Albert Humphrey was specialised in organizational management and cultural change. At the Stanford Research Institute he produced a method which created SOFT analysis that was developed into SWOT analysis...
SWOT analysis aims to identify the key internal and external factors seen as important in achieving the company's objective or event. It groups key pieces of information into two main categories:
the strengths and weaknesses internal to the organization. The examined internal factors are classified as strengths or weaknesses depending upon their effect on the organization’s objectives. People performing the SWOT analysis have to keep in mind that strengths with respect to one objective may be weaknesses for another.
the opportunities and threats presented by the environment external to the organization. These external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or in competitive position.
People or groups of people using SWOT analysis have to keep in mind that this categorization technique has its own weaknesses. It may indeed tend to persuade its users to compile lists rather than to critically think about actual important factors in achieving objectives. Used alone, it also can mislead a company in thinking that weak opportunities may appear to balance strong threats.
SWOT analysis may be used in all decision-making situations when a desired objective has been defined. It may also be used in crisis planning or recommendation during a viability study.
Here is a great video on how to perform a SWOT in a proper manner.
Examine the internal capabilities of your organization. This can be done by analyzing the primary data (customers feedbacks, employee information, resources, processes) on your organization's that can be classified as strengths or weaknesses
Analyse the secondary data about the environmental, the industry and the competition, and identify the key points that pose opportunities for your organization, and those that pose threats or obstacles to performance.
Develop a strategy
You can use this information to help you develop a strategy that uses the strengths and opportunities to reduce the weaknesses and threats, and to achieve the objectives of your organization.
WHEN DO YOU USE SWOT?
SWOT is usually used during the proposal stage of strategic planning. It helps to weight out any sort of company action, which makes it perfect for:
Exploring new initiatives
Making decisions about strategies and the best path of new policies/initiatives
Identifying areas for change
Refining and redirecting efforts of the company/association
The SWOT analysis is an excellent tool in organizing information and presenting solutions, identifying roadblocks and emphasizing opportunities.
ADDITIONAL INFORMATION ON SWOT ANALYSIS
David, Fred R. (1993). Strategic Management, 4th Ed. New York: Macmillan Publishing Company.