SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. The SWOT analysis is a strategic planning tool that organizations―and yes―individuals can use to assess the strengths, weaknesses, opportunities, and threats involved in the industry or career analysis. The first strategic choice that an organization must address is defining the market to compete. The external analysis provides information on the competition, the factors that define the competitive market, and profitability. The external analysis also provides relevant information about what the customers want.
Begin your analysis department by department. Ask every employee to participate. Make it anonymous so that the fear of retaliation is eliminated. A simple illustration of the SWOT analysis is illustrated in the matrix below―
| Strengths: | Opportunities: |
| Weaknesses: | Threats: |
The company can formulate strategies with the data from the SWOT analysis. Strategies are guided by the company mission, which is the foundation for developing organizational strategies within the three distinct levels of strategic management, viz., ―
- Corporate strategy―This is done at the C-suite or corporate level which defines the markets where to compete.
- Business unit strategy―The managers for each standalone business units within the organizations decide on how to gain and sustain advantage.
- Functional strategy―The head of the different functional areas of management like in (a) Sales and Marketing, (b) R&D, (c) Finance or Accounting, (d) HR, or (e) IT, decide on how to effectively implement the strategies in alignment with the business unit strategy.
NOTE: The example above gives your organization a snapshot of your organization. There are other strategic tools that can help shape the formulation of strategies, like Michael Porter’s Five Forces, the VRIO Model of Sustainability, and McKinsey’s 7 Model. For an in-depth and personalized analysis of your organization, please contact us.
