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What’s the Purpose of a SWOT Analysis in Project Management?
A SWOT analysis can help you seize opportunities and avoid costly mistakes. Find out everything you need to know about conducting a SWOT analysis to improve your business.
SWOT analysis is a technique to assess your firm based on its strengths, weaknesses, opportunities, and threats. By listing your company’s positive and negative traits, you gain a better understanding of its current performance so you can make a strategic plan for the future. For a business owner or project manager, using SWOT analysis in your project planning can increase the likelihood of a successful outcome.
Companies of all sizes should conduct an annual SWOT analysis to anticipate issues and threats, identify improvements, invest in efficiencies, and introduce new ideas. Completing your yearly SWOT analysis keeps your business on track, competitive in your industry, and relevant with clients.
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How to Conduct a SWOT Analysis
While a SWOT analysis is exceptionally informative for your company’s leadership, it’s helpful for all departments, including supply chain (e.g., preventing a break in your chain before it happens) and marketing (e.g., finding strategies to attract new clients). These five steps will help ensure you perform an effective SWOT analysis:
1. Create a SWOT matrix
To begin the SWOT analysis process, create a matrix with quadrants for strengths, weaknesses, opportunities, and threats. A SWOT matrix pairs strengths with opportunities and weaknesses with threats, making it easy for your team to understand the strengths that create opportunity and the weaknesses they can eliminate to ward off threats. There are several SWOT matrix templates available online to get you started, either 2x2 grids or 4-column documents.
2. Brainstorm with participants
A SWOT analysis is a collaborative process where more perspectives are always better. Including experienced team members, stakeholders, and clients in the brainstorm gives you more input and insight into each of the four categories. It can be particularly eye-opening to ask clients what they consider to be your biggest strengths and weaknesses, and the threats that would cause them to lose interest in working with you.
3. List out strengths, weaknesses, opportunities, and threats
During your brainstorm, list out all of the internal and external factors that affect your company’s success. Place each one in its corresponding quadrant (strength, weakness, opportunity, or threats) and prioritize the items in each quadrant based on importance.
As you brainstorm, consider your SWOT categories related to company financials, your clients’ perspective, growth, and efficiency. Questions like these can help ensure your brainstorm is thorough:
What are my company’s key drivers of cash flow?
What are our financial weaknesses?
Where do most of our clients come from?
Why do clients choose my company over others?
Why do we lose clients?
Is our current structure scalable?
Does my company actively nurture its employees?
4. Create an action plan
Have a plan for the external factors in your analysis — both opportunities and threats. For opportunities, that means having a plan to take advantage of them, and for threats, it’s identifying them as early as possible and knowing what to do if they occur. Items in your action plan may be to hire for skills missing from your team, update your technology, adjust your pricing, or expand into new markets.
5. Use your SWOT analysis
With your SWOT analysis complete, it’s time to use it. Distribute it to all stakeholders, make a plan to periodically review it, then make updates as factors need to be added, removed, or evolved. You may find that you want to conduct another analysis before the year is up, such as before an expansion or acquisition.
Components of a SWOT Analysis
Your company’s strengths are the internal factors that make you successful. Specifically, these may be skilled staff, seasoned project managers, efficient processes through good project management software, or highly engaged clients.
Weaknesses are internal factors that block success. Maybe it’s a lack of resources or budget, disengaged stakeholders, an inexperienced team or a missing skillset — anything that makes it difficult for your project to succeed.
What are the external factors that contribute to your company’s success? In contrast to strengths, which are within your control, these are outside factors that could likely benefit your business, such as eased regulations, a discount or lower costs, a competitor going out of business, or new technology.
Threats are the external blockers to your success. They aren’t guaranteed to happen, but if they did, they could negatively impact your project. Identifying threats before they occur helps keep your work on track and prepared for anything that might go wrong. Examples of threats include increased costs from contractors or suppliers, employees quitting, or a recession.
Benefits of SWOT Analysis
A SWOT analysis is enormously beneficial because it allows businesses to measure strengths and weaknesses in their processes, yielding a high-level view of efficiencies, where to improve, and what to replicate. A SWOT analysis will improve overall planning and provide more perspective on each project.
It also lets you monitor and manage threats, so you address limitations, avoid risks, create contingency plans, and make additional investments. By involving critical stakeholders in your SWOT analysis and planning process, you receive their honest assessments and validation of what to change. The result is a strategic document that makes everyone’s voice feel heard, which you can repurpose for subsequent projects.
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A SWOT analysis helps you uncover what your firm does well, where it can develop, and introduce strategies for sustainable success. Knowing the uncontrollable and controllable factors that affect your future may sound overwhelming but it is incredibly empowering because you avoid potential pitfalls and take advantage of every opportunity.
Using SWOT analysis in your project management helps you prevent challenges, improve your project planning, and increase the likelihood of a successful project. Utilizing project management software, like BQE CORE, to manage your SWOT analysis makes it easy to find, store, and share with stakeholders. With all of your key project data in one place, it’s more efficient to track your firm’s strengths, weaknesses, opportunities, and threats in real-time.
The impact of PM software is proven. Companies without a solid project management system are more likely to miss deadlines and overspend on projects. CORE enables you to prevent costly errors, missed deadlines, and disorganized teams. To plan more accurate projects and increase overall project success, sign up for your free CORE demo. For additional resources to improve your company’s performance, check out the rest of the BQE blog.