Marketing Intelligence & Planning

Making SWOT Analysis Work

Nigel Piercy William Giles

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Nigel Piercy William Giles, (1989),"Making SWOT Analysis Work", Marketing Intelligence & Planning, Vol. 7 Iss 5/6 pp. 5 - 7
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MAKING SWOT ANALYSIS WORK

by Nigel Piercy and William Giles
Cardiff Business School and Strategic Marketing Development Unit, Marlow

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Introduction
Without doubt SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is the
commonest practical analytical tool for strategic planning, which is actually used by executives
and consultants. As most readers will recognise, SWOT analysis is a simple structured approach
to evaluating a company's strategic position w h e n planning, t o identify the company's
strengths and weaknesses and to compare these to opportunities and threats in the
environment. We have been unable to discover the original source of the technique, but one
of the best technical descriptions, w h i c h links SWOT analysis to market segmentation and
strategy is given by Abell and Hammond (1979).

The attractions of SWOT analysis are that this technique

is familiar and easily understandable by users and it
provides a good structuring device for sorting out ideas
about the future and a company's ability to exploit that
future. In fact, the technique is so well-known that we
had some reservations about writing a paper on the
topic managers do not take kindly to consultants and
writers "rediscovering the wheel"! This said, our experience suggests that there is a market for our ideas about
revitalising this tool, for the reasons outlined below.
It is our view that the use of this tool has generally
become sloppy and unfocused a classic example
perhaps of familiarity breeding contempt! It must surely
be admitted that SWOT analysis is frequently done
badly, but this does not have to be the way the technique
is used. On the basis of our experiences in using the
technique with companies, we suggest a number of
guidelines below for making the technique work
dynamically to generate new insights and strategies.
First, however, it should not be forgotten that the reason
SWOT analysis has come to be so widely known (and
we suggest misused!) is because of its inherent
attractions. These are:

the technique is simple enough in concept to

be immediately and readily accessible to
managers no computer or management
scientist is needed;
the model can be used without extensive corporate or market information systems but is flexible
enough to incorporate these where appropriate;
SWOT analysis provides us with a device to
structure the awkward mixture of quantitative
and qualitative information, of familiar and
unfamiliar facts, of known and half-known
understandings, that characterises strategic
marketing planning.

Our experiences with a wide variety of companies and

managers suggest that SWOT analysis can be made
to work, these payoffs can be realised, and real strategic
insights can be generated and used. We propose a
number of very straightforward guidelines to achieve
these goals.

Our challenge to the reader is to look at how SWOT

analysis is used (or neglected) in his/her company's
planning and to see whether our guidelines can be
made to work. In short, by changing the ground rules
for using this technique, we suggest it can be made
exceptionally full and rich in strategic insight.
The "rules" we propose for using SWOT to produce
dynamic results are:
(1)
(2)
(3)
(4)
(5)

Focused SWOTs.
Shared vision.
Customer orientation.
Environmental analysis.
Structured strategy generation.

Focused SWOTS
Experience suggests first, that the more carefully we
define the area to be evaluated with a SWOT analysis,
the more productive the analysis is likely to be. By
focusing on a particular issue, and excluding nonrelevant material, we can overcome the bland,
meaningless generalisations that executives frequently
produce if asked to take a global view of their
businesses' strengths and weaknesses.
This definition, which should be rigorously enforced,
has been made effective in analysing issues as diverse
as focusing on:

a specific product-market (with parameters

defined);
a specific customer segment in a market;
product policy in a given market or segment;
pricing policy in a particular market;
distribution systems for particular customer groups;
marketing communications for different
customers and members of a defined decisionmaking unit;
the study of named competitors or groups of
similar competitors;
relationships between departments in a company;
the standing of a marketing department in
marketing its strategies within its company.

MIP 7,5/6
1989

the SWOT analysis provides a concrete

mechanism for expressing team consensus
about important issues;

producing a SWOT analysis has the effect of

pushing a team towards agreement and flushes
out potentially harmful disagreements
indeed, in effect, one can observe managers
negotiating the view of the world the company
will adopt for its planning.

These potential gains arise primarily from participation

of diverse interests in planning but SWOT analysis
provides a mechanism for making participation
operational and reaching that potential set of benefits.

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For example, in the financial services business, a

company with which we worked was organised into two
semi-autonomous divisions one serving the retail
market and the other the commercial lending market.
Undertaking SWOT analysis in joint planning groups
proved to be quite literally the first time that managers
of the two divisions actually found out what their
counterparts could do and were doing, and uncovered
many profitable opportunities for collaboration and
cross-selling between the divisions.

Customer Orientation
The way we can use the SWOT technique in a
particularly powerful form is summarised in Figure 1.
The rule we follow is that attention should first be focused
on a critical issue to our planning, rather than being global
in perspective we can always build up the global picture
by putting together our focused analyses.
Apart from anything else, the very act of focusing starts
to highlight major gaps in knowledge and the hidden
strategic assumptions that managers make. For
instance, in a planning session with a major computer
firm, we asked the planners to undertake a SWOT for
their own position in a particular market segment. The
results were relatively negative, so we then asked them
to do the same exercise for their major competitors. The
planners completed the analysis for their best-known
competitor, and the results were encouraging. However,
for the third player in the market they came back with
blank sheets they had no knowledge or
understanding of this company. Their view of the market
was swamped by the image of one dominant
competitor. Incidentally, the anonymous third company
proved to be the fastest-growing player in that market.
Focus and concentration can have many pay-offs.

Shared Visions
Because of its apparent simplicity and ease of
communication, we have found SWOT analysis to be
an excellent vehicle in working with planning teams or
groups of executives. There is little or no barrier created
through executives having to learn complex analytical
techniques (or succumbing to the temptation to leave
it to the "experts").
MIP 7,5/6
1989
6

We have found that the payoffs from making SWOT the

central focus for group or team planning to be numerous:

the pooling of ideas and information from a

number of sources produces richer results;

The first requirement is that in evaluating our strengths

and weaknesses, we can only include those resources
or capabilities which would be recognised and valued
by the customer with whom we are concerned. This
helps us to get past the "motherhood" statements often
produced as a list of strengths: service, quality, an
established firm, and so on because we have to
define what we believe is seen by the customer and is
valued by him/her.
For example, our "great private medical scheme" for
employees is not a strength for these purposes. It is only
relevant if we can say that customers would recognise
that we treat our employees well, and this in turn has
payoffs in how they deal with customers and the
establishment of long-term relationships. Applying this
rule is often a considerable discipline on executives, and
in the event of disputes which cannot be resolved about
what is a strength and what is not we may actually
test our claims by market research with a larger pool
of people, or even with customers!
Forcing executives to confront the difference between
what they think is important and what customers think
is important is a substantial contribution of this
technique. At the end of the day however unreasonable, irrational, awkward, intolerant, ignorant or
plain foolish the "experts" think customers to be it
is the customers who buy products, not the "experts".
In fact, we are, in a very practical way, forcing users
of the technique to identify the critical success factors
in their business, customers' needs, and factors
influencing customer satisfaction.
In one company, for example, what executives told us
was their strength of "technical service excellence",
turned out to mean to customers that this was a
company that sent out PhD-level engineers to prove that
products had been abused in use, and that warranties
did not apply!

One problem which regularly emerges is that executives

trying to use the model claim that the same thing can
be listed as a strength and a weakness. This simply
means that we have not gone far enough in our
analysis. For example, perhaps the commonest type of
"motherhood" statements produced here are: "we are
an old-established firm this is a strength and a
weakness", or "we are a large supplier this is a
strength and a weakness".

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What we need to do here is to ask the question: which

aspects of these characteristics are strengths and which
are weaknesses? For instance, the statements above
might be expanded as shown in Table I.
The remaining issue to be addressed is where managers
claim that they have a strength (or weakness) which
customers do not know about and would not recognise
but which is too important to leave out of
consideration. The easiest way of handling this issue
is to include these factors in the list, but to have them
boxed-off as "hidden". When it comes to the stage of
generating strategies, then it is appropriate to consider
what would be needed to uncover hidden strengths, if
they really are particularly important to the customer
and to generating strategies for the future.

Environmental Analysis
Essentially the same discipline is required to view the
Opportunities and Threats in the environment relevant
to our point of focus the specific market, customer,
issue etc.
Here the goal is to list those things in the relevant environment which make it attractive or unattractive to us, and
our search for ideas should be as thorough and widelyinformed as possible. Indeed, this is another prime chance
to identify information needs and market research tasks.
Probably the major difficulty here is that executives tend
to jump the gun and put their strategies and tactics
down as Opportunities a classic example of selffulfilling prophesy!
The way out of this trap is the insistence that Opportunities and Threats exist only in the outside world the
things we propose to do about them are our strategies.
For example, it may be suggested that price-cutting is an
Opportunity. This is not an Opportunity in a SWOT analysis
it is a price Strategy which we may adopt. However,
we would only accept the desirability of a price-cutting
strategy if, for example, our size gave us greater costeconomies than our competitors, and there was an identified Opportunity in terms of there being a price-sensitive
segment of the market, or the need to meet a competitor's threatened entry to the market with low prices. The
rule is that Opportunities exist largely independently of our
policies the actions we plan are our Strategies.

Structured Strategy Generation

When we are able to complete all four cells of the
SWOT matrix, and we have ranked each item in each
category in terms of importance, then the matrix acts
automatically as a generator of strategies.
(a) Matching Strategies Our central focus is on
matching our Strengths to Opportunities in the outside
world. Our logic here is that Strengths which do not
match any known Opportunity are of little immediate
value, while highly ranked Opportunities for which we
have no Strength are food for further thought.

"An old established

Strength
Stable suppliers for after-sales service
Trustworthy
Experienced

firm"
Weakness
Inflexible
Old-fashioned
No innovation

"A large supplier"

Strength
Weakness
Comprehensive product range and
Bureaucratic
technical expertise
Offhand with customers
High status/stability reassures
No continuity of personal
customers
contact
Table I.
(b) Conversion Strategies More difficult is the design
of appropriate responses to highly ranked Weaknesses
and Threats. Here the goal is ideally to convert these
factors into Strengths and Opportunities. In some cases
this may be relatively straightforward a Weakness
in sales coverage may mean adding to the salesforce,
a Threat from a competitor may be bought-off by
collaboration or merger, but in other cases we may be
unable to think sensibly about conversion or neutralising
these factors. In the latter case these factors remain
the limiting problems in this business and determine
how attractive it is to us.
(c) Creative Strategies Finally, we have to recognise
that going through this analytical process often simply
generates new, creative ideas for how to develop the
business. Good ideas should never be discarded simply
because they are unusual. Whatever recording we are
doing, we should have a box especially for creative ideas
that may not fit elsewhere in the model.
In this way the model gives us a mechanism for structuring and categorising the strategies generated through the
SWOT analysis. The final discipline, however, is one of
iteration. As we identify strategies to match Strengths
to Opportunities, to uncover hidden Strengths, to convert
Weaknesses, and so on, we should always go back and
see how the new situation we are building changes the
SWOT model and the broad picture we are painting.
Our output is then ready to be entered into the planning
process for programme-building, evaluation, financial
appraisal, and ultimately for implementational or action
planning.

The Challenge
The guidelines we have outlined above are incredibly
simple to apply, but the disciplines imposed are very
severe.
We know that this approach is effective, and that it turns
the SWOT technique into a dynamic and productive tool
for strategic audits and strategy generation. Our challenge to the reader is to use the model and the guidelines
on his/her own planning and see what happens!

Reference
Abell, D.F. and Hammond, J.S., (1979), Strategic Market
Planning, Prentice-Hall, Englewood Cliffs, N.J.

MIP 7,5/6
1989
7

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