SWOT Analysis: A Strategic Planning Method

Posted on Oct 26, 2024 in Spanish

SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or business venture. It involves specifying the objective and identifying internal and external factors that are favorable and unfavorable to achieving it.

The SWOT Model

A SWOT analysis generates information helpful in matching an organization’s goals, programs, and capacities to its operating environment. The SWOT analysis itself is a data capture exercise—the actual analysis follows.

Key Components:

  • Strengths: Positive tangible and intangible attributes, internal to an organization and within its control.
  • Weaknesses: Internal factors within an organization’s control that detract from its ability to attain the desired goal. Areas for potential improvement.
  • Opportunities: External attractive factors that represent the reason for an organization to exist and develop. Opportunities in the environment that can propel the organization forward, identified by their time frames.
  • Threats: External factors beyond the organization’s control that could place its mission or operation at risk. Contingency plans are beneficial to address potential threats, classified by severity and probability of occurrence.

Internal and External Factors

The aim of a SWOT analysis is to identify key internal and external factors important to achieving the objective. These factors originate from within the company’s unique value chain.

  1. Internal Factors: Strengths and weaknesses internal to the organization.
  2. External Factors: Opportunities and threats presented by the external environment.

Internal factors can be strengths or weaknesses depending on their impact on the organization’s objectives. A strength for one objective might be a weakness for another. These factors can include the 4Ps (product, price, place, promotion), personnel, finance, and manufacturing capabilities.

External factors can include macroeconomic matters, technological change, legislation, socio-cultural changes, and marketplace or competitive position shifts. Results are often presented in a matrix format.

Strengths and weaknesses are intrinsic value-creating skills or assets (or the lack thereof) relative to competitive forces. Opportunities and threats are external factors, not created by the organization, but emerging from competitive dynamics and future market gaps.