Can A SWOT Analysis Be Expanded?
August 25, 2015
The traditional SWOT analysis stands for strengths, weaknesses, opportunities, and threats. This type of analysis highlights factors that a business should consider when planning for the future. A critical self-analysis allows a business to understand important factors that can make a huge difference in its long-term success.
It is certainly important to understand what made a business successful in the past, but it is equally important to understand what failures have taken place, what hurt profitability, and how those contributing factors can be improved. One sign of businesses astuteness is being able to understand a company's strengths and opportunities in addition to its weaknesses and threats. This is what a SWOT analysis accomplishes.
Room for Another "T"
Although there is no actual documented evidence of when the SWOT analysis first came into existence, it does date back to the 1950s and 60s. It has been used consistently by businesses and organizations to strengthen operations, products, and services. Anyone using a SWOT analysis over the years knows what the acronym stands for, but is there room for another "T" in the traditional SWOT analysis? If so, what could the last "T" stand for?
Within the last decade, many users of the traditional SWOT analysis have added an extra "T" for "trends." Current trends might involve:
- An industry
- A marketplace
- A city
- Customer purchasing patterns
- Types of communication
Simply speaking, trending is keeping current about what is going on within the business as well as outside of the business. It is seeing the bigger picture rather than focusing only on internal resources or deficiencies in a business. Why, then, is the last "T" not always used?
Understanding trends is also an integral part of understanding all of the strengths, weaknesses, opportunities, and threats of any business. Understanding and taking advantage of trends can be a business strength, however, not keeping up with the "latest' can be a weakness that should be addressed to counteract any competitive liabilities. Likewise, understanding trends can create additional market opportunities leading to future growth, or not keeping up with trends can allow the market to bypass a business, thus, becoming an external threat.
So, while some want to add an extra box in the SWOT template for the last "T," others are content to say that trends...understanding or not understanding them...keeping up or not keeping up with them...knowing or not knowing customers habits and desires...are all inclusive as part of a normal SWOT analysis.
To Use or Not To Use
How do you know if and when the last "T or trend" should be used? The choice is yours. All businesses and industries have trends; some will be more obvious and relevant than others. If you feel as though the trends in your business and industry are important enough to stand alone, then add the last "T" to the analysis. If on the other hand, you feel as though the "trends" should be interwoven into the traditional SWOT analysis, then there is no need to make the last "T" a special section.
What is important, however, is to make sure that all trends that contribute to the overall strengths, weaknesses, opportunities, and threats of a business are included in a SWOT analysis. A company cannot make future plans if it does not understand both internal and external forces that affect the business, favorably and unfavorably. It is through this process of completing a SWOT analysis that a company can clearly see where it is today relative to where it might be in the future. The changes resulting from a SWOT analysis take conclusions and turn those conclusions into actions.