SWOT analysis provides a comprehensive assessment of an organization’s strengths, weaknesses, opportunities and threats in the marketplace and within the organizational culture. Strengths and weaknesses consider factors internal to the company, while opportunities and threats assess external issues. SWOT was first described in the 1960s as a simple method to organize information for strategic planning. General Electric, for example, used SWOT successfully in the 1980s as part of its growth strategy.
A SWOT analysis begins by soliciting input about the organization’s strengths and weaknesses from the several perspectives. Evaluating strengths includes considering the organization’s ranking in the marketplace and its reputation. The capabilities of key personnel, patents and intellectual property are strengths. Weaknesses could include inefficiencies of scope, age of equipment, financial assets or the lack of patents or intellectual property protections.
Opportunities and threats come from an analysis of competitors and the marketplace of ideas, often aided by the services of a business analyst or consultant. Collecting opinions and data across the organization, using employees with a broad range of viewpoints, helps create a complete picture to use in strategic planning.
Organizational Cognitive Bias
Companies conducting a SWOT analysis need to be aware of the dangers of organizational cultural biases. The organization’s cultural biases include values, ideas and procedures that the company takes for granted. The culture may reflect an attitude of action versus analysis or optimism versus conservatism. These cultural variables affect how data is selected for SWOT analysis and how the data is interpreted. Using data collection templates and a diversity of input sources helps moderate the affect of corporate cultural biases.
When the organizational culture provides the focus of the SWOT analysis, consideration of mission, decision-making process and performance metrics offer excellent areas to collect information and complete an assessment of corporate strengths and weaknesses. Threats to the organization may result from negative branding of the core culture by competitors, while opportunities may require assessing potential profitability outside of the organization’s current customer base.
A matrix of strengths, weaknesses, opportunities and threats create the basis for a SWOT-based plan to address organizational culture. For example, a conservative, hierarchical culture that relies on layers of management to approve new projects may experience a weakness in responsiveness to a rapidly changing marketplace. Therefore, the SWOT-based plan might include changing the organizational culture to become more agile by distributing decision-making. Alternatively, taking advantage of an opportunity may require the culture to apply its commercial strengths in a new government marketing initiative.
- Net MBA: SWOT Analysis
- Villanova University: General Electric; slide 35
- National Defense University: Strategic Leadership and Decision Making
- "Harvard Business Review"; The Big Idea: Before You Make That Big Decision...; Daniel Kahneman, et al.; June 2011
- New Mexico State University College of Business: SWOT
- Texas A&M University: S.W.O.T. Analysis
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