SWOT Anaysis Copyright 2016 The Open University
2 of 16 Monday 26 February 2018
Contents SWOT Anaysis 4 1 When to use a SWOT anaysis 5 2 Exporing the environment of a project 6 3 The four components of SWOT anaysis 7 3.1 Strengths and weaknesses 7 3.2 Opportunities and threats 8 4 Competing the SWOT anaysis 10 5 Using the SWOT anaysis for decision making 11 5.1 SWOT anaysis: a case study 12 Summary 14 Sef Assessment Questions 14 End of Modue Quiz 15 References and acknowedgements 16 3 of 16 Monday 26 February 2018
SWOT Anaysis SWOT Anaysis This modue wi support your understanding and use of the SWOT Anaysis Too from the DIY Tookit. You shoud ook at the SWOT Anaysis Tempate before working through the modue. You wi find it hepfu to have a print out of the SWOT Anaysis Tempate with you whie you work through this modue. Understanding your strengths can put you in the right pace at the right time Knowedge of the interna strengths and weaknesses, aong with the opportunities and threats SWOT facing a business, project or programme can paint a broad picture of its current status. This proactive anaysis eads to a richer understanding and avoids reying on habit or instinct, heping eaders and managers to make informed decisions about the actions avaiabe to them. Conducting a SWOT anaysis can be usefu for ots of contexts, incuding: probem soving panning competitor evauation persona-deveopment panning strategic decision making, such as entering a new sector or aunching a new product a potentia partnership an investment opportunity 4 of 16 Monday 26 February 2018
1 When to use a SWOT anaysis outsourcing a service, activity or resource staff-deveopment panning deveoping contingency pans. This modue expains how to use SWOT anaysis as a too. As with many of the DIY toos, it is a subjective activity that woud probaby be competed quite differenty by two peope working on the same issue for the same organisation. Asking coeagues and partners to hep with a SWOT anaysis wi aways give a richer resut than working in isoation. Learning outcomes After studying this modue, you shoud be abe to: describe what a SWOT anaysis is and where you woud use it (SAQ 1) expain the terms strength, weakness, opportunity and threat in the context of a SWOT anaysis (SAQs 2 and 3) distinguish between the interna and externa issues in a project and its environment using a SWOT anaysis (SAQ 2) conduct and interpret a simpe SWOT anaysis (SAQ 3) 1 When to use a SWOT anaysis SWOT anayses are popuar because of their ease of use and fexibiity in highighting where project or business ideas are strong and/or vunerabe, and where there are opportunities to expore. The SWOT Anaysis Too heps you to anayse and expore your position through both interna and externa enses. Whie it coud be appied at any stage of a panning process, it is most suitabe at the start, or at a significant point of review. This is because it is important to assess and understand the current situation before committing to a sensibe and sustainabe course of action. A SWOT anaysis can be performed on a project, service or product, a sector, an organisation or even on an individua in the form of persona deveopment panning. When done propery, a SWOT anaysis wi give you a cear picture of the most important factors that can infuence the surviva and sustainabiity of your activity. For convenience to save you reading sentences ike the strengths of your service/ product/project/sector/activity within this modue we wi use project as a genera term to cover a the activities to which a SWOT anaysis might be appied. Activity 1 Aow around 5 minutes for this activity Which one of the three statements beow is correct? Statement 1: A SWOT anaysis is a compex ong-term panning too for understanding the externa environment of a project. 5 of 16 Monday 26 February 2018
2 Exporing the environment of a project Statement 2: A SWOT anaysis is a method of conducting a genera and quick examination of a project s current position, which wi inform the actions to be taken to reach a favourabe future position. Statement 3: A SWOT anaysis is a process that focuses on identifying where a project or programme is vunerabe. Discussion Statement 2 most accuratey captures what a SWOT anaysis is: a simpe diagnostic too for assessing the present and desired state of a business. The other two statements provide ony a imited view of what a SWOT anaysis can do. A SWOT anaysis wi hep you to anayse both the interna and externa environment of a project. It wi aso show what a project shoud reinforce and what it shoud revise and adapt to ensure the surviva and continuity of the project. 2 Exporing the environment of a project Every project or deveopment activity operates within a context of interna and externa infuences. Most interactions with a project or deveopment activity take pace within the interna environment. Interna factors are generay within your contro, and can be atered to suit the needs/infuences coming from the externa environment. Factors in the externa environment around a project are generay outside of your direct contro. Activity 2 Aow around 10 minutes for this activity Beow is a ist of factors that coud affect a project. Imagine this is your own project and, for each factor, indicate whether you think it is interna (something you can contro or manage), or if it is more ikey to be externa (something outside of your infuence). a. Society, cuture and poitics Interna Externa b. Pricing Interna Externa c. Knowedge (of team members) Interna Externa d. Competitor activity Interna Externa e. Vaue for money 6 of 16 Monday 26 February 2018
3 The four components of SWOT anaysis Interna Externa f. Economic cimate Interna Externa g. Legisation Interna Externa h. Product quaity Interna Externa i. Technoogy Interna Externa j. Peope and skis (team members) Interna Externa k. Reputation Interna Externa Discussion If you got more than three or four wrong, you might want to come back to this activity and try it again ater. It might be hepfu to think of the words Change in before each term, so that you can ask yoursef if this is something you coud have direct infuence over. 3 The four components of SWOT anaysis So far, we ve estabished that SWOT stands for: Strengths Weaknesses Opportunities Threats These components coud be described as providing different perspectives through which to expore an issue. We now ook at each of these in more detai. 3.1 Strengths and weaknesses Strengths and weaknesses refer to factors in the interna environment of the project. 7 of 16 Monday 26 February 2018
3 The four components of SWOT anaysis Tabe 1 Strengths Such as Exampe Typica questions Competences and skis Resources Attributes Knowedge Data Outstanding expertise in basic heathcare training Highy skied and motivated workforce Good brand image and reputation Estabished community network with exceent understanding of oca context Facts and figures about customers/ beneficiaries and their behaviour or preferences What do you do better than anyone ese? What makes you unique? What unique or owest-cost resources can you draw upon that others can t? What do peope in your market see as your strengths? What makes you agie and/or fexibe? Tabe 2 Weaknesses Such as ack of Competences and skis Resources Attributes Knowedge Data Typica questions What coud you update or improve? What shoud you avoid? What are things that users/cients/beneficiaries/partners might see as weaknesses or cause for compaint? What critica resources can t you provide do you have sufficient cash fow? Are the timescaes achievabe? 3.2 Opportunities and threats Opportunities and threats refer to factors in the externa environment around the project. Tabe 3 Opportunities Such as Exampe Typica questions 8 of 16 Monday 26 February 2018
3 The four components of SWOT anaysis Changes in technoogy Changes in government poicy or reguation Loca and goba events New products and/ or services Use of marketing or promotion Socia or popuation structures Lifestye fuctuations Increasing avaiabiity of internet access New rues that give you greater freedom in an environment Word AIDS day as a goba focus for activities and resources A new oca suppier of a product that was previousy difficut to access A oca radio station that might be persuaded to run community-service advertising A strong oca women s group that coud hep provide support access to vunerabe individuas Increasing rates of non-communicabe disease (NCD)*. Do peope have a need? Do peope prefer something ese? Are there any new technoogies? Are there changes in government poicy? What toos or routes can you use to engage with your target audience? Who coud you partner with? What events can you aign your message with? * This is a deiberate exampe to iustrate that something negative can be an opportunity in certain contexts if you provide heathcare training, then this unfortunate trend coud be an opportunity to deveop much-needed new training materias on NCD. Tabe 4 Threats Such as negative impact of Changes in technoogy Changes in government poicy or reguation Typica questions This section has been eft deiberatey bank. See Activity 3, beow. Loca and goba events New products and/or services Use of marketing or promotion Socia or popuation structures Lifestye fuctuations Key point It is important that the four components of the SWOT anaysis are considered together and not in isoation. This is because a factor can be both a threat or an opportunity, depending on the context and how you are abe to respond to it Activity 3 Aow around 15 minutes for this activity What do you think some of the typica questions might be when considering the threats to a project from its externa environment? Try and think of at east five threats and note them down in the text box beow. 9 of 16 Monday 26 February 2018
4 Competing the SWOT anaysis 1. 2. 3. 4. 5. Discussion One approach to this activity is to turn around the questions in the opportunities box, for exampe: Are peope s needs/preferences being met esewhere? Are new technoogies overtaking us? Is our activity restricted by changes in government poicy? Other questions I thought of were: Are we under threat from the economic cimate? Does the empoyment market aow us to recruit the peope we need? Are our partners ooking for new opportunities without us? Your questions are probaby infuenced by the specific context in which you work. For exampe, if your geographic ocation is heaviy infuenced by the weather, then this coud be a key consideration in your questions around threat. The important thing is that you capture a the potentia obstaces in your own externa environment. 4 Competing the SWOT anaysis Now that you understand the sections in the SWOT Anaysis Tempate, it s time to go ahead and compete it! It is important to have a cear objective for deveoping your SWOT anaysis, and its content wi vary significanty according to the question(s) you want to answer. Use the tips beow to hep you construct an effective SWOT anaysis. Do not overestimate the strengths or underestimate the weaknesses of your project. Be reaistic in your anaysis. Be prepared with a the reevant facts and figures. Get input from other peope. Focus on the current situation and what you know rather than what you want the project to become. Prioritise facts over opinions. Ony incude information that is reevant to your decision making. Use your competitors or simiar organisations in your sector as a benchmark to assess your interna factors against. Keep your SWOT anaysis short and simpe avoid unnecessary compexities. Use no more than ten factors for each section. 10 of 16 Monday 26 February 2018
5 Using the SWOT anaysis for decision making 5 Using the SWOT anaysis for decision making The act of competing your SWOT anaysis tempate may bring some reveations in itsef, but you aso need to work with the competed too to get the most vaue from the whoe SWOT anaysis process. Consider the obvious natura priorities: Are you doing everything you can to make the most of your strengths? What quick wins can you impement straight away? Within your weaknesses, what coud you start or stop doing straight away that woud make a positive change? Are there any weakness so urgent that you need to remedy them before considering any other actions? Consider how your strengths aign with the opportunities: Are there any surprises that you need to expore in more detai? How are you going to prioritise the right opportunities for you, for exampe, quick wins or ong-term gain? What are the opportunities that don t invove your weaknesses? Consider how your weaknesses aign with the threats: Does this highight any vunerabiities you weren t aware of? Can anything be turned into an opportunity, for exampe, is it time to stop pursuing something you re not very good at and focus resources esewhere? Wi your coeagues agree with this anaysis or are they in denia about the weaknesses and threats? Consider any other potentia matches: Are any threats baanced by opportunities, for exampe, as one suppier coses is another opening? Refect on the overa message of your SWOT anaysis. It shoud give you a deeper understanding of an issue that can then contribute to your decision-making process. Sometimes it wi raise more questions than it answers, and you might need to go around the oop severa times to dea with what is raised before you can focus on the origina issue. Depending on the context in which you are working, it can sometimes be hepfu to return to a SWOT anaysis after a break and compare the situation then and now according to the actions you have taken. 11 of 16 Monday 26 February 2018
5 Using the SWOT anaysis for decision making 5.1 SWOT anaysis: a case study Read through the case study and SWOT Anaysis Tempate, then try to compete the activity beow. Case study 1: Syed s business opportunity Syed runs his own enterprise in an area on the outskirts of Dhaka, Bangadesh. He manages a coective of peope with disabiities who make Bangadeshi puppets in a traditiona stye, mainy seing to tourists through oca shops, and pays them a basic saary as we as a profit share. The puppets are a made to Syed s own designs, and are quite different to the standard items in most tourist stores. His quirky designs and their popuarity with shoppers have come to the attention of Muhammad, who runs a reativey arge factory producing puppets and other tourist-friendy wares. Muhammad approaches Syed to suggest that he buy his enterprise, incuding his designs, and that Syed and his empoyees a come and work at Muhammad s factory. He is offering a ot of money, and Syed doesn t know whether he wants to maintain his independence or go for the security offered by a ump cash sum and guaranteed empoyment. He uses a SWOT anaysis to take a snapshot of his current situation and hep him consider the decision: 12 of 16 Monday 26 February 2018
5 Using the SWOT anaysis for decision making Activity 4 Aow around 20 minutes for this activity Looking at the case study above, incuding Syed s SWOT anaysis, imagine you are heping Syed make his decision. What points woud you highight? Woud you recommend him to se to Muhammad? Make some notes in answer to this question in the text box beow. Provide your answer... Discussion Syed has provided some interesting information in his SWOT anaysis. By taking a reaistic ook at his business as it is, he can decide what is most ikey to make sense for its future. There s no absoute right or wrong here (there rarey is in this sort of decision-making), but based on the information given I woud advise Syed not to se. These are the key points I woud highight: Syed has a ot of strengths, mainy based on the very fact that the organisation is sma and under his management. Being dependent on one suppier is aways a risk, especiay now they are becoming unreiabe. However, there s no reason he coudn t identify other suppiers and shop around to get a good dea and spread the risk by reguary using two or three. Syed has said that cash fow is a weakness that stops him from expanding. It sounds ike now woud be a great time to expore the financia support from the new NGO, as this woud enabe him to respond to some of the other opportunities (new shops and the potentia for export) at his own pace and under his contro. If he expands, perhaps he coud take on some new empoyees part time? If he has, say, four empoyees who work haf time rather than two who work fu time, he has spread the risk of his dependency if someone is i or eaves, one or more of the others might be abe to increase their hours. If he agrees to Muhammad s offer, he wi ose his independence and have to commute to a different workpace. Wi the peope he works with be abe to commute, or in practica terms wi this mean they become unempoyed (and how might he fee about that)? More peope wi see and buy his designs, but wi his name or mark be on them? What if he expores the opportunities for expansion that the SWOT anaysis has highighted, and then considers whether the offer ooks tempting? Finay, I woud perhaps suggest that this isn t a yes or no decision, and there might be a way that Syed coud maintain a his strengths but sti work in partnership with Muhammad. He coud create some designs especiay for Muhammad s factory, and/or draw on some of his resources in exchange for design expertise. At this point, a SWOT anaysis of the potentia partnership coud be a usefu decision-making too. 13 of 16 Monday 26 February 2018
Summary Summary In this modue, we have expored how a SWOT anaysis can be usefu in taking a snapshot to assess and understand eements of the interna and externa environments of a project in order to make a decision. We have seen that it is usefu as a guide to hep consider further actions or the deveopment of an idea. Sef Assessment Questions SAQ 1 Which two of the statements beow are true? o SWOT stands for Securities, Weaknesses, Opportunities, Threats. o A SWOT anaysis is a good too for taking a snapshot of a situation in order to inform a decision-making process. o A SWOT anaysis shoud incude as much information as you can find about a eements of your business. o Athough often used for business decisions, a SWOT anaysis can aso be used for persona-deveopment panning. o SWOT is aways best when competed by just one individua. SAQ 2 Drag and drop the words beow into the missing gaps in the sentences. Interactive content is not avaiabe in this format. SAQ 3 In the feedback to Activity 4, it was suggested that Syed coud do another SWOT anaysis to consider the idea of a partnership with Muhammad. Beow is an exampe of what points this SWOT anaysis might raise. For each of the points beow, indicate whether they are a strength, weakness, opportunity or threat. a. The new designs might prove to be more popuar than Syed s existing ines. Strength Weakness Opportunity Threat b. Syed and Muhammad create imited-edition ine of products to test their reationship. This was then featured in the oca newspaper, generating pubicity and significant demand. 14 of 16 Monday 26 February 2018
End of Modue Quiz Strength Weakness Opportunity Threat c. Both partners have good brand reputation; Muhammad s is much more widey known than Syed s. Strength Weakness Opportunity Threat d. A oca businessman has started importing Bangadeshi-stye puppets made in China that retai at ower prices than even Muhammad can offer. Strength Weakness Opportunity Threat e. Muhammad is considering renting a new factory space, near Syed s home, as the production base for their potentia coaboration. Strength Weakness Opportunity Threat f. Syed s workers are worried about their job security with the expansion, damaging the usuay positive atmosphere in their workroom. Strength Weakness Opportunity Threat g. Muhammad is investing in a new website, designed to attract export orders. Strength Weakness Opportunity Threat End of Modue Quiz Congratuations, you have now reached the end of this modue! We hope that you have enjoyed it, and have earned usefu skis. End of Modue Quiz This quiz aows you to work towards your badge for DIY Learn: SWOT Anaysis. To achieve your badge, you must answer six out of eight questions correcty. 15 of 16 Monday 26 February 2018
References and acknowedgements You can try each question three times. There is no imit to the number of attempts you can have to take the whoe quiz. If you answer fewer than six questions correcty, you wi need to start again if you want to earn your badge. Don t worry if you are not successfu first time, as you wi be abe to attempt the quiz again in 24 hours. You need to enro in this course before you can attempt this quiz which you can do by cicking on the Sign up / Sign in button at the top of this page. End of modue quiz When you have finished the quiz, cick on Next to review your Summary of attempt. Once you are happy with your answers, cick Submit a and finish. Once you have finished this quiz you wi be redirected back to this page. Don t forget there are another nine modues to choose from which you can find on the DIY Learn home page. References and acknowedgements Inspired by: MindToos (1996) SWOT Anaysis. This Modue shoud be cited as foows: DIY Learn (2016) SWOT Anaysis, Copyright The Open University and Nesta Except for third party materias and otherwise stated beow, this content is made avaiabe under a Creative Commons Attribution-ShareAike icence ( http://creativecommons.org/icenses/by-nc-sa/4.0/). The materia acknowedged beow is Proprietary and used under icence for this project, and not subject to the Creative Commons Licence. This means that this materia may ony be used un-adapted within the DIY Learn project and not in any subsequent OER versions. Return to the DIY Learn home page 16 of 16 Monday 26 February 2018