thumb|The four components of SWOT in a 2 × 2 matrix
In strategic planning and strategic management, SWOT analysis (also known as the SWOT matrix, TOWS, WOTS, , and situational analysis) is a decision-making technique that identifies the strengths, weaknesses, opportunities, and threats of an organization or project.
SWOT analysis evaluates the strategic position of organizations and is often used in the preliminary stages of decision-making processes to identify internal and external factors that are favorable and unfavorable to achieving goals. Users of a SWOT analysis ask questions to generate answers for each category and identify competitive advantages.
SWOT has been described as a "tried-and-true" tool of strategic analysis, but has also been criticized for limitations such as the static nature of the analysis, the influence of personal biases in identifying key factors, and the overemphasis on external factors, leading to reactive strategies. Consequently, alternative approaches to SWOT have been developed over the years.
Overview
The name is an acronym for four components:
- : characteristics of the business or project that give it an advantage over others
- : characteristics that place the business or project at a disadvantage relative to others
- : elements in the environment that the business or project could exploit to its advantage
- : elements in the environment that could cause trouble for the business or project
Results of the assessment are often presented in the form of a matrix. The degree to which an organization's internal strengths matches with its external opportunities is known as its strategic fit.
- Human resources—staff, volunteers, board members, stakeholders
- Physical resources—location, building, equipment, plant
- Financial—revenue, grants, investments, other sources of income
- Activities and processes—projects, programs, systems
- Past experiences—reputation, knowledge
External factors may include:
Use
SWOT analysis has been used at different levels of analysis, including businesses, non-profit organizations, governmental units, and individuals. SWOT analysis may also be used in pre-crisis planning, preventive crisis management, and viability study recommendation construction.
Strategic planning
SWOT analysis can be used to build organizational or personal strategy. Steps necessary to execute strategy-oriented analysis involve identifying internal and external factors, selecting and evaluating the most important factors, and identifying relationships between internal and external features. For instance, strong relations between strengths and opportunities can suggest good conditions in the company and allow using an strategy. On the other hand, strong interactions between weaknesses and threats could be analyzed as a warning to use a strategy.
One form of SWOT analysis combines each of the four components with another to examine four distinct strategies: Matching refers to seeking competitive advantage by matching strengths to opportunities. This strategy ensures that an organization leverages its core competencies, resources, and capabilities to capitalize on favorable market conditions, emerging trends, or unmet customer needs. Conversion refers to converting weaknesses or threats into strengths or opportunities. An example of a conversion strategy is to buy off a threat through collaboration or merger.
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! Strengths
! width=25% | Weaknesses
! width=25% | Opportunities
! width=25% | Threats
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| Reputation in marketplace
| Shortage of consultants at operating level rather than partner level
| Well established position with a well-defined market niche
| Large consultancies operating at a minor level
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| Expertise at partner level in HRM consultancy
| Unable to deal with multidisciplinary assignments because of size or lack of ability
| Identified market for consultancy in areas other than HRM
| Other small consultancies looking to invade the marketplace
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In community organizations
thumb|An example of a SWOT template that includes cells for strategies, not only assessments
thumb|A simple SWOT template
Although the SWOT analysis was originally designed for business and industries, it has been used in governmental organizations and non-governmental organisations as a tool for identifying external and internal support to combat internal and external opposition for successful implementation of social services and social change efforts. It has been used by community organizers and community members to further social justice in the context of social work practice,
Limitations and alternatives
SWOT analysis is intended as a starting point for discussion and not to, in itself, show managers how to achieve a competitive advantage.
In a highly-cited 1997 critique, "SWOT Analysis: It's Time for a Product Recall", Terry Hill and Roy Westbrook observed that one among many problems of SWOT analysis as often practiced is that "no-one subsequently used the outputs [of SWOT analysis] within the later stages of the strategy". Hill and Westbrook, among others, also criticized hastily designed SWOT lists. Other limitations of SWOT practice include: preoccupation with a single strength, such as cost control, leading to a neglect of weaknesses, such as product quality; Many other limitations have been identified.
Porter's five forces
Michael Porter developed the five forces framework as an alternative to SWOT analyses, which he found lacking in rigor and over-dependent on individual company circumstances.
SOAR
SOAR (strengths, opportunities, aspirations, and results) is an alternative technique inspired by appreciative inquiry. SOAR has been criticized as having similar limitations as SWOT, such as "the inability to identify the necessary data".
SVOR
In project management, the alternative to SWOT known by the acronym SVOR (Strengths, Vulnerabilities, Opportunities, and Risks) compares the project elements along two axes: internal and external, and positive and negative.
{| class="wikitable"
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! Forces !! Internal !! Mathematical link !! External
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| || Total Forces || Total Forces given constraints = Infrastructures / Opportunities || Opportunities
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| || Vulnerabilities given constraints = 1 / Total Forces || constant k || Opportunities given constraints = 1 / Risks
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| || Vulnerabilities || Risks given constraints = k / Vulnerabilities || Risks
|}
Constraints consist of: calendar of tasks and activities, costs, and norms of quality. The "k" constant varies with each project (for example, it may be valued at 1.3). The report described how a person in the role of a company's staff planner would gather information from managers assessing operational issues grouped into four components represented by the acronym SOFT: the "satisfactory" in present operations, "opportunities" in future operations, "faults" in present operations, and "threats" to future operations. ( was a term then current for what has come to be called strategic management.) The first chapter of the textbook stated, without using the acronym, the four components of SWOT and their division into internal and external appraisal: