SWOT Analysis is an essential tool in Strategic Planning. It is a complex process that entails many data analysis in the external as well as internal environment, assumptions, scenarios and risk factors. This TQM article address how SWOT analysis can be part of the overall Strategic Planning Process.

What is SWOT Analysis? It is an abbreviation for Strengths-Weaknesses-Opportunities-Threats. It is a tool widely used as an integral part of Strategic Planning Process.

There are many ways how a SWOT analysis is used. It is not my intention to compare what are the differences but to share how I used it in my Strategic Planning workshops.

Strength

This is an internal factor deals with the strength in the operation. It is internal because it takes into considerations of the level of competence for their internal capability. They are many factors in an operation that can be considered as strength. It is normally highlighted during brainstorming among management members. When the list of factors for Strength is too many, then it should be grouped using Stratification method. Then reduce it further to three to five items using appropriate tools such as , multi-voting, Selection grids etc. Once it is done, rank these items by comparing own company with better competitors. Force ranking is sometime used an alternative to multi-voting.

Weaknesses

Similar to the above, it is an internal factor deals with the weaknesses of the operation considering the level of competence as compared to their better competitors. With weaknesses identified by way of brainstorming, the factors might be too many. When the list of factors for weaknesses is too many, then it should be grouped using Stratification method. Then reduce it further to three to five items using appropriate tools such as , multi-voting, Selection grids etc. Once it is done, rank these items by comparing own company with better competitors. Force ranking is sometime used an alternative to multi-voting.

Opportunities

This is an important factor to identify opportunity as a result of external influence. It is often leads to more business or investment as well as opportunity for innovation of products and services. Due to the fact it is external, many assumptions is used. However, given the constraints, one should try to quantify the assumptions so that the conclusion of this factor is real. In real life application, there are cases where opportunities derived from operation are park in this section. Rightfully, it can be rephrased such that it became a Strength instead..

Threats

This is another important and critical factor to deal with. It has great influence to the success or failure of an organization if not dealt with appropriately. This section look for factors that can put an organization in a loss-loss situation where example may either reduce the market share or its profitability. Once again, since it is an external factor, its reality is assumed. However, in many cases, they can be verified by announcement, publications etc. On the other hand, if organizations act on these factors, it may not always mitigate the threat because the threat is not real. One example is the Y2K issue.

Want to read more detail SWOT Analysis article. click http://tqmcasestudies.com

About the Author

The author publish artciles and case studies in Malcolm Baldrige, TQM Implementation, SWOT Analysis and Strategic Planning. More can be view from http://TQMCaseStudies.com

>> More Marketing & Competititive Intelligence articles on SWOT anaylsis here at http://www.MarkIntell.com

SWOT Analysis is an excellent tool to be incorporated with Strategic Planning. While there may be some difficulties in performing a SWOT Analysis, it could be easily resolved when it is properly guided.

To maximize the power of SWOT Analysis, all the four factors in SWOT should be well understood. In this article, I share with you one of the comment I received from one of my reader to my article entitle: SWOT Analysis in Strategic Planning

The comment read as below:-
I think the approach to SWOT by the author of the article is not adequate to formulate an effective business strategy, as he says that SW are related to internal and OT are related to external factors. Each of the components in SWOT should be related to both internal and external factors. Analyzing strengths and weaknesses merely based on internal operational factors is not enough, as there are perhaps more critical factors on strengths and weaknesses that a company should look into, analyse and focus on - like branding, market and products positions as compared to competitors, what the company see other competitor sand what others would see your company. On the other hand, opportunities and threats may consist of internal factors like talent acquisition and retentions, and the availability of talents as compared to the competitors.

To share with you my response to the comment as follows:-
First of all, I like to take this opportunity to thank you and your group reading my article. The fact that the way my article was written purely based on sharing of knowledge. And due to limitation of article submission guidelines.
I appreciate you took his time to point out the inadequacy the definition of SWOT Analysis in my article and I agreed with him. Perhaps, I take this opportunity to share my thought as follows:-

a) I consider SW as internal factors because it deal with capabilities of an organization. However, when deal with capabilities, a reference point is used. I normally use comparing with a benchmark such as competitors. In this case, you have rightly pointed out.

b) I faced with similar situation when deal with the OT factor. There are two school of thoughts i.e. consider OT as a pure external factor (like what I normally do) or alternatively, include them into internal as well. Why I said that. Let’s consider this scenario:-
Scenario A: An organization is loosing talented employee and resulted in talent acquisition

My thought on scenario A is below:-
I consider an organization not able to retain talented employee (for whatever reason) as an internal weakness. And I consider “talent acquisition” as an action rather than a factor.

I normally separate an action from the SWOT factors and consider these action items when I analysis the SWOT further. I do that with another tool called SWOT or TOWS matrix. ( sorry for not elaborate in more detail here)

I hope my explanation satisfy your member’s view and looking forward to answer any other comments.
Thanks and Best regards

In conclusion: This is a typical situation that SWOT Analysis can be interpreted based on individual knowledge and application experience. At the end of the day, it is important that all members who are involved in the SWOT Analysis session have a common understanding.

Do you want to read the graphic illustration for better understanding?? Then Click Here SWOT Analysis in Graphic Illustrations

You may download more about SWOT Case Studies HERE!

About the Author

Dr. L M Foong publishes TQM articles, ebooks, case studies, trainer manual and presentation slides. He can be contact at http://tqmcasestudies.com/ContactUs.html

>> More Marketing & Competititive Intelligence articles on SWOT anaylsis here at http://www.MarkIntell.com