Also known as SWOT matrix, SWOT analysis is a popular technique that is effective in evaluating the Strengths, Weaknesses, Opportunities and Threats associated with a business endeavor or project. Whether the structured planning is intended for a person, a product or a place, all the external and internal factors that may affect the final outcome will be identified and analyzed thoroughly.
In a business context
Businesses find SWOT analysis very useful due to the fact that it can help in finding out possible opportunities to take advantage of. And because it can also help in revealing threats, weaknesses that might potentially cause problems can already be managed or even eliminated.
When to use SWOT analysis
Team leaders, project managers and other groups of people responsible for strategic planning and decision-making often use SWOT when developing action plans. It would require several hours of brainstorming and well thought-out analysis of every aspect of the program or project. It is most effective when every participant will collaborate and share his views or knowledge on the issue at hand.
The best results would come when everyone involved will be truthful, perceptive and willing to share their opinions on the matter being discussed by the group. And you can employ this method when you want to search for new opportunities and expose areas for action.
How to use SWOT analysis
This kind of structured planning is most effective when the right approach is employed. The simple opposing terms will serve as a guide in making a decision that will produce optimum benefits. In general, SWOT will simplify the entire decision-making process since the technique can help in identifying problem areas or issues, reaffirming goals and making an action plan.
It is very essential that you try to be as realistic as possible when you are using the SWOT analysis. Otherwise, all your efforts will be futile. You also have to consider that certain factors will most likely affect the accuracy of the results. The most common external constraints that are beyond the control of management may include government legislation, raw material input, price increase and state of the economy. Internal constraints, on the other hand, include faulty products, insufficiency of development facilities, shortage of skilled labor, and lack of research.
In summary, SWOT analysis can show the strengths you need to build on, the weaknesses that must be played down, the opportunities to take hold of, and the best ways to cancel out threats.