History of SWOT Analysis

Over the last decade most organizations have been experiencing unprecedented pressures to improve their performance. There is a growing emphasis upon analysing and evaluation performance. Typically, performance evaluation involves identifying, generating and justifying decisions leading to organizational change. The results of such examination are then applied to the development of strategic plans for the future. Finding an effective evaluative and analytical technique to aid the decision-making process is therefore fundamentally important to all organizations seeking to improve their performance.

The word "analysis" originates from the Greek language, meaning to separate into parts, loosen and dissolve. A SWOT analysis does this by 'peeling back layers of the company' (Williams, 1996) and is widely used in many organizations.

The initials of the acronym and mnemonic 'SWOT' represent the four factors of Strengths, Weaknesses, Opportunities and Threats.

In an organization, a SWOT analysis involves pinpointing these areas to assist managers in identifying the key facts, thereby giving them a focus on what needs to be tackled and an awareness of the relevant opportunities and possible threats. Williams (1996) claims that effective business leaders are people who live 'in a world of SWOT', as they will be individuals who will have access to the right information so that they can act on maximising opportunities and attempt to avoid threats. As such, SWOT analysis is recommended by some as a prime tool of analysis (Hatton et al., 1992).

Within SWOT analysis, the Strengths and Weaknesses are seen as internal factors which are controllable, and can be acted upon (e.g. staff turnover, organizations image). The Opportunities and Threats are external, uncontrollable factors. These form the external environment within which the organization operates and may include demographics, rates of interest, changes in legislation etc. (Hatton et al, 1992). It is the opinion of some that for a company which desires to grow, the objective appraisal of strengths and weaknesses should be high on the list of necessary activities (Ansoff, 1956; Cordiner, 1956; Leavitt, 1965 etc). A major objective for many managers is the identification of threats and opportunities through environmental scanning (Jackson and Dutton, 1998). The fundamental principles of SWOT analysis therefore seem to play an integral part within the organization domain.

SWOT analysis has also been referred to under names of other acronyms or mnemonics. Gray and Smeltzer (1989) refer to a 'WOTS-UP' analysis. This is similarly divided into the external analysis of opportunities and threats, and the internal analysis of strengths and weaknesses. Gray and Smeltzer claim that their WOTS-UP analysis should 'suggest strategies for the firm and supply information for evaluating alternative strategies'. This should lead to the choosing of an optimal strategic plan. Alternatively, to some people it is known as a 'TOWS' analysis where the emphasis is more upon environmental factors (threats and opportunities) than on those which are internal (Hindle, 1994).

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SWOT - History

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