How to Use SWOT Analysis to Formulate Strategies

How to Use SWOT Analysis to Formulate Strategies

Using SWOT Analysis as a tool to formulate Strategy is one of the most effective tool in Strategic Planning. It is a factual analysis due to its extensive data collection and analysis of the data collected. It is effective because the analysis covers a wide spectrum of business environment during data collection. Its takes into consideration external business environment as well as internal capabilities.

This is perhaps the most powerful usage of SWOT Analysis in the Strategic Planning Process. I am going to show you how to use the four factors of SWOT to develop Strategies

Assuming you have collected several data relating to the Strengths, Weaknesses, Opportunities and Threats. Then you will use them to formulate strategy. Not sure how to do it? Do not worry, I take you through the steps.

Step 1 – Evaluate the surrounding

Let’s take a moment to think about both of us as the coach for two teams of football teams.

Before the game starts, you and I have certain strategies that we want the team to follow. As the game progresses, there is a sign of difference between the two teams in terms of the game as well as the condition of the team members.

Step 2 – Identify the Strengths, Weaknesses, Opportunities and Threats

Now, it is time to evaluate the teams in the four factors of SWOT. Lets take the following examples as the result of the evaluation: –

Strengths – Your team is full of fighting spirit

Weaknesses – One of your team members is hurt

Opportunities – Your opposition team seems to loose stamina

Threats – Your opposition team is full of energy

Note: Some of these factors seem to be conflicting each other. For the purpose of this step, this conflict is ignored.

Step 3 – Pair the SWOT factors to formulate strategies

Now, you would start to formulates strategies in the four categories. Namely: –

    • SO Strategies (Strengths and Opportunities Strategy)
    • ST Strategies (Strengths and Threats Strategy)
    • WO Strategies (Weaknesses and Opportunities Strategy)
    • WT Strategies (Weaknesses and Threats Strategy)

In this case, your strength is “your team is full of fighting spirit” and paired with your opportunities is “Opposite team is losing stamina”. With this scenario, what would you do? Perhaps you formulate a strategy to “ATTACK”. There it goes, you just formulated a attacking strategy.

Then you do the same procedure for SW Strategies, WO strategies and WT strategies.

Step 4 – Evaluate the strategic options

At the end of this paring of SWOT factors, you would have end up several strategic options. Do a quick evaluation of each of these strategies to the extent of meeting the company objectives.

Step 5 – Selecting Strategic Options

At this step, you would have a long list of strategic options. Too many strategies to implement may not be practical. Therefore, you need to shorten the list to probability maximum three strategies.

After you have completed all the 5 steps to use SWOT Analysis to Formulate Strategies, you have a list of strategies for you to implement to your business.

Source by Dr LM Foong