Using a SWOT Analysis

By Minton, Gabe | Mortgage Banking, December 2010 | Go to article overview

Using a SWOT Analysis


Minton, Gabe, Mortgage Banking


I've just returned from the Mortgage Bankers Association's (MBA's) 97th Annual Convention in Atlanta, which was very well attended. A lot of mortgage bankers have enjoyed good profits this year and last, but are wary looking forward, with the daunting amount of regulation to be put in play as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

MBA is tracking some 100 different rulemakings, definitions and constructs that are all on a tight timeline (at least for regulation to be finalized). There will be implications throughout the industry.

At the convention, the panel I participated in discussed the impact of Dodd-Frank at a high level, as well as covering other issues such as capacity, hedging strategies and utilizing business intelligence to visualize the data in your organization to make timely and better-informed decisions.

One strategic tool discussed by our panel was that of a Strengths, Weaknesses, Opportunities and Threats matrix, or SWOT. Most people have heard of a SWOT and many have created and/or used them during their careers, but--at least according to a show of hands in the audience at our panel--not many have employed them recently or on a recurring basis. Credited to Albert Humphrey, then at California's Stanford Research Institute in the 1960s and 1970s, the SWOT is surprisingly simple in construction yet very valuable in operational execution strategies.

In my experience, it has been more important to observe rules during the SWOT meeting: The meeting must be held off-site, cell phones must be turned off, all aspects of the company should be represented in some form. Following a particular specification or philosophical model in the construction of the SWOT is not as important.

Figure 1 is an example of what a SWOT matrix looks like.

Figure 1 Strengths, Weaknesses, Opportunities and Threats (SWOT) Matrix

                                    Helpful to achieving   Harmful to
                                        the objective       achieving
                                                          the objective

Internal Origin (attributes of the      Strengths          Weaknesses
organization)

External Origin (attributes of the      Opportunities      Threats
environment)

SOURCE: BUSINESSTEACHER.ORG.UK

[FIGURE 1 OMITTED]

Basically, a SWOT is a standard matrix. Usually it initially takes at least a day to construct one of any value, and less time if the executive team meets regularly to update it. They vary in time frame, usually looking out one to three years, and should be revisited at least annually.

Once your matrix is completed and the executive team has signed off on it, you are ready to incorporate the SWOT into your operational execution strategy. There is nothing off-limits (at least initially) in a SWOT exercise. When identifying threats, direct competitors can be added as threats, all the way up to market forces beyond your company's control. Not only can the organization as a whole look at a SWOT, but departments can create smaller, more narrowly focused SWOTs that take into consideration what they are specifically looking at. …

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