SWOT analysis

Inroduction

SWOT is a frequently used management tool, useful for reflection, decision making and appraising options. It is particularly useful because of it's simplicity, the way in which it takes seconds to set up, and can be easily explained to others and therefore used as a group exercise. The simplicity of the idea belies how easily it can be extended and built on.

How to use it

The central idea is to take whatever you're wishing to consider and to look at it in terms of 4 areas:

Strengths - what does this idea have as advantages? What does it bring to the organisation (or yourself?) What other things are linked to it that would be advantageous?

Weaknesses - What are the intrinsic problems with the idea? What are the associated costs (financial, resources, management time etc)

Opportunities - What avenues could this open up? How does this idea fit with the existing strategy, or could it bring new ideas into the ongoing strategic development? The opportunities part should be those things outside the actual issue, and will often be outside the organisation itself

Threats - What are the dangers of adopting this approach? How will others see the change?

Brainstorm around these themes for a few minutes - it doesn't matter really if some things go in different or multiple categories, the important thing is to get the ideas out there and work through them.

Once you've got your Strengths, Weaknesses, Opportunities and Threats worked out, you can begin to consider if the Strengths and Opportunities outweigh the Weaknesses and Threats. You may see that there is an immediate threat which means that the idea is not viable, but try to think a little deeper to see if the idea can be changed in some way to minimise this threat.

You may move on to using another decision making tool to help you further in identifying the way forward, or you may see things that have to be adopted as first steps before the idea can be adopted. Alternatively you may be comparing two options and have a better idea of which is the more appropriate choice.

Situations where you might use SWOT

• A new project or venture that you've thought of or that someone has suggested to you.
  
• A change to existing practice,
  
• A way of involving other people in a change process so that you can gain from their ideas and they feel that they have been involved in the process.
  
• As part of the ongoing strategic planning process - eg where we are now or to consider a change in strategic direction.
  
• A choice between two applicants for a job who both appear to equally fit the job specification.
  
• Choosing when to adopt a new practice - some changes are better sooner rather than later and some vice versa.
  

A story about SWOT

John is the Development Director of a housing association. He has limited funds for new developments, but is approached by a firm of architects who have drawn up plans for some new houses on a piece of land near to his area. John isn't sure whether this would be a good idea or not, so he uses SWOT to help him clarify his thinking about the proposal.

He comes up with

Strengths
20 new houses would bring additional income
It would fit well with a larger development which is coming to completion
A small scheme could be developed quickly

Weaknesses
He's not sure about the quality of the work of these particular architects
It would cost a lot of money from reserves to finance the scheme

Opportunities
It would look good for John to have found this new development and maybe help his career
20 new houses would help with the ever expanding waiting list for houses
It might be good to work with a new firm of architects - maybe he's been relying on the same couple of firms too much

Threats
The Housing Corporation would not fund the scheme at the moment
The owner of the land and the architects might put up the price

John thinks about the situation a bit more and the next day shows the SWOT analysis to one of his Development Officers.

She sees some other factors and between the two of them they decide that weaknesses and threats are not outweighed by the strengths and opportunities. So they decide not to go ahead, but realise that this process has helped them think about how they use architects and other consultants.

John calls the firm of architects who approached him, explains that he will have to decline but offers to put them on the tender list for the next development. That way he keeps his options open on the site and gets the opportunity to try working with a new firm of architects.