MODELS FOR IMPLEMENTATION

MODEL 81: SWOT, Heinz Weihrich (1982)

PROBLEM STATEMENT
How should an organization deal with its strengths, weaknesses, opportunities and threats?

ESSENCE
SWOT stands for strengths, weaknesses, opportunities and threats. The idea is that a company
must align internal activities with external realities to be successful. Various authors are
credited with developing this concept. Some sources credit consultant Albert Humphrey,
who developed the SOFT analysis (satisfactory, opportunity, fault, threat); others suggest
that the concept was devised by George Smith and Roland Christensen. The first mention
of SWOT was, however, in an academic seminar in Zurich in 1964, when consultants Lyndall
Urwick and John Leslie Orr proposed a SWOT analysis, replacing the F for ‘faults’ with W for
‘weaknesses’. The first article that explained SWOT (albeit presented as TOWS) as a matrix
with strategies for each quadrant was published by Heinz Weihrich in 1982. Since then, SWOT
(or TOWS) has been widely used for strategic assessments of organizations.

HOW TO USE THE MODEL

Weihrich suggests the following steps:

1. Define the business arena.

2. External identification of:

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 MODELS

i. Opportunities, analysing political, economic, social and technological

developments (often summarized as ‘PEST’), legal, ecological (‘PESTLE’), ethical
and demographic (‘STEEPLED’). Or, it can be defined as ‘DESTEP’: demographic,
economic, social, technological, ecological and political developments.
ii. Threats: The obstacles, risks and dangers that (might) arise from the
environmental factors mentioned above.

3. Envision future scenarios.

4. Audit of the internal value chain, assessing:
i. Strengths: like competitive advantages, core competencies, unique selling
propositions (USPs).
ii. Weaknesses: what should be improved or eliminated.

5. Develop strategies to deal with identified TOWS.

6. Choose the best strategy and tactics.
7. Test steps 1–6 for consistency and prepare contingency plans.

Furthermore, Weihrich proposed that companies either defensively minimize weaknesses

and threats (mini-mini) or offensively maximize strengths and opportunities (maxi-maxi),
or choose a mix (mini-maxi or maxi-mini). The idea of using strengths or strengthening
weaknesses in order to grasp opportunities or to deter threats is also known as the
‘confrontation matrix’.

RESULTS
SWOT is one of the most straightforward, appealing and powerful ways to do what it says:
analyse an organization’s strengths, weaknesses, opportunities and threats. Any organization
should be aware of these to avoid dangers and pursue success.

COMMENTS
Various alternative concepts can be helpful in identifying strengths, weaknesses,
opportunities and threats, including all the theories that are discussed in Part 3 (Strategy and
positioning). Furthermore, SWOT is a way to generate and classify vital information; it does
not give specific directions to organizations.

LITER ATURE
Hill, T., Westbrook, R. (1997) ‘SWOT Analysis: It’s Time for a Product Recall’, Long Range
Planning, 30:1, pp. 46–52.
Koontz, H., Weihrich, H. (2009) Essentials of Management, 8th Edition: An International
Perspective, New Delhi, Tata McGraw-Hill.
Weihrich, H. (1982) ‘The TOWS Matrix – A Tool for Situational Analysis’, Long Range Planning,
15:2, pp. 54–66.

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