SWOT Analysis – Definition and implementation
SWOT analysis is used to identify, analyze and evaluate a company and/or a new project competitive position. It allows to implement a successful strategic planning for the future.
This post gives a brief description of SWOT analysis and shows how to establish a successful analysis adapted to innovative projects.
SWOT analysis - Definition
SWOT analysis (or SWOT Matrix) is a practical and important tool for the strategic diagnostic phase of a project.
SWOT matrix allows to spot and identify innovation projects’s Strengths, Weaknesses, Opportunities, and Threats. Thus, it allows to reveal the factors that are holding the business and retaining the project away from success.
SWOT analysis is mainly used to evaluate and diagnose a company or a project specifically during the initiation phase.
A SWOT analysis examines four factors (Strengths, Weaknesses, Opportunities, and Threats) belonging to 2 different categories:
Identifying the internal factors allows to internally diagnose the project mainly by tackling human resources, production capacities, financial capacities, the company know-how.
Strengths: Those are the resources and know-how belonging to the company. Thanks to their strengths, companies can be positively differentiated from their competitors. Strengths are things that the company does well. It is the characteristics and resources leading to a successful outcome and offering the business and projects advantage over others.
Weaknesses: They are defined by the success factors that the company is missing (lack in know-how, weak team, organizational issues, etc.). Theses weaknesses can stop the company from growing and the projects from succeeding. They are disadvantages compared to competitors and other market actors.
2. External factors:
These external factors must be identified to understand their impact (positive or negative) on the company.
Opportunities: They are the positive elements offering the company a reasonable advantage compared to competitors (new market, a lean offer perfectly fitting the customers’ needs, etc.). Identifying the opportunities can profit to the company and make a big difference versus competitors and market actors.
Threats: Those are the factors that can negatively affect the business and the project successful development (new legislation, new competitors, etc.). It is vital to anticipate and take action to mitigate the threats.
Establishment of a SWOT Analysis
Identifying the SWOT Factors
First, a SWOT analysis requires decision-makers and/or projects’ managers to specify the objectives they aim to achieve to success their project.
Second, they are invited to list and answer the potential questions in relation to the four factors of the SWOT such as:
1. Internal factors:
What are our competencies and know-how?
Do we have the right team and human resources?
How are we different from competitors?
What is our strongest asset?
How is our financial situation?
How much do we need in financial resources to develop our project?
Do we have an adequate production capacity to answer customers’ needs?
Can we answer our customers’ demands in time?
2. External factors:
What are the market’s trends?
Are we proposing a lean offer able to reach a large majority of the market?
What is the size of the market which we are tackling?
How many competitors exist, and what is their market share?
Are there new regulations that potentially could harm our operations or products?
Analyzing the relation between SWOT factors
After doing the above exercise, the project manager will be able to get a clear idea of where the company stands. Then, they should analyze the relation between all factors:
To which extent the strengths will enable to seize the opportunities?
To which extent the strengths will enable to resist to the threats?
To which extent the weaknesses will slow down the seize of the opportunities?
To which extent the weaknesses will influence the consequences of the threats?
Implementing an action plan
Then the company (teams' leaders and projects’ managers) should define an action plan and apply it to secure the company success:
Secure and mitigate the weaknesses and threats.
Consolidate the strengths.
Benefit from the opportunities.
A successful SWOT analysis leads to an action plan allowing to mitigate all the identified risks and to consolidate the strengths and opportunities. By taking the appropriate measures the innovation project will succeed. SWOT analysis spots and tackles internal and external factors. It allows to diagnose the company and project actual state. Then, it offers a solution to existing issues by a functional action plan.
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Kelly Skinner, Rhona M. Hanning, Celine Sutherland, Ruby Edwards-Wheesk, and Leonard J. S. Tsuji. American Journal of Health Promotion. Vol. 26, No. 6, 2012.