how swot analysis helps in strategic planning

Last week we looked at the third stage of keeping in touch with your customers, namely responding to information. 

This week we look at an example of a manager trying to reduce the number of complaints about the financial reports their department produces monthly for managers throughout their organisation.

The manager might do a SWOT analysis for the department. In this SWOT analysis we can see that the strengths and weaknesses relate to the department — those areas which are internal to the department and affect the way the tasks can be carried out. 

The opportunities and threats relate to the wider organisation environment — those aspects which are external to the department. Again, the factors which are included here are those which are considered to have the greatest impact on the department's ability to achieve the objective of reducing the number of complaints. 

Whenever a SWOT analysis is drawn up from an audit, it is important to make sure that the definition of what is internal and what is external is clear. For some people, internal will mean what happens within a department; for others it may be what happens within a unit or even within a whole organisation. 

External factors will also vary from context to context. Sometimes they will include the environment outside an organisation, sometimes the environment outside a department but within its organisation. 

There are two further things to note about a SWOT analysis before we move on to look at the next stages of the planning process. 

• There are only a few points under each heading, but these are considered to be the most important, the ones that will have the most impact on the strategies and programme of activities that are developed. 
• Opportunities and threats relate to events or predicted events outside the control of the department or organisation and thus have to be taken into account, but they cannot necessarily be changed or influenced by the department or organisation. 

Many organisations carry out a SWOT analysis but then do not use it in the development of strategies. In fact, an analysis can be crucial in the development of plans that are appropriate to the environment and feasible, given the current situation within a department. 

Constant reference to the SWOT elements will lead to plans that can be implemented. It will also highlight areas where resources are available, and areas where extra resources are likely to be needed. 

Clarifying assumptions
Organisations need to make and state certain assumptions about the future. These assumptions will be based on the information about their customers they have acquired, disseminated and responded to (Stages 1-3 discussed earlier). 

The assumptions need to be realistic. For example, it would be no use if the manager of the finance department in the example above assumed that the organisational structure would stay the same, as the new Managing Director has informed him that there will be changes. 

Assuming no change in this case is likely to invalidate any plans that the manager makes. Assumptions also need to be based clearly and explicitly on information available, so that others can understand the reasoning behind the development of any plans. Assumptions may also need to take into account the availability of resources in the future. 

Next week we’ll look at reviewing objectives and developing strategies...​
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