MAKING SWOT ANALYSIS WORK

by Nigel Piercy and William Giles

Introduction
Without doubt SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is the
commonest practical analytical tool for strategic planning, which is actually used by executives
and consultants. As most readers will recognise, SWOT analysis is a simple structured approach
to evaluating a company's strategic position w h e n planning, t o identify the company's
strengths and weaknesses and to compare these to opportunities and threats in the
environment. We have been unable to discover the original source of the technique, but one
of the best technical descriptions, w h i c h links SWOT analysis to market segmentation and
strategy is given by Abell and Hammond (1979).

The attractions of SWOT analysis are that this technique Our challenge to the reader is to look at how SWOT
is familiar and easily understandable by users and it analysis is used (or neglected) in his/her company's
provides a good structuring device for sorting out ideas planning and to see whether our guidelines can be
about the future and a company's ability to exploit that made to work. In short, by changing the ground rules
future. In fact, the technique is so well-known that we for using this technique, we suggest it can be made
had some reservations about writing a paper on the exceptionally full and rich in strategic insight.
topic — managers do not take kindly to consultants and The "rules" we propose for using SWOT to produce
writers "rediscovering the wheel"! This said, our experi- dynamic results are:
ence suggests that there is a market for our ideas about
revitalising this tool, for the reasons outlined below. (1) Focused SWOTs.
(2) Shared vision.
It is our view that the use of this tool has generally
(3) Customer orientation.
become sloppy and unfocused — a classic example
perhaps of familiarity breeding contempt! It must surely (4) Environmental analysis.
be admitted that SWOT analysis is frequently done (5) Structured strategy generation.
badly, but this does not have to be the way the technique
is used. On the basis of our experiences in using the
technique with companies, we suggest a number of Focused SWOTS
guidelines below for making the technique work Experience suggests first, that the more carefully we
dynamically to generate new insights and strategies. define the area to be evaluated with a SWOT analysis,
the more productive the analysis is likely to be. By
First, however, it should not be forgotten that the reason
focusing on a particular issue, and excluding non-
SWOT analysis has come to be so widely known (and
relevant material, we can overcome the bland,
we suggest misused!) is because of its inherent meaningless generalisations that executives frequently
attractions. These are: produce if asked to take a global view of their
• the technique is simple enough in concept to businesses' strengths and weaknesses.
be immediately and readily accessible to This definition, which should be rigorously enforced,
managers — no computer or management has been made effective in analysing issues as diverse
scientist is needed; as focusing on:
• the model can be used without extensive corpor- • a specific product-market (with parameters
ate or market information systems — but is flexible defined);
enough to incorporate these where appropriate;
• a specific customer segment in a market;
• SWOT analysis provides us with a device to • product policy in a given market or segment;
structure the awkward mixture of quantitative
• pricing policy in a particular market;
and qualitative information, of familiar and
unfamiliar facts, of known and half-known • distribution systems for particular customer groups;
understandings, that characterises strategic • marketing communications for different
marketing planning. customers and members of a defined decision-
making unit;
Our experiences with a wide variety of companies and
• the study of named competitors or groups of
managers suggest that SWOT analysis can be made MIP 7,5/6
similar competitors;
to work, these payoffs can be realised, and real strategic 1989
insights can be generated and used. We propose a • relationships between departments in a company;
number of very straightforward guidelines to achieve • the standing of a marketing department in 5
these goals. marketing its strategies within its company.
 • the SWOT analysis provides a concrete
mechanism for expressing team consensus
about important issues;
• producing a SWOT analysis has the effect of
pushing a team towards agreement and flushes
out potentially harmful disagreements —
indeed, in effect, one can observe managers
negotiating the view of the world the company
will adopt for its planning.
These potential gains arise primarily from participation
of diverse interests in planning — but SWOT analysis
provides a mechanism for making participation
operational and reaching that potential set of benefits.
For example, in the financial services business, a
company with which we worked was organised into two
semi-autonomous divisions — one serving the retail
market and the other the commercial lending market.
Undertaking SWOT analysis in joint planning groups
proved to be quite literally the first time that managers
of the two divisions actually found out what their
counterparts could do and were doing, and uncovered
many profitable opportunities for collaboration and
cross-selling between the divisions.

Customer Orientation
The way we can use the SWOT technique in a
particularly powerful form is summarised in Figure 1.
The first requirement is that in evaluating our strengths
The rule we follow is that attention should first be focused and weaknesses, we can only include those resources
on a critical issue to our planning, rather than being global or capabilities which would be recognised and valued
in perspective — we can always build up the global picture by the customer with whom we are concerned. This
by putting together our focused analyses. helps us to get past the "motherhood" statements often
produced as a list of strengths: service, quality, an
Apart from anything else, the very act of focusing starts established firm, and so on — because we have to
to highlight major gaps in knowledge and the hidden define what we believe is seen by the customer and is
strategic assumptions that managers make. For valued by him/her.
instance, in a planning session with a major computer
firm, we asked the planners to undertake a SWOT for For example, our "great private medical scheme" for
their own position in a particular market segment. The employees is not a strength for these purposes. It is only
results were relatively negative, so we then asked them relevant if we can say that customers would recognise
to do the same exercise for their major competitors. The that we treat our employees well, and this in turn has
payoffs in how they deal with customers and the
planners completed the analysis for their best-known
establishment of long-term relationships. Applying this
competitor, and the results were encouraging. However,
rule is often a considerable discipline on executives, and
for the third player in the market they came back with
in the event of disputes which cannot be resolved about
blank sheets — they had no knowledge or
what is a strength and what is not — we may actually
understanding of this company. Their view of the market
test our claims by market research with a larger pool
was swamped by the image of one dominant of people, or even with customers!
competitor. Incidentally, the anonymous third company
proved to be the fastest-growing player in that market. Forcing executives to confront the difference between
Focus and concentration can have many pay-offs. what they think is important and what customers think
is important is a substantial contribution of this
technique. At the end of the day — however un-
Shared Visions reasonable, irrational, awkward, intolerant, ignorant or
plain foolish the "experts" think customers to be — it
Because of its apparent simplicity and ease of is the customers who buy products, not the "experts".
communication, we have found SWOT analysis to be
an excellent vehicle in working with planning teams or In fact, we are, in a very practical way, forcing users
groups of executives. There is little or no barrier created of the technique to identify the critical success factors
through executives having to learn complex analytical in their business, customers' needs, and factors
techniques (or succumbing to the temptation to leave influencing customer satisfaction.
it to the "experts"). In one company, for example, what executives told us
MIP 7,5/6 We have found that the payoffs from making SWOT the was their strength of "technical service excellence",
1989 central focus for group or team planning to be numerous: turned out to mean to customers that this was a
company that sent out PhD-level engineers to prove that
6 • the pooling of ideas and information from a products had been abused in use, and that warranties
number of sources produces richer results; did not apply!
One problem which regularly emerges is that executives
trying to use the model claim that the same thing can "An old established firm"
be listed as a strength and a weakness. This simply Strength Weakness
means that we have not gone far enough in our
Stable suppliers for after-sales service Inflexible
analysis. For example, perhaps the commonest type of
Trustworthy Old-fashioned
"motherhood" statements produced here are: "we are
an old-established firm — this is a strength and a Experienced No innovation
weakness", or "we are a large supplier — this is a "A large supplier"
strength and a weakness".
Strength Weakness
What we need to do here is to ask the question: which Comprehensive product range and Bureaucratic
aspects of these characteristics are strengths and which technical expertise Offhand with customers
are weaknesses? For instance, the statements above High status/stability reassures No continuity of personal
might be expanded as shown in Table I. customers contact
The remaining issue to be addressed is where managers
Table I.
claim that they have a strength (or weakness) which
customers do not know about and would not recognise (b) Conversion Strategies — More difficult is the design
— but which is too important to leave out of of appropriate responses to highly ranked Weaknesses
consideration. The easiest way of handling this issue and Threats. Here the goal is ideally to convert these
is to include these factors in the list, but to have them factors into Strengths and Opportunities. In some cases
boxed-off as "hidden". When it comes to the stage of this may be relatively straightforward — a Weakness
generating strategies, then it is appropriate to consider in sales coverage may mean adding to the salesforce,
what would be needed to uncover hidden strengths, if a Threat from a competitor may be bought-off by
they really are particularly important to the customer collaboration or merger, but in other cases we may be
and to generating strategies for the future. unable to think sensibly about conversion or neutralising
these factors. In the latter case these factors remain
the limiting problems in this business and determine
Environmental Analysis how attractive it is to us.
Essentially the same discipline is required to view the
Opportunities and Threats in the environment relevant (c) Creative Strategies — Finally, we have to recognise
to our point of focus — the specific market, customer, that going through this analytical process often simply
issue etc. generates new, creative ideas for how to develop the
business. Good ideas should never be discarded simply
Here the goal is to list those things in the relevant environ- because they are unusual. Whatever recording we are
ment which make it attractive or unattractive to us, and doing, we should have a box especially for creative ideas
our search for ideas should be as thorough and widely-
that may not fit elsewhere in the model.
informed as possible. Indeed, this is another prime chance
to identify information needs and market research tasks. In this way the model gives us a mechanism for structur-
ing and categorising the strategies generated through the
Probably the major difficulty here is that executives tend
SWOT analysis. The final discipline, however, is one of
to jump the gun and put their strategies and tactics
down as Opportunities — a classic example of self- iteration. As we identify strategies — to match Strengths
fulfilling prophesy! to Opportunities, to uncover hidden Strengths, to convert
Weaknesses, and so on, we should always go back and
The way out of this trap is the insistence that Opportuni- see how the new situation we are building changes the
ties and Threats exist only in the outside world — the SWOT model and the broad picture we are painting.
things we propose to do about them are our strategies.
For example, it may be suggested that price-cutting is an Our output is then ready to be entered into the planning
Opportunity. This is not an Opportunity in a SWOT analysis process — for programme-building, evaluation, financial
— it is a price Strategy which we may adopt. However, appraisal, and ultimately for implementational or action
we would only accept the desirability of a price-cutting planning.
strategy if, for example, our size gave us greater cost-
economies than our competitors, and there was an identi-
fied Opportunity in terms of there being a price-sensitive The Challenge
segment of the market, or the need to meet a competi- The guidelines we have outlined above are incredibly
tor's threatened entry to the market with low prices. The simple to apply, but the disciplines imposed are very
rule is that Opportunities exist largely independently of our severe.
policies — the actions we plan are our Strategies.
We know that this approach is effective, and that it turns
the SWOT technique into a dynamic and productive tool
Structured Strategy Generation for strategic audits and strategy generation. Our chal-
When we are able to complete all four cells of the lenge to the reader is to use the model and the guidelines
SWOT matrix, and we have ranked each item in each on his/her own planning and see what happens!
category in terms of importance, then the matrix acts
automatically as a generator of strategies.
(a) Matching Strategies — Our central focus is on
■
matching our Strengths to Opportunities in the outside MIP 7,5/6
world. Our logic here is that Strengths which do not 1989
match any known Opportunity are of little immediate Reference
value, while highly ranked Opportunities for which we Abell, D.F. and Hammond, J.S., (1979), Strategic Market 7
have no Strength are food for further thought. Planning, Prentice-Hall, Englewood Cliffs, N.J.