SWOT Analysis is a useful technique for understanding your Strengths and Weaknesses, and for identifying both the Opportunities open to you and the Threats you face. Used in a business context, a SWOT Analysis helps you carve a sustainable niche in your market. Used in a personal context, it helps you develop your career in a way that takes best advantage of your talents, abilities and opportunities.

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• What advantages does your organization have?
  
  
• What do you do better than anyone else?
  
  
• What unique or lowest-cost resources can you draw upon that others can't?
  
  
• What do people in your market see as your strengths?
  
  
• What factors mean that you "get the sale"?
  
  
• What is your organization's Unique Selling Proposition (USP)?

• What could you improve?
  
  
• What should you avoid?
  
  
• What are people in your market likely to see as weaknesses?
  
  
• What factors lose you sales?

• What good opportunities can you spot?
  
  
• What interesting trends that you're aware of?

• Changes in technology and markets on both a broad and narrow scale.
  
  
• Changes in government policy related to your field.
  
  
• Changes in social patterns, population profiles, lifestyle changes, and so on.
  
  
• Local events.
  
  

• What obstacles do you face?
  
  
• What is your competition doing?
  
  
• Are the required specifications for your job, products or services changing?
  
  
• Is changing technology threatening your position?
  
  
• Do you have bad debt or cash-flow problems?
  
  
• Could any of your weaknesses seriously threaten your business?

• Only accept precise, verifiable statements (For example, "Cost advantage of US$10/ton in sourcing raw material x", rather than "Good value for money").
  
  
• Ruthlessly prune long lists of factors, and prioritize them, so that you spend your time thinking about the most significant factors.
  
  
• Make sure that options generated are carried through to later stages in the strategy formation process.
  
  
• Apply it at the right level - for example, you might need to do it at product or product-line level, rather than at the much vaguer whole company level.
  
  
• Use it in conjunction with other strategy tools (for example, USP Analysis and Core Competence Analysis) so that you get a comprehensive picture of the situation you're dealing with.

Example SWOT Analysis

A start-up small consultancy business might draw up the following SWOT Analysis:

Strengths:

• We are able to respond very quickly as we have no red tape, and no need for higher management approval.
  
  
• We are able to give really good customer care, as the current small amount of work means we have plenty of time to devote to customers.
  
  
• Our lead consultant has strong reputation in the market.
  
  
• We can change direction quickly if we find that our marketing is not working.
  
  
• We have low overheads, so we can offer good value to customers.

• Our company has little market presence or reputation.
  
  
• We have a small staff with a shallow skills base in many areas.
  
  
• We are vulnerable to vital staff being sick, and leaving.
  
  
• Our cash flow will be unreliable in the early stages.

• Our business sector is expanding, with many future opportunities for success.
  
  
• Local government wants to encourage local businesses.
  
  
• Our competitors may be slow to adopt new technologies.

• Developments in technology may change this market beyond our ability to adapt.
  
  
• A small change in focus of a large competitor might wipe out any market position we achieve.

As a result of their SWOT Analysis, the consultancy may decide to specialize in rapid response, good value services to local businesses and local government.

Marketing would be in selected local publications to get the greatest possible market presence for a set advertising budget, and the consultancy should keep up-to-date with changes in technology where possible.

Key Points

SWOT Analysis is a simple but useful framework for analyzing your organization's strengths and weaknesses, and the opportunities and threats that you face. This helps you to focus on your strengths, minimize threats, and take the greatest possible advantage of opportunities available to you.

SWOT Analysis can be used to "kick off" strategy formulation, or in a more sophisticated way as a serious strategy tool. You can also use it to get an understanding of your competitors, which can give you the insights you need to craft a coherent and successful competitive position.

When carrying out your SWOT Analysis, be realistic and rigorous. Apply it at the right level, and supplement it with other option-generation tools where appropriate.