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SWOT ANALYSIS

A SWOT analysis is a strategic balance sheet of an organization; that is the strengths of the organization, the weaknesses of the organization, the opportunities facing the organization, and the threats facing the organization. It is one of the cornerstone analytical tools to help an organization develop a preferred future. It is one of the time tested tools that has the capacity to enable an organization to understand itself. To respond effectively to changes in the environment, we must understand our external and internal contexts so we can develop a vision and a strategy that link the two. We need to weave together our understanding of our organization and our actions to develop a future. The purpose of the SWOT analysis is to provide information on our strengths and weaknesses in relation to the opportunities and threats we face.

The analysis and subsequent lists (the outcome of a SWOT analysis is a point form list) is not valuable unless a rigorous discussion takes place with background insight, and unless the list reflects the final views of the organization. A major purpose of any strategic discussion is to arrive at a deeper level of insight. Any response to threats and opportunities must be based on an intimate knowledge and understanding of the organization's strengths and weaknesses. One outcome that should follow a SWOT analysis is an identification of distinctive competencies (for further insight on the latter see: Prahalad/Hamel. "The Core Competencies of the Corporation." HBR. 1990). The benefits of a SWOT analysis are that it provides learning and knowledge vital to the organization's survival and prosperity. Nutt and Backoff talk about SWOT as a clarifier of the "tension fields" in organizations. It is a juxtaposition of the ying and the yang of organizations. Another outcome of the SWOT analysis which is becoming extremely important is an understanding of our boundaries and the development of boundary-spanning skills and insight to help navigate the changing environment we face.

Some Techniques for SWOT:

Highs and Lows:
Divide the blackboard into the current year and the last two - three years. Individuals silently brainstorm all organizational highs and lows. Transcribe all the high and lows and stick them on the wall. The group identifies themes common to the highs, the lows, or both. The group analyses the data by answering these questions:

  1. What opportunities have we had? What did we do? Was it successful?
  2. What threats have we had? How did we handle them? Which did we ignore?
  3. What strengths do we rely on? Which do we ignore?
  4. How do we deal with weaknesses? What have we done about them?

Eventually the discussion has to move on to how to behave in the future and how to benefit from the insight generated.

Snowball Card:
Each person writes a SWOT analysis on a 5 x 7 (or larger) card and sticks the card on the wall. The group then develops four lists of strengths, weaknesses, opportunities, and threats, eliminating overlap, to discuss, compare, and analyze. Prepare a list which reflects the common themes in the individual SWOT analyses. Clustering technique is normally used to tease out themes.

Guidelines for SWOT Analysis:

  1. Keep it simple
  2. Focus on your organization.
  3. Look for patterns.
  4. Look for action that can be taken within a year.
  5. Don't get lost in the future.
  6. Be rooted in the now.

A Summary of the Characteristics of Strengths, Weaknesses, Opportunities, and Threats: (modified from Thompson/Strickland. "Crafting and Implementing Strategy." Irwin Mcgraw-Hill. 1998.)

    Strengths:
  • something we do well
  • valuable know how
  • assets (physical, human, intangible)
  • competitive capability
  • attributes
  • ventures, alliances
    Weaknesses:
  • something we do poorly
  • a disadvantage
  • a deficiency in expertise or competence
  • lack of assets (physical, human, intangible)
  • missing capabilities
    Opportunities:
  • best prospects
  • competitive advantage
  • good match with what we have to offer
    Threats:
  • competitive behaviour
  • new product/service
  • demographics

Strategy from SWOT analysis

  • Build on the organization's strengths.
  • Recognize weaknesses and correct, where possible.
  • Take advantage of opportunities. This is what drives the strategy.
  • Recognize threats to the organization and take steps to minimize the effects.

KBJ.Nov. 98

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