A SWOT analysis is a tool used for strategic planning that looks at the strengths, weaknesses, opportunities and threats for a project.
This type of analysis can be applied to a variety of different projects, and looks at favourable, unfavourable, internal and external factors involved with achieving specific objectives. There are both advantages and disadvantages to performing this type of analysis.
One of the greatest advantages of SWOT analysis is that it helps to summarise and clarify whatever opportunities and issues are facing a business or project. For this reason, a SWOT analysis is often advantageous and can play a key role in how a business sets its objectives and develops strategies for achieving goals.
Another advantage of SWOT analysis is that the primary cost involved in the process is time.
A SWOT analysis makes it possible for new ideas to be generated without costing the business much in the process. Hiring a business strategist or a marketing team would cost time and resources, but a SWOT analysis can be performed by anyone with time available and an understanding of how the business is run.
A SWOT analysis is simple to conduct, which poses both advantages and disadvantages. The advantage lies in the fact that anyone with a basic understanding of the business can perform this analysis.
The disadvantage to the simplicity of this type of analysis is that it usually creates a very simple list that is not presented critically. If a company is focused only on the creation of a list, then it may not be focusing its attention sufficiently or deeply enough on how it can actually achieve all of its objectives.
In order for a SWOT analysis to be truly successful, it should extend beyond a simple list of strengths, weaknesses, opportunities and threats. For example, a business should consider what degrees of strengths and weaknesses it possesses in comparison to competitors in order to determine how strong those strengths actually are.
A thorough SWOT analysis should also look at an opportunity or threat's size in order to see how it is related with the company's strengths and weaknesses. While a SWOT analysis can be simple and straightforward, more research and analysis is usually needed in order to obtain a comprehensive picture.