SWOT analysis is a tool used to make the situation analysis (analysis of the environment, internal and external) for the marketing plan, being used as a basis for management and strategic planning of a corporation or company, but may, due to its simplicity, be used for any type of scenario analysis. This analysis of scenario is divided into internal environment (forces and weaknesses) and external environment (opportunities and threats). The strengths and weaknesses are determined by the current position of the company and are related, almost always, to the internal factors. Regarding the opportunities and threats, these are expectations of the future and are related to external factors. The internal environment can be controlled by the leaders of the company, since it is the result of the strategies of action defined by the members of the organization. Thus, during the analysis, when noticed a strength, it must be stressed the most, and when noticed a weak point, the organization must act to control it or at least minimize its effect. The external environment is totally outside the control of the organization. But in spite of being unable to control it, the company must know it and monitor it frequently, in order to seize the opportunities and avoid the threats. Avoid threats is not always possible, however you can make a plan for addressing them, minimizing its effects.
(Source Wikipedia, adapted)
Remember that SWOT should always be specific. You should avoid grey areas. Always apply SWOT in relation to your competition i.e. better than or worse than your competition. Keep your SWOT short and simple. Avoid complexity and over analysis, and remember that the SWOT is not a “political” tool ( to manage your image inside the company, being nice to someone), so you should always try to be realistic.
Once you decided wich are the factors to include in each criteria, give the SWOT analysis some strategic meaning i.e. you can begin to select those factors that will most greatly influence your marketing strategy: a mix of strengths, weaknesses, opportunities and threats. Essentially you rank them highest to lowest (“weight” in figure 1), and then prioritize those with the highest rank. So, weight the factors and rank them. One way would be to use percentages e.g. opportunity A = 10%, opportunity B = 70%, and opportunity C = 20% (they total 100%).
After, you should score how your company or product, faces each factor defined and weighted. You can use a score from 1 (very negative) to 5 (very positive) (3 means without influence) (“Evaluation” in figure 1). Now you are rating your position in each factor evaluated, and more over ypu are rating your competitive position.
If you want to be more effective, you can do your SWOT for each segment that you defined essential for your business.
Now you have your weighted SWOT finished. This is a method for explicitly considering the different factors in a decision. By multiplying the score by the weight and summing up for each option, you can get an overall score that takes into account each options and define wich are the most relevant factors to evaluate in each of the S.W.O.T. Criteria.
Because you are in the “situation analysis”, you must define the objectives and the actions based on the SWOT quantified and weighted analysis, mainly the most relevant and important. Remember that strategic planning may be characterized as a systematic effort to produce fundamental decisions and actions that shape and guide what a business organization is, what it does, and why it does it. The objective of strategic planning is to develop a map by which to manage an organization's positioning. So a SWOT analysis must have a consequence. You are defining where you and your company are and where you and your company want to go!
Remember also that a company doesn't need to pursue an opportunity that is not particularly attractive to it, nor does it need to pursue an opportunity for which it does not possess the requisite. Ultimately it is about making decisions, and it is only for that reason that we managers are paid ... To take correct decisions!!!
Nelson Ferreira Pires (Sal&Mar)