Explain two purposes of carrying out a SWOT analysis for a project option

A SWOT analysis is a tool that business leaders use to identify strengths, weaknesses, opportunities and threats. Helpful in goal setting and strategic planning, a SWOT analysis can help assess the health of your organization and the prospects for future growth. The impact of a SWOT analysis is determined by how you apply the results. For example, if you identify a potential threat and respond proactively, the SWOT analysis helped you avoid a pitfall that could save time and money. A four-section SWOT can be divided into two parts: strengths and weaknesses as one part, and opportunities and threats as another.

Any type of organization can use a SWOT analysis. The usefulness of this tool isn’t confined to large companies. Startup companies can use a SWOT analysis for a business plan, or established corporations can use it as an organizational health checkup. The University of Kansas provides these applications for the SWOT analysis:

• Problem-solving
• Decision-making
• Change management
• Big-picture planning
• New initiative launching

As you embark on new innovative thinking for your business, consider using a SWOT analysis to jump-start the planning process.

The first step to facilitating a SWOT analysis is to identify the core team. If it’s a project-based SWOT meeting, project leaders and key stakeholders should be involved. If it’s an organizational effort for strategic planning, key leaders and managers should be at the table. Begin with the strengths and weaknesses and then process the results. Move on to the opportunities and threats and do the same. It’s critical to remain optimistic when you’re discussing the results of a SWOT analysis. Weaknesses and threats can cause a planning team to feel defeated. Instead, use the tool as an aspirational way to create big thinking and solution-oriented results.

The SWOT analysis definition is broken into four sections, but it encompasses two main parts. The first is the analysis of strengths and weaknesses. This part is the opportunity to look internally at what the organization is doing well and identify the areas of needed improvement. You can direct this to a specific initiative, process or the organization as a whole. Don’t leave any idea out. Be exhaustive as you brainstorm the positive and negative aspects of your analysis. The results help you learn more about the resources that are needed or how you might redeploy staff and dollars for improvement purposes.

The second part of a SWOT analysis looks at external factors that may affect success. Opportunities may relate to financial, industry, societal, environmental or political issues, according to BetterEvaluation. Similarly, threats look at the same affinity areas to ascertain any that may pose a risk to the project, idea or organization as a whole. Even though there are two main parts and four sections to a SWOT analysis, they work in cooperation with one another. For example, you may move something to a higher priority if you determine a related weakness and threat heighten potential harm to the organization.

A SWOT analysis is only useful if you harness the information to take action. Begin by using the information gathered in each category and create questions for the team to answer. For example, if you’re discussing weaknesses, ask these questions:

• What control do we have over these weaknesses?
• How much time would it take to improve?
• Which weaknesses pose the biggest risk to our business?
• What are our top three priorities?

You can create similar questions that apply to each category. Once you synthesize the information, you can make a specific plan to mobilize your staff and move the organization in a new direction.

1. Career development
2. Purpose of a SWOT Analysis

By Indeed Editorial Team

Updated December 30, 2021 | Published March 29, 2021

Updated December 30, 2021

Published March 29, 2021

A SWOT analysis is a method that helps companies develop strategies to achieve their objectives, improve efficiency and maintain brand relevance. Organizations in many industries use this analysis method in different situations, such as when they hire a new executive or when federal or state governments pass new laws that concern their industry. You can use a SWOT analysis to determine how a recent development could affect your organization so you can effectively address the situation. In this article, we discuss the purpose of this planning tool, when to use it and tips for how to implement it.

Related: Top 10 Effective Business Analysis Techniques

What is the purpose of a SWOT analysis?

The primary purposes of a SWOT analysis are to identify factors that impact a company's functioning and offer useful information during the strategic planning process. This method can help lead to more careful and informed decision-making.

SWOT stands for:

• Strengths: These are your organization's best qualities and the ways they affect your business or brand reputation.

• Weaknesses: These indicate areas that your company could benefit from improving in order to deliver better products or services.

• Opportunities: These are changes or developments that can positively affect your company, such as mergers and acquisitions.

• Threats: This refers to the changes or developments that can negatively affect your organization, such as strict regulations or increased competition from new companies entering the market.

Some primary goals of a SWOT analysis are to:

• Create an analysis summarizing internal and external factors

• Identify risks and issues that need solving

• Establish management priorities

• Reduce factual, management or marketing errors

• Perform realistic sales forecasts based on market conditions and evaluate the business's potential for growth

• Help an organization determine whether it needs help from outside legal, financial, marketing or management professionals

Read more: SWOT Analysis Guide (With Examples)

Benefits of a SWOT analysis

A SWOT analysis can show you how to:

• Turn weaknesses into strengths: Since a SWOT analysis provides a detailed, organized model to evaluate your organization's best traits and current flaws, it can help you identify some weaknesses to eliminate or turn into strengths.

• Minimize losses: A goal for most businesses is to minimize losses, both in the short term and the long term. For example, a company can mitigate financial losses by evaluating the benefits and disadvantages of investing in new technology.

• Better understand external threats and opportunities: A SWOT analysis helps you determine threats and opportunities that are most common in your industry, making you more prepared to minimize threats or take advantage of opportunities in the future.

Related: How To Do the SWOT Analysis for Your Company: Steps and Tips

When to conduct a SWOT analysis

A SWOT analysis can be useful during nearly any stage in an organization's planning process, including:

Staffing changes

A SWOT analysis can be extremely helpful when an organization changes personnel. In this situation, it could involve determining how hiring a new CEO might affect your company. For example, if the new executive has more experience than the previous one, this could be a strength. Conversely, if the new CEO has less experience, this may be a weakness. If the new CEO has connections to several important people in your company's industry, this can be an opportunity for your firm to grow. A new CEO who had trouble growing sales in past roles may be a threat.

New product

If you are considering selling a new product, a SWOT analysis may be helpful because it allows you to project how the item might positively or negatively affect your company. A good way to conduct a SWOT analysis for a new product would be to identify the product's best strengths (what makes it high quality) and its drawbacks, or weaknesses. The analysis would also involve assessing how this product could help your organization gain more opportunities and further recognition, and determine what dangers could arise from its sale and distribution to customers.

For example, if a home products company wishes to produce a high-tech new leaf blower, it may benefit from conducting a SWOT analysis. This product might be popular because of the sophisticated technological features it includes, but it could also lead to customer injuries.

Merger or an acquisition

You can perform a SWOT analysis if your organization is considering a potential merger or acquisition. You could first evaluate the other company's overall strengths, like strong brand reputation, high productivity or sales volumes, and weaknesses, like high marginal costs or slow service. You would then project what new opportunities merging with the other company could bring, like greater efficiency due to an increase in personnel or higher profits, and what threats or disadvantages this decision could bring, like a monopoly.

For example, a major television broadcasting organization is considering acquiring a phone company. The broadcaster may be drawn to the possibility of improving its efficiency and productivity because of the resulting increase in personnel, but it may also express concern about customers potentially leaving the newly formed company because of higher prices.

Read more: 6 Reasons To Do a SWOT Analysis

Tips for conducting a SWOT analysis

You can follow these tips when conducting a SWOT analysis:

Strengths

• Determine your business's most effective activities. Identify which of your organization's practices get the best results in terms of customer or employee satisfaction.

• Identify advantages over competitors. Note whether your company has a competitive advantage over other firms in your industry, such as more experienced employees.

• Analyze customer engagement levels. Note what your customers' experiences with your products or services are. If your customers are consistently reacting positively to your products or services, this is a strength.

Weaknesses

• Evaluate your employees' experience levels. If most of your employees are new to your industry, this may show that your company could take time to grow.

• Streamline processes for greater efficiency: If there are many parts to your processes and practices, or your company handles each process completely differently, this may be a weakness.

• Determine the size of your client base. Identify how many customers you serve in total. You may want to expand your reach to other markets to grow your base.

• Note disadvantages over competitors: Identify whether other firms in your industry have an advantage over your company, such as more advanced technology.

Opportunities

• Identify beneficial investment opportunities or trends. Determine whether there is a chance for your company to invest in a useful resource.

• Capitalize on positive new industry laws and regulations. Take advantage of any new laws or regulations to grow your business, such as tax breaks.

• Assess whether new technology can help you. Determine whether any new technologies can help your company increase its profits.

Threats

• Note new competitors in your industry. Identify whether any new firms have entered your industry and can reduce your client base.

• Stay informed about new restrictions. Remain up to date on new limits to how you can conduct business, such as quotas on imports.

• Analyze how employee losses affect your business. Try to quantify how losing a certain number of employees could hurt your company.

• Determine whether automation may hurt your company. The replacement of employees with robots can harm your business by driving customers away from it.

Related: Threats in a SWOT Analysis: Definition and Examples

SWOT analysis example

Here's an example of a SWOT analysis:

A food company, Smiling Tiger, faces a threat after losing customers to a new competitor that manufactures and sells healthier, organic products.

Strengths

• Smiling Tiger shifts toward making and selling organic products.

• It focuses on promoting its most popular products to a wider customer base and stops selling its least healthy products.

Weaknesses

• Smiling Tiger experiences a reduced customer base.

• The company spends more resources on marketing campaigns.

Opportunities

• A multinational consumer products conglomerate offers to acquire Smiling Tiger.

• Smiling Tiger reevaluates its business model, including its vision, goals and priorities.

Threats

• Lawsuits could occur if Smiling Tiger needs to issue product recalls.

• If the competitor poaches enough customers, it could declare bankruptcy and close.

Related: Creating a Personal SWOT Analysis for Your Career