SWOT Analysis is an universal analytical technique focusing on the evaluation of internal and external factors affecting the success of a organization or any other evaluated system. Most often, SWOT analysis is used in the strategic management of an organization in the evaluation of a strategic intention. The author of SWOT analysis is Albert Humphrey, who designed it in the sixties of the 20th century.
Internal and external factors within the SWOT analysis are evaluated. Internal factors include the Strengths and Weaknesses of the organization/system. External factors include Opportunities and Threats which are related to the surroundings of the organization/system. SWOT is an acronym formed by the first letters of the designations of the individual factors.
The essence of the analysis is to identify key strengths and weaknesses of the organization and key opportunities and threats stemming from the external environment. To analyze the external environment of the organization (OT), the PESTLE Analysis can be used. For the assessment of the resources as internal factors (SW), a VRIO Analysis can be used. Subsequently, ways are sought as to determine how to use the identified strengths and opportunities and how to eliminate the identified weaknesses and threats.
Use of SWOT analysis in practice: Given that the SWOT analysis is a very universal and one of the most widely used analytical technique, its application in practice is very wide. It can be used for an organization/ an business as a whole or for individual areas, projects or other purposes. Since it contains both external and internal factors, it is also part of the broader risk management of an organization. As it affects key risk sources, it helps to realize them and the possibilities for countermeasures. It is necessary to clearly define in advance the external factors which apply to the analyzed problem or entity. These may be the surroundings of an organization or organizational unit.
In practice, there are lots of different methodologies, interpretations and ways of creating SWOT analyses.
Related terms and methods:
- Five Forces Analysis (Five Forces Model)
- EFE Matrix
- IFE Matrix
- Impact Analysis
- Market Segmentation
- PESTLE Analysis
- SPACE Analysis
- VRIO Analysis
- Situation Analysis 5C
Related management fields: