SWOT as helping tool. Ruta Pels, Eesti People to People, Estonia. Tools for Trainers. 1. When to use SWOT?
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1 Ruta Pels, Eesti People to People, Estonia SWOT as helping tool Tools for Trainers 1. When to use SWOT? SWOT analyses are often used during strategic planning. They can serve as a precursor to any sort of company action, such as exploring new initiatives, making decisions about new policies, identifying possible areas for change, or refining and redirecting efforts midplan. A SWOT analysis can offer helpful perspectives at any stage of an effort. You might use it to: Explore possibilities for new efforts or solutions to problems. Make decisions about the best path for your initiative. Identifying your opportunities for success in context of threats to success can clarify directions and choices. 1
2 Determine where change is possible. If you are at a juncture or turning point, an inventory of your strengths and weaknesses can reveal priorities as well as possibilities. Adjust and refine plans mid-course. A new opportunity might open wider avenues, while a new threat could close a path that once existed. SWOT also offers a simple way of communicating about your initiative or program and an excellent way to organize information you've gathered from studies or surveys. 2. WHAT ARE THE ELEMENTS OF A SWOT ANALYSIS? A SWOT analysis focuses on Strengths, Weaknesses, Opportunities, and Threats. Remember that the purpose of performing a SWOT is to reveal positive forces that work together and potential problems that need to be recognized and possibly addressed. We will discuss the process of creating the analysis below, but first here are a few sample layouts for your SWOT analysis. Ask participants to answer these simple questions: what are the strengths and weaknesses of your group, community, or effort, and what are the opportunities and threats facing it? 2.1 Internal factors The first two letters in the acronym, S (strengths) and W (weaknesses), refer to internal factors, which means the resources and experience readily available to you. Examples of areas typically considered include: Financial resources, such as funding, sources of income and investment opportunities Physical resources, such as your company's location, facilities and equipment Human resources, such as employees, volunteers and target audiences Access to natural resources, trademarks, patents and copyrights Current processes, such as employee programs, department hierarchies and software systems 2.2 External factors External forces influence and affect every company, organization and individual. Whether or not these factors are connected directly or indirectly to an opportunity or threat, it is important to take note of and document each one. External factors typically reference things you or your company do not control, such as: Market trends, like new products and technology or shifts in audience needs Economic trends, such as local, national and international financial trends Funding, such as donations, legislature and other sources Demographics, such as a target audience's age, race, gender and culture Relationships with suppliers and partners Political, environmental and economic regulations 2
3 Internal and external factors SWOT analysis aims to identify the key internal and external factors seen as important to achieving an objective. SWOT analysis groups key pieces of information into two main categories: Internal factors the strengths and weaknesses internal to the organization External factors the opportunities and threats presented by the environment external to the organization Analysis may view the internal factors as strengths or as weaknesses depending upon their effect on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses (distractions, competition) for another objective. The factors may include all of the 4Ps as well as personnel, finance, manufacturing capabilities, and so on. The external factors may include macroeconomic matters, technological change, legislation, and sociocultural changes, as well as changes in the marketplace or in competitive position. The results are often presented in the form of a matrix. SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade its users to compile lists rather than to think about actual important factors in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats. It is prudent not to eliminate any candidate SWOT entry too quickly. The importance of individual SWOTs will be revealed by the value of the strategies they generate. A SWOT item that produces valuable strategies is important. A SWOT item that generates no strategies is not important. 3 Questions to ask during a SWOT Analysis I ve compiled some questions below to help you develop each section of your SWOT analysis. There are certainly other questions you could ask; these are just meant to get you started. Strengths (internal, positive factors) 3
4 LISTING YOUR INTERNAL FACTORS: STRENGTHS AND WEAKNESSES (S, W) Internal factors include your resources and experiences. General areas to consider: Human resources - staff, volunteers, board members, target population Physical resources - your location, building, equipment Financial - grants, funding agencies, other sources of income Activities and processes - programs you run, systems you employ Past experiences - building blocks for learning and success, your reputation in the community 3.1. Strengths describe the positive attributes, tangible and intangible, internal to your organization. They are within your control. What do you do well? What internal resources do you have? Think about the following: Positive attributes of people, such as knowledge, background, education, credentials, network, reputation, or skills. Tangible assets of the company, such as capital, credit, existing customers or distribution channels, patents, or technology. What advantages do you have over your competition? Do you have strong research and development capabilities? Manufacturing facilities? What other positive aspects, internal to your business, add value or offer you a competitive advantage? 3.2 Weaknesses (internal, negative factors) Weaknesses are aspects of your business that detract from the value you offer or place you at a competitive disadvantage. You need to enhance these areas in order to compete with your best competitor. What factors that are within your control detract from your ability to obtain or maintain a competitive edge? What areas need improvement to accomplish your objectives or compete with your strongest competitor? What does your business lack (for example, expertise or access to skills or technology)? Does your business have limited resources? Is your business in a poor location? Opportunities (external, positive factors) 4
5 LISTING EXTERNAL FACTORS: OPPORTUNITIES AND THREATS (O, T) Cast a wide net for the external part of the assessment. No organization, group, program, or neighborhood is immune to outside events and forces. Consider your connectedness, for better and worse, as you compile this part of your SWOT list. Forces and facts that your group does not control include: Future trends in your field or the culture The economy - local, national, or international Funding sources - foundations, donors, legislatures Demographics - changes in the age, race, gender, culture of those you serve or in your area The physical environment (Is your building in a growing part of town? Is the bus company cutting routes?) Legislation (Do new federal requirements make your job harder...or easier?) Local, national or international events 3.3. Opportunities are external attractive factors that represent reasons your business is likely to prosper. What opportunities exist in your market or the environment that you can benefit from? Is the perception of your business positive? Has there been recent market growth or have there been other changes in the market the create an opportunity? Is the opportunity ongoing, or is there just a window for it? In other words, how critical is your timing? 3.4. Threats (external, negative factors) Threats include external factors beyond your control that could place your strategy, or the business itself, at risk. You have no control over these, but you may benefit by having contingency plans to address them if they should occur. Who are your existing or potential competitors? What factors beyond your control could place your business at risk? Are there challenges created by an unfavorable trend or development that may lead to deteriorating revenues or profits? What situations might threaten your marketing efforts? Has there been a significant change in supplier prices or the availability of raw materials? What about shifts in consumer behavior, the economy, or government regulations that could reduce your sales? Has a new product or technology been introduced that makes your products, equipment, or services obsolete? 5
6 5. SWOT analysis template Below is a third option for structuring your SWOT analysis, which may be appropriate for a larger initiative that requires detailed planning. This "TOWS Matrix" is adapted from Fred David's Strategic Management text. 6
7 David gives an example for Campbell Soup Company that stresses financial goals, but it also illustrates how you can pair the items within a SWOT grid to develop strategies. (This version of the chart is abbreviated.) 7
8 TOOL: PERFORMING A SWOT ANALYSIS Here are some general questions in each SWOT category to prompt analysis of your organization, community, or effort. 6. HOW DO YOU DEVELOP A SWOT ANALYSIS? Steps for conducting a SWOT analysis: 1. Designate a leader or group facilitator who has good listening and group process skills, and who can keep things moving and on track. 2. Designate a recorder to back up the leader if your group is large. Use newsprint on a flip chart or a large board to record the analysis and discussion points. You can record later in a more polished fashion to share with stakeholders and to update. 3. Introduce the SWOT method and its purpose in your organization. This can be as simple as asking, "Where are we, where can we go?" If you have time, you could run through a quick example based on a shared experience or well-known public issue. 4. Remind, that the way to have a good idea is to have lots of ideas. Refinement can come later. In this way, the SWOT analysis also supports valuable discussion within your group or organization as you honestly assess. 5. It helps to generate lots of comments about your organization and your program, and even to put them in multiple categories if that provokes thought. 6. Once a list has been generated, it helps to refine it to the best 10 or fewer points so that the analysis can be truly helpful. 7. Reconvene the group at the agreed-upon time to share results. Gather information from the groups, recording on the flip-chart or board. Collect and organize the differing groups' ideas and perceptions. 8
9 8. Proceed in S-W-O-T order, recording strengths first, weaknesses second, etc. 9. Or you can begin by calling for the top priorities in each category -the strongest strength, most dangerous weakness, biggest opportunity, worst threat--and continue to work across each category. 10. Ask one group at a time to report ("Group A, what do you see as strengths?") You can vary which group begins the report so a certain group isn't always left "bringing up the end" and repeating points made by others. ("Group B, let's start with you for weaknesses.") 11. Or, you can open the floor to all groups ("What strengths have you noted?") for each category until all have contributed what they think is needed. 12. Discuss and record the results. Depending on your time frame and purpose: 13. Come to some consensus about the most important items in each category 14. Relate the analysis to your vision, mission, and goals 15. Translate the analysis to action plans and strategies 16. If appropriate, prepare a written summary of the SWOT analysis to share with participants for continued use in planning and implementation. To read more about SWOT: 9
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