SWOT Analysis is an essential tool in Strategic Planning. It is a complex process that entails many data analysis in the external as well as internal environment, assumptions, scenarios and risk factors. This TQM article address how SWOT analysis can be part of the overall Strategic Planning Process.
What is SWOT Analysis? It is an abbreviation for Strengths-Weaknesses-Opportunities-Threats. It is a tool widely used as an integral part of Strategic Planning Process.
There are many ways how a SWOT analysis is used. It is not my intention to compare what are the differences but to share how I used it in my Strategic Planning workshops.
This is an internal factor deals with the strength in the operation. It is internal because it takes into considerations of the level of competence for their internal capability. They are many factors in an operation that can be considered as strength. It is normally highlighted during brainstorming among management members. When the list of factors for Strength is too many, then it should be grouped using Stratification method. Then reduce it further to three to five items using appropriate tools such as , multi-voting, Selection grids etc. Once it is done, rank these items by comparing own company with better competitors. Force ranking is sometime used an alternative to multi-voting.
Similar to the above, it is an internal factor deals with the weaknesses of the operation considering the level of competence as compared to their better competitors. With weaknesses identified by way of brainstorming, the factors might be too many. When the list of factors for weaknesses is too many, then it should be grouped using Stratification method. Then reduce it further to three to five items using appropriate tools such as , multi-voting, Selection grids etc. Once it is done, rank these items by comparing own company with better competitors. Force ranking is sometime used an alternative to multi-voting.
This is an important factor to identify opportunity as a result of external influence. It is often leads to more business or investment as well as opportunity for innovation of products and services. Due to the fact it is external, many assumptions is used. However, given the constraints, one should try to quantify the assumptions so that the conclusion of this factor is real. In real life application, there are cases where opportunities derived from operation are park in this section. Rightfully, it can be rephrased such that it became a Strength instead..
This is another important and critical factor to deal with. It has great influence to the success or failure of an organization if not dealt with appropriately. This section look for factors that can put an organization in a loss-loss situation where example may either reduce the market share or its profitability. Once again, since it is an external factor, its reality is assumed. However, in many cases, they can be verified by announcement, publications etc. On the other hand, if organizations act on these factors, it may not always mitigate the threat because the threat is not real. One example is the Y2K issue.
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About the Author
The author publish artciles and case studies in Malcolm Baldrige, TQM Implementation, SWOT Analysis and Strategic Planning. More can be view from http://TQMCaseStudies.com