SWOT analysis

publication date 23.07.2012

SWOT analysis

SWOT analysis is largely used in marketing to evaluate Strengths, Weaknesses, Opportunities and Threads of a particular company within the market environment where it does business. It enables to make a realistic picture of the strengths of the company´s internal evironment as compared with the external (market) one and helps to find an adequate strategy to make a profit and be prosperous.

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SWOT analysis evaluates Strengths, Weaknesses, Opportunities and Threads of a particular business project, strategy or restructuring processes. Thanks to SWOT it is possible to evaluate company’s operation function in its complexity, identify its problems and find areas of potential growth. Detailed SWOT analysis has to be a cornerstone of any company’s mid and long term planning.

SWOT analysis has been developed by Albert Humphrey from Stanford University. He used data from 500 major US corporations that were collected during the research project he conducted in 1960’s. 

Description of SWOT analysis

SWOT analysis is based on the evaluation of company’s current condition (inner internal environment) as well as on the evaluation of the factors standing outside the company (outer external environment). Within the innerinternal environment analysis classifies company’s strengths and weaknesses, whereas within its outside environment analysis scrutinizes potential opportunities and threats. The process of analyzing usually begins with brainstorming of the top management and specialists from the departments concerned. In the following step findings are sorted by relevance. Subsequently, every item on the findings list is evaluated by all participating experts. Afterwards, outcomes of the expert group are, again, sorted by relevance in each of 4 SWOT categories. The last step returns the process back to the top management that has to take a clear decision how to work with the analysis final outcome. 

It is recommended, when interpreting the analysis, to search for synergy and balance between all 4 components of SWOT. Only balanced document can establish a foundation for a successful strategy assuring no growth opportunity is wasted and no threat is underestimated.

Creating strategy using SWOT analysis

SWOT analysis is often used as a powerful tool that helps to establish and optimize company’s strategy, a new project or simply improve current state of processes. There are four basic options of applying SWOT outcome into a particular strategy:

  • MAX-MAX strategy – maximization of strengths – maximization of opportunities
  • MIN-MAX strategy – minimization of weaknesses – maximization of opportunities 
  • MAX-MIN strategy – maximization of strengths – minimization of threats
  • MIN-MIN strategy – minimization of weaknesses – minimization of threats

Areas of use:

  • marketing
  • management
  • strategy
  • process management
  • project management
  • quality control systems":http://www.ownway.eu/academy/quality-system/
  • etc.

Jiří Střelec

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