it’s also possible to have a SWOT analysis session in the middle of a project for a review or reassessment of identified elements.
A SWOT analysis is one among many tools for project or strategic planning. Teams can use an existing SWOT analysis template with a variety of formats placing strengths, weaknesses, opportunities, and threats in grids or columns.
In addition, other tools are available to complement SWOT analysis. Brainstorming techniques can help putting forward ideas and opinions during the analysis session while a TOWS Matrix is a SWOT variation where the focus is in identifying the relationships between the elements. Other similar strategies that involve analyzing individual but related elements include:
PEST Analysis – A Political, Economic, Social, and Technological (PEST) Analysis can provide additional assessment of external factors in opportunities and threats. This type of analysis is useful for assessing factors that can affect the profitability of a company. It is used in conjunction with SWOT.
MOST Analysis – A Mission, Objectives, Strategy, and Tactics (MOST) Analysis is a technique used for strategy planning and development. It helps companies evaluate what they want to achieve through their mission statement and objectives. It also helps them clarify how they want to achieve this through strategies and tactics.
SCRS Analysis – A Strategy, Current state, Requirements, and Solutions (SCRS) Analysis is a business tool for coming up with a plan of action. For each identified problem, you create a strategy, review your current state, identify requirements, and find the best solution. It also allows the team to look at the underlying problem and find practical and feasible solutions that aligns with the company’s current strategy.
VRIO Analysis – A Value, Rarity, Imitability, and Organization (VRIO) Analysis is performed by organization leaders after creating their vision statement. It is an analysis tool that helps uncover elements that can provide competitive advantage to a company over others. Participants answer a question-framework regarding added value offered to customers, control of rare or scarce resources and capabilities, difficulty of duplicating or creating a substitute to an organization resource, and confirming the presence of organized systems and processes to capitalize on resources.