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SWOT - A business tool for most business challenges

The SWOT framework is the most used and best known business analysis tool in the world. Almost everybody has heard of a SWOT, so much so that people are known to groan if you say “let's do one”.

Completing a SWOT does not mean "job done". Things change all the time. Businesses are dynamic. Strengths and weaknesses are forever changing and so are the opportunities and threats.

The SWOT tool was invented by Stanford Research Institute (SRI) in 1960 when Albert Humphrey was trying to find out why corporate planning was failing in large companies. The SRI team concluded that the starting point was to find out what was good and bad about a company before deciding on a course of action. They labelled the good things as satisfactory (S) and the weaknesses they called faults (F). These were then related to the opportunities (O) and threats (T) in the marketplace. The acronym SOFT didn't sit so well and in 1964 it was changed to a SWOT.

Despite its popularity, companies don't always use the model to best effect. The SWOT is an action orientated framework. Relating a company’s strengths to market opportunities should lead to specific actions. So too actions should arise from considering company weaknesses and market opportunities. Bringing together the strengths and weaknesses and opportunities and threats leads to specific actions. In the diagram below we see a SWOT for a company that makes tools sold to automotive body repair shops. You can see how the responses are a critical part of the SWOT tool.

The SWOT framework may be nearly 60 years old but it is still one of the most important tools for developing business strategies. Think about how you can use it at a corporate level, brand level or simply as a problem-solving device for any issue faced by your business.

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