Sunday, June 5, 2011

SWOT - Your basic evaluation tool

There is various ways to analyze or make evaluation but my favorite one is SWOT analysis. In my humble opinion, SWOT analysis is the simplest and the most precise tool for evaluating projects. The SWOT analysis is very useful to evaluate not only projects or strategies but almost can be used to appraise anything and anyone, even your own self.

SWOT analysis covers all the main area one needs to look into when analyzing. These main areas are the Strength (S), Weakness (W), Opportunity (O) and Threat (T). These areas are the basis for all analysis tools.

The areas can be further divided into 2 categories, namely External Factor and Internal Factor. Strengths and Weaknesses are obtained in the internal environment analysis while Opportunities and Threats are found in the analysis of the external environments. While listing the SW and OT, in their respective categories, one must be careful not to be mistaken between the criteria. If you think that you have found an internal opportunity or threat then you want to paraphrase it as either a strength or weakness iii. For instance, if you identify “new machineries” as an opportunity, you be able to amend this to strength by restate it as “dependable capital assets”.

I believe SWOT analysis is the basis of most analytical tools. For example, in PESTLE analysis, the tool helps us to identify our forte, chances, disadvantages and risks in the various aspects – Political (P), Economic (E), Social (S), Technological (T), Legal (L) and Environmental (E). It is similar to SWOT analysis but is presented in a slightly different way but we are still looking at the external and internal factors in terms of our forte (strength), chances (opportunity), disadvantages (weaknesses) and risks (threats).

However, as mentioned earlier SWOT is for simple evaluation and it helps to identify the strength, weakness, opportunity and threat. No one tool is expected to be fully comprehensive, so a combination of other analytical tools such as SWOT Matrix, Porter’s 5 Forces and Blue Ocean Strategy could be used if you need to further deepen the analysis.

Further readings on SWOT Analysis at

i) http://www.netmba.com/strategy/swot/

ii) http://www.whatmakesagoodleader.com/swot_analysis.html

iii) http://www.usfca.edu/fac_staff/weihrichh/docs/tows.pdf

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