SWOT Analysis : [625703]

SWOT Analysis :
Strengths, Weaknesses,
Opportunities, Threats

Liza Groenendijk
October 2002

Version
Liza Groenendijk/Social Science Division /ITC/Enschede/ Netherlands
29.10.02

SOCIAL SCIENCE TOOLS AND INSTRUMENTS COMM ONLY USED IN ITC
INTERNATION AL INSTITUTE FOR GEO -INFORMATION SCIENCE AND EARTH OBSERVATIO N PAGE 1 OF 11

SWOT Analysis
What?
The SWOT1 analysis is a tool designed to be used in the preliminary stages
of decision -making, often as a precursor to strategic planning. It is a common
tool in evaluation studies.

It focuses on the identification of strong and weak points within an organis a-
tion and the analysis of opportunities and threats towards further develo p-
ment. SWOT is an acronym, which stands for Strengths, Weaknesses, O p-
portun ities and Threats.

The results of the SWOT analysis can be summarised in the SWOT Matrix
(figure 1). Strategy planning may use the matrix to ide ntify how external o p-
portunities and threats facing a particular organisation can be matched with
the internal strengths and weaknesses, to result in possible strategic altern a-
tives. A more detailed process of strategy formulation may fo llow.

Why?
Basic p rinciple in the SWOT analysis is the idea that good strategy means
ensuring a fit b etween the external situation or environment (threats and o p-
portunities) and the internal qualities or characteristics (strengths and wea k-
nesses) of the organ isation.

The p rocess of gathering, analysing and evaluating information among di f-
ferent stakeholders, to investigate the SWOT elements, identify strategic o p-
tions and formulate a strategy, makes the SWOT analysis a good method for
systematic group r eflection.

The SWOT analysis creates consensus among stakeholders on reaching
strategic priorities to tackle major weaknesses and threats using the major
strengths and opportunities. It contributes to ownership and commitment to
the process of strategy fo rmulation and further action planning.

1 The terminology used in this document reflects those generally used in the training modules.
In the list of key defin itions, the most common synonyms are given.

SWOT ANALYSIS
PAGE 2 OF 11 INTERNATIONAL INSTIT UTE FOR GEO -INFORMATION SCIENCE AND EARTH OBSERVATIO N

Field of application
Originally the SWOT analysis was developed for business applications, as a
management tool in Strategic Planning and Manag ement of industrial and
business enterprises. It has expanded from there to a much broader field of
application.

SWOT analysis is used in project planning as a tool for exploring the co n-
straints and opportun ities of a project proposal. It is also being u sed in cu r-
riculum development and planning, as well as in individual c areer planning.

Fig. 1. Example of a SWOT
Matrix for the National Mapping
Agency in Europe (Paresi,
1999)
Box 1. Historical overview of
SWOT.
The SWOT analysis, as part of Strategic Planning, has its origin in the work of business
policy academics at Harvard Business School and other America n business schools
from the 1960s onwards. Strategic Planning is concerned with developing an organis a-
tion‟s mission, objectives, strategies and policies. Popular became the idea that good
strategy means finding a strategic fit between external situation a firm faces (threats and
opportunities) and its own internal qualities or characteristics (strengths and wea k-
nesses).
In recent years the SWOT analysis has become a popular tool for strategy formulation
for a much broader field of application. Improvement s of the tool were proposed which
refer to the weighting and commenting of the different internal and external factors.
There are other approaches to strategy formulation, but the SWOT -type of analysis of
internal and external assessment and seeking a fit between the two perspectives has
remained popular.

Internal
Factors
External
FactorsStrengths (S)
Quality culture
Large experience in mapping
operations
Availability of hard/software
Well trained personnel/staff
developmentWeaknesses (W)
No marketing structure
Divisional structure
No flexible system
Lack of operations
management
Opportunities (O)
Growing number of new
customers
Established copyright
legislation
Growth of E-commerce
Enabling power of GI
technologySO Strategies
Use internet for easier/cheaper
product dissemination
Optimise production system making
use of available technology and staff
Certify products protected by
copyrightWO Strategies
Develop marketing mechanisms
to better identify customer’s
requirements
Re-engineer production system
using GI technology + ops. mgt.
Techniques to enable product
diversity for E-commerce
Develop business units
Threats (T)
Cut in government
budget
Dissatisfaction of user
community
Growing competition
from private sector
Easy access to
easy/cheap technology
by competitorsST Strategies
Find new market niches to recover
part of costs (new users, new
products)
Make use of culture, capabilities and
experience to satisfy users and to
enter competition
Do not oppose but co-operate with
private sector (partnership)WT Strategies
Develop marketing mechanisms
to better identify customer’s
requirements
Re-engineer production system
using GI technology + ops. mgt.
Techniques to enable product
diversity to better compete

SOCIAL SCIENCE TOOLS AND INSTRUMENTS COMM ONLY USED IN ITC
INTERNATION AL INSTITUTE FOR GEO -INFORMATION SCIENCE AND EARTH OBSERVATIO N PAGE 3 OF 11

Description
The SWOT analysis consists of following basic steps: the external analysis to
identify opportun ities and threats, the internal analysis of the organisation to
identify the existing strengths and weaknesses, the generation of alternative
strategies and the formulation of a strategic choice (box 2).

1. External analysis
The exter nal analysis takes into account the actual situation (existing threats,
non-exploited o pportunities) as well as possible trends and developments.
The latter have to be realistic with clear indications and without major spec u-
lations. Moreover, the effect on the performance of the organisation should
be su bstantial.

An opportunity can be defined as an external fact or development that, if
taken advantage of, can substantially contribute to the realisation of the o r-
ganisation‟s mission. Examples of oppo rtunities are new possibilities for co –
operation, favourable government policies and regulations, a new target
group or demand for new services.

A threat can be defined as an external fact or development that has or can
have a substantial negative effect on an organisation‟s performance. Threats
are challenges posed by unfavou rable trends or developments in the env i-
ronment that will lead to the erosion of the organisation‟s position if no co r-
rective action is taken. Examples of threats are: other projects/organi sations
coming in with similar products/services, changes in donor policies, changes
in government policies and regulations, diminishing resources (e.g. ma n-
power, inputs).

2. Internal analysis
The internal situation is discussed on the basis of the existi ng situation and
explores existing strengths and weaknesses. An organisation‟s strengths and
weaknesses are internal factors that critically dete rmine its performance.

A strength is therefore defined as an internal characteristic that contributes
substant ially to the realisation of the organisation‟s mission. A strength is any
existing internal asset (management, staff capacity/motivation, knowledge,
resource, business links, etc.) well placed to help to exploit opportunities (or
to meet demands) and fight off threats.

A weakness is an internal characteristic that threatens the functioning of the
organisation. Weaknesses are internal conditions that erode the organis a-Box 2. Basic steps in SWOT

1. External analysis
2. Internal analysis
3. Generating alternative strategies
4. Formulation of strategic choice

SWOT ANALYSIS
PAGE 4 OF 11 INTERNATIONAL INSTIT UTE FOR GEO -INFORMATION SCIENCE AND EARTH OBSERVATIO N

tion‟s position, hamper co -operation with others or obstruct the exploitation of
oppo rtunities.

3. Generating alternative strategies
Strengths, weaknesses, opportunities and threats are matched/combined in
order to arrive at a number of alternative strategies, which may form the b a-
sis for further strategy formulation.

Figure 1 shows how st rengths, weaknesses, opportunities and threats can be
matched in order to arrive at four (or more) sets of alternative strategies. The
alternative strategies are based on particular combinations of the four strat e-
gic factors:
SO strategies aim at using the strengths to take advantage of the oppo r-
tunities
ST strategies consider the strengths as a way to avoid threats in the e n-
vironment
WO strategies attempt to take advantage of opportunities by overcoming
weaknesses
WT strategies are basically defensive and primarily act to minimise
weaknesses and avoid threats
More combinations are possible and might be relevant to consider, e.g. using
strengths to all eviate or mitigate weaknesses, and using opportunities to
combat threats (see figure 3: the e nhanced SWOT Ma trix).

4. Formulation of strategic choice
The sets of alternative strategies, summarised in the SWOT Matrix, are fu r-
ther discussed and analysed.

Generally successful organisations will attempt to get into a situation where
they can work from strengths to t ake advantage of opportunities. If they have
weaknesses, they will strive to ove rcome them, making them strengths. If
they face threats, they will frame strategies that cope with them so that they
can focus on opportun ities.

Gradually, a “synthesised” str ategic choice will be defined and the trade -offs
involved appraised. The process of strategic choice formulation will result in
one single strategy. The single strategy will often include „contingency pla n-
ning‟.

The factors displayed in the SWOT Matrix pe rtain to analysis at a particular
point in time. Exte rnal and internal environments are dynamic: some factors
change over time while others change very little. Because of the dynamics in
the environment several Matrices could be prepared at different point s in
time. One may start with a SWOT Analysis in the past, continue with an
analysis of the present, and, perhaps most important, focus on different time
periods in the f uture.

SOCIAL SCIENCE TOOLS AND INSTRUMENTS COMM ONLY USED IN ITC
INTERNATION AL INSTITUTE FOR GEO -INFORMATION SCIENCE AND EARTH OBSERVATIO N PAGE 5 OF 11

Operating the instrument
The SWOT Analysis followed by a strategic orientation can be done by an
individual, but is more effective when carried out in participatory exercise i n-
volving major stakeholders. The proposed procedure aims at reaching co n-
sensus among the stakeholders concerning the strat egic choice.

Step 1. Define the entit y (organisation, problem area, situation, technique)

Step 2. Brief participants about purpose and procedure, and explain term i-
nology used.

Step 3. Identification of strengths, weaknesses, opportunities and threats
Ask participants to list perceived exter nal Threats and Opportun i-
ties, present ones and, even more important, also future ones.
List in the same way the internal Strengths and Weaknesses.
It can be helpful to use a sample 2 x 2 matrix (see figure 2.)

Strengths
List 5 – 10
Strengths
Weaknesses
List 5 – 10
Weaknesses
Opportunities
List 5 – 10
Opportunities
Threats
List 5 – 10
Threats

List only the most important factors (5 – 10).
Read and discuss the re sponses.

Step 4. Develop alternative strategies
Draw a 3 x 3 sample Matrix (see format in figure 1).
Transfer the discussed lists of S, W, O and T to this matrix.
Analyse the results. Use the following questions to fill in the
empty fields of the SWOT Mat rix.
How can strengths be employed to take advantage of oppo r-
tunities? (SO analysis for SO strategies)
How can strengths be used to counteract threats that tend to
hinder achiev ement of objectives and pursuit of opportun i-
ties? (ST analysis for ST strategie s)
How can weaknesses be overcome to take advantage of
opportunities? (WO analysis for WO strategies)
How can weaknesses be overcome to counteract threats
that tend to hinder achievement of objectives and pursuit of
opportunities? (WT analysis for WT strat egies)
And, consider the additional fields (see figure 3):
How can strengths be used to mitigate weaknesses (SW
strategies)? And, how can opportunities be used to combat
threats (OT strat egies)?
Fig. 2. Sample matrix for lis t-
ing Strengt hs, Weaknesses,
Opportunities and Threats

SWOT ANALYSIS
PAGE 6 OF 11 INTERNATIONAL INSTIT UTE FOR GEO -INFORMATION SCIENCE AND EARTH OBSERVATIO N

Internal
Factors
External
Factors
Strengths (S)
List 5 – 10 internal strengths
here

Weaknesses (W)
List 5 – 10 internal wea k-
nesses here

Opportunities (O)
List 5 – 10 exte rnal oppo r-
tunities here

SO Strategies
Generate strategies here that
use strengths to take advantage
of opportun ities
WO Strategies
Generate strategies that take
advantage of opportunities by
overcoming wea knesses
OT Strat egies
Generate
strategies that
use opportun i-
ties to combat
threats
Threats (T)
List 5 – 10 external
Threats here

ST Strategies
Generate strategies here that
use strengths to avoid threats
WT Strategies
Generate strategies here that
minimise weaknesses and
avoid threats

SW Stra tegies
Generate strategies that use strengths to mitigate weaknesses

Synthesis

Step 5. Select best strategies
Different methods can be used to select best options or strategies.
Two e xamples:
Develop one or more criteria to select the best option s and apply
the cr iteria to the options.
Select the best 5 options using consensus or using voting by
participants.

Step 6. Formulate a strategy
Formulate major tentative strategies based on these options.
Identify areas for further investigation. This could be a more d e-
tailed analysis of the consequences of the tentative strat egies.
Make a final decision (synthesis) on the strategy to follow.

Step 7. Follow up
Prepare an action plan, or project plan, based on the strategic
decision.

Strengths
SWOT A nalysis is a well -understood technique.
It offers a consistent approach to identify major strategic choices.
Both growth as well as retrenchment strategies can be considered.
It is a good way to use brainstorming to create alternative strategies that
might not othe rwise be considered.
It assists in generating consensus among stakeholders, providing a good
basis for impl ementation of a project plan
An important added benefit is that the use of SWOT can be a powerful
tool in team building. Fig. 3. SWOT Matrix: e n-
hanced format (Source: Hu n-
ger & Wheel en, 1997; adapted)

SOCIAL SCIENCE TOOLS AND INSTRUMENTS COMM ONLY USED IN ITC
INTERNATION AL INSTITUTE FOR GEO -INFORMATION SCIENCE AND EARTH OBSERVATIO N PAGE 7 OF 11

Limitations
The ade quacy of the strategic choices depends on the adequacy of the
strategic factors identified in the analysis phase
It requires commitment of the participants
The SWOT Analysis may easily be used in a limited sense: only as mere
list-making

Requirements
Skills
A SWOT Analysis can be done individually, but it is more effective when
major stakeholders of the project/organisation are involved.
The SWOT Analysis requires a good understanding of the participants in
the actual and f uture situation of the organisati on or the project.
To guide the participants or stakeholders in the process of the SWOT
Analysis a good facil itator is required.
It requires commitment of all stakeholders or participants, during the
whole process of the analysis.

Time
Completing a SWOT Analysis takes from one day to several weeks, d e-
pending on the size of the project/organisation, the expected output and
the depth ne cessary to which the tec hnique is applied.
The SWOT Analysis requires a considerable effort from all parties i n-
volved.

Related instruments
The SWOT framework can be used as a tool for situation analysis within a
Strategic Planning process.

Opportunities and threats can be identified in a number of ways. Instruments
that can be useful for identification of opportunities an d threats are:
Institutiogramme
Network Matrices
Environmental Scan
Problem Tree

To identify strengths and weaknesses systematically, the following tools may
be useful:
Integrated Organisation Model
Criteria for judgement (suitability, legitimacy, effecti veness, continuity,
sustainability, flexibi lity, efficiency)
Process Analysis
Problem Tree

SWOT ANALYSIS
PAGE 8 OF 11 INTERNATIONAL INSTIT UTE FOR GEO -INFORMATION SCIENCE AND EARTH OBSERVATIO N

Weighting and rating are tools can be used to refine the analysis of strengths
and weaknesses, opportunities and threats. Ranking tools are applied to pr i-
oritise fac tors and/or alternative strategies.

EFAS ( External Strategic Factor Analysis ) and IFAS ( Internal Strategic Fa c-
tor Analysis ) are tools used for detailed analysis of the external and internal
factors.

Strategic orientation (also used synonymous to SWOT An alysis) is a method
in which the SWOT analysis is applied in the following way. In order to d e-
velop strategies, an intermediate step is used by first generating strategic
„options‟ for each opportunity and threat. A selection of these options is than
match ed with strengths and weaknesses. This results in a number realistic
alternative strat egies and provides a prioritisation.

Making an action plan or a project plan can follow a SWOT Analysis. This
could be done in the form of a Logical Framework .

SOCIAL SCIENCE TOOLS AND INSTRUMENTS COMM ONLY USED IN ITC
INTERNATION AL INSTITUTE FOR GEO -INFORMATION SCIENCE AND EARTH OBSERVATIO N PAGE 9 OF 11

Furthe r reading

Hill, T. and Westbrook, R., 1997. SWOT Analysis: It's Time for a Product
Recall. Long Range Planning, 30(1): 46 to 52.

Hunger, J.D. and Wheelen, T.L., 1997. Essentials of Strategic Management.
Addison Wesley Longman, Inc., 212 pp.

MDF, 1998. O rganisational Development for Advisors and Consultants.
Course material, Ma nagement for Development Foundation, Ede.

Paresi, C.M.J., 1999. Situation Analysis in the framework of Strategic Pla n-
ning. Power Point Presentation. International Institute for Aer ospace Survey
and Earth Sciences.

Weihrich, H., 1982. The TOWS Matrix -A Tool for Situational Analysis. Long
Range Planning, 15(2): 67 to 76.

SWOT ANALYSIS
PAGE 10 OF 11 INTERNATIONAL INSTIT UTE FOR GEO -INFORMATION SCIENCE AND EARTH OBSERVATIO N

Key definitions

Alternative strategies
Strategies based on the matching of the four strategic factors (opportuni ties, threats, strengths
and weaknesses) of an organisation. (Synonyms: options, strategic choices)

External situation
The external analysis is described in a dynamic sense taking into account the actual situation
(existing threats, non -exploited opportun ities) as well as possible trends and developments.
(Synonym: external environment)

Internal situation
The internal situation is discussed on the basis of the existing situation and explores existing
strengths and wea knesses and not future ones. An organi sation’s strengths and weaknesses
are the internal critical factors that dete rmine its performance. (Synonym: internal environment)

Opportunity
An opportunity can be defined as an external fact or development that, if taken advantage of,
can substantially contri bute to the realisation of the organisation’s mission. (Synonym: deve l-
opment opportunity)

Strategic management
Strategic management is that set of managerial decisions and actions that determines the long –
run performance of an organisation. It incl udes environmental scanning (both external and i n-
ternal), strategy formulation (strategic or long -range planning), strategy implementation, and
evalu ation and control

Strategy
A strategy is a translation of the organisation’s mission into aims, and provid es ideas how these
aims could be pu rsued.

Strength
Strength is defined as an internal characteristic that contributes substantially to the realisation
of the organisation’s mission. A strength is any existing internal asset which will help to exploit
opportunities (or to meet demands) and to fight off threats.

SWOT Analysis
The SWOT analysis is a management tool used for strategy formulation. It is used to identify
strong and weak points within an organisation and to analyse opportunities and threats tow ards
further development. SWOT is an acronym with stands for Strengths, Weaknesses, Opportun i-
ties and Threats. (Synonym: TOWS Analysis, Situational Analysis, Strategic Orientation)

SWOT Matrix
The SWOT Matrix illustrates how external opportunities and th reats facing a particular organis a-
tion can be matched with that organisation‟s internal strengths and weaknesses to result in four
sets of possible strategic altern atives. (Synonym: TOWS Matrix)

Threat
A threat can be defined as an external fact or develo pment that has or can have a substantial
negative effect on an organisation’s performance.

Weakness
A weakness is an internal characteristic that negatively and substantially influences the fun c-
tioning of the organisation. Weaknesses are internal conditio ns that erode the organisation’s
position, hamper co -operation with others or obstruct the exploitation of opportunities.

.