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Step-by-Step SWOT Analysis
Before a SWOT analysis can be performed, the desired objective for the project must be explicitly defined and approved by all participants in the process. Failure to identify the objective leads to wasted resources and possibly failure of the enterprise. In relation to objectives the following terms have been used in the literature: desired end states, plans, policies, goals, objectives, strategies, tactics and actions. These terms may be organized in a hierarchy of means and ends and numbered as follows: Top Rank Objective (TRO), Second Rank Objective, Third Rank Objective, etc. From any rank, the objective in a lower rank answers the question "How?" and the objective in a higher rank answers the question "Why?" The exception is the Top Rank Objective (TRO), for which there is no answer to the "Why?" question. That is how the TRO is defined. This diagram illustrates the development of the hierarchy of objectives. (See also http://en.wikipedia.org/wiki/Strategic_planning.)
Once the objective has been identified, SWOTs are discovered and listed. SWOTs are defined precisely as follows:
Strengths are attributes of the organization that are helpful to the achievement of the objective.
Weaknesses are attributes of the organization that are harmful to the achievement of the objective.
Opportunities are external conditions that are helpful to the achievement of the objective.
Threats are external conditions that are harmful to the achievement of the objective.
Correct identification of SWOTs is essential because subsequent steps in the process are all derived from the SWOTs.
Decision makers must determine whether the objective is attainable, in view of the SWOTs. If the objective is not attainable, a different objective must be selected and the process repeated.
If, on the other hand, the objective seems attainable, the SWOTs can be used to brainstorm possible strategies, by asking and answering the following four questions:
How can we use each Strength?
How can we stop each Weakness?
How can we exploit each Opportunity?
How can we defend against each Threat?
Ideally a cross-functional team or a task force that represents a broad range of perspectives should carry out SWOT analyses. For example, a SWOT team may include an accountant, a salesperson, an executive manager, an engineer, and an ombudsman. An educational SWOT team might include the dean, the department chair, instructors, students, and representatives from the business office, registar's office, and student services office.
An Alternative Viewpoint
Typically seen by managers/educational leaders as a strategic planning tool, SWOT analysis groups some of the key pieces of information into two main categories (internal factors and external factors) and then by their dual positive and negative aspects:
Internal factors - The strengths and weaknesses internal to the organization, its strategies and its position in relation to its competitors.
External factors - The opportunities and threats presented by the external environment and the competition.
The analysis is often presented in the form of a matrix. You should note, however, that SWOT is just one aid to categorization. It is not, as many organizations seem to think, the only technique. It also has its own weaknesses. It tends to persuade organizations to compile lists rather than think about what is really important to their enterprise. The aim of any SWOT analysis should be to isolate the key issues that will be important to the future of the organization; and that subsequent marketing planning will address.
SWOT analyses also present the resulting lists uncritically, without clear prioritization; so that, for example, weak opportunities may appear to balance strong threats.To offset the difficulty of evaluating the importance of each proposed SWOT, it may be prudent not to eliminate too quickly any candidate SWOT entry and instead, to proceed to the the next step of generating possible strategies for using the SWOTs (see above). 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.
Errors to Be Avoided
The following errors have been observed in published accounts of SWOT analysis. Making these errors can result in serious losses:
Conducting a SWOT analysis before defining and agreeing upon an objective. A moment of reflection will reveal an indisputable truth: SWOTs cannot exist in the abstract. They can exist only with reference to an objective. If the desired objective is not openly defined and agreed upon, each participant may have a different result in mind and the outcome will be confusing.
Opportunities [external to the company] are often confused with strengths [internal to the company]. Keep them separate.
Another error is to confuse SWOTs with possible strategies. This error is made especially with reference to Opportunities. To avoid this error, it may be useful to think of Opportunities as "Auspicious Conditions." It may also be useful to keep in mind that SWOTs are descriptions of conditions. Possible strategies define actions.