SWOT organizational analysis is a strategic planning process that enables companies and other organizations to focus on their own strengths and weaknesses, as well as the opportunities and threats in their environment. This flexible planning process provides a popular approach to guiding organizations to accomplish their objectives and goals. SWOT analysis provides the foundation for effective strategic management through a flexible, if somewhat vague, framework.
A SWOT analysis is a strategic planning method that assesses an organization’s Strengths, Weaknesses, Opportunities and Threats, which summarizes the abbreviation. Sometimes, the abbreviation appears as TOWS or “WOTS up” analysis. Regardless, the elements in each abbreviation are the same..
The purpose of a SWOT analysis is to evaluate the internal and external environment of a project, business or organization. The Strengths and Weaknesses are the internal factors, while Opportunities and Threats refer to the external factors. This analysis helps organizations summarize supportive and unsupportive factors. All types of organizations, including businesses, nonprofit groups and government agencies, can use SWOT analysis.
Business and management scholars differ on who originated SWOT analysis. Many sources often credit Albert Humphrey, who led a research project at Stanford University in the 1960s to learn why corporate planning efforts often failed. Other sources credit Ken Andrews of the Harvard Business School with developing the concept in the 1950s.
Under the SWOT process, participants in the analysis classify various internal factors as either strengths or weaknesses. Analysts then classify external factors as opportunities or threats. After classification analysts categorize each identified factor in a 2-by-2 matrix, with the cells labeled as follows: strengths-opportunities (S-O), weaknesses-opportunities (W-O), strengths-threats (S-T) and weaknesses-threats (W-T). This process helps organizations match their capacities to their environment.
By surveying an organization’s internal and external environment, the SWOT analysis process forces organizational planners to think strategically. The process helps organizations capitalize on their strengths, access opportunities and minimize threats. It also helps them avoid, if not alleviate, weaknesses. Further, SWOT offers a flexible framework that makes it applicable in a wide variety of project and organizational settings..
While flexible in its framework, SWOT analysis has the disadvantage of being vague. The process offers no guidance on how organizations can identify Strengths, Weaknesses, Opportunities and Threats. Consequently, some organizations may have trouble determining, for example, whether an external factor represents an opportunity or a threat. Analysts, depending on their perspective, may differ on whether a particular factor presents a threat or opportunity.