By Issa Bass
 

Any business that evolves in a competitive environment faces threats from its competitors and its environment; what keeps it in the market is the potential opportunities that can be exploited.

The strength of a company depends on its ability to face the threats by better exploiting these opportunities. So when starting a new project, a company needs to assess its position in the market.

The SWOT (Strength- Weakness- Opportunity- Threat) Analysis is an effective tool that can be used in project planning to assess a company's strategic position and gage its ability to respond to the threats posed by its competitors or exploit the opportunities offered by the market.

The SWOT Analysis is done at two levels: the first level will consist in assessing the company's internal situation by analyzing its strength and weaknesses (how prepared is it to engage in the planned project?): The external situation is contingent upon the level of threats from the competitors and the opportunities offered by the market.

So SWOT analysis consists in analyzing information about a business and its environment in order to determine how to overcome potential obstacles to a project.

Company's internal situation: Strength and Weakness

For a company that is customer satisfaction oriented, the first step in the SWOT analysis will consist in assessing the company's ability to produce goods or services that meet or exceed the customers expectations. Does the company have the financial, human and material resources needed to satisfy its customers?

If it does, can it generate a cost effective process that yields the goods and services?

To better visualize the company's Strength and Weaknesses, a chart that lists both conditions might be a good starting point.

The purpose of the chart is to oppose the strengths to the weaknesses. If the strengths overcome the weaknesses, it would be easy for the project managers to address the next level of the SWOT Analysis, which is the company's external position. But if the company's weaknesses are overwhelming, the project managers will need to develop an effective strategy to strengthen the company's internal position before addressing the external factors.

The following chart is a synthesis of potential strengths and weakness that might be addressed when analyzing a company's internal situation as it relates to a particular project.

When the internal conditions are deemed to be favorable, the next step in the SWOT Analysis will be the assessment of the threats and opportunities that come from the environment in which the company evolves.

External Factors: Opportunities and Threats

A mistake that is often made in project planning is to ignore the external factors. The assessment of the external factors starts with the PEST (Political, Economical, Social and Technological) Analysis.

About the author
Issa Bass is the managing editor of SixSigmaFirst. He can be reached at issa@sixsigmafirst.com

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