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Both SWOT analysis and GAP analysis are used to evaluate businesses, but different aspects of businesses. However output from one can be used as input for another and vice verse. This article will give a brief introduction to both techniques, how both connect with each other and give you some guidelines to drawing these diagrams. SWOT analysis is frequently used by companies while GAP analysis is not used frequently.
What is a SWOT analysis
SWOT stands for strengths, weaknesses, opportunities and threats. It is sometimes referred as SLOT analysis with liabilities coming in place of weaknesses.
- Strengths – Advantages the company has over other competitors
- Weaknesses – Areas that needs improvement compare to competitors
- Opportunities – Trends and market gaps to take advantage of
- Threats – External factors that can threaten your business
Identifying these factors and considering all of them together makes it easier to plan your future activities. Adding all these factors within a diagram makes it easy to visualize and helps you make even better decisions. Plus you get impress your peers with beautiful diagrams .
In a business or a company GAP analysis compares the actual performance with the potential performance. Sometimes it is referred as need-gap analysis, need analysis or need assessment.
A company will determine the factors that define its current state, list down the factors needed to reach its target state and then plan on how to fill the gap between the two states. This is important because it helps to identify if a company is performing to its potential and if not performing, why it is not performing to its potential. This helps to identify flaws in resource allocation, planning, production etc.
SWOT analysis and GAP analysis
SWOT analysis and GAP analysis can be used in different context and they might give a different meaning in those contexts. Below is a breakdown of SWOT analysis vs GAP analysis in the context of a company.
- SWOT analysis evaluates a company against its peers, while GAP analysis is internal evaluation to identify performance deficiencies.
- SWOT analysis is done for long term planning while GAP analysis is often done to reach short term goals.
- SWOT analysis is often a comprehensive study evaluating many aspects and many competitors. GAP analysis can be very simple targeted towards fine tuning one process.
When coming up with SWOT and GAP diagrams collaboration and visualization plays an important role. For example in case of SWOT analysis you need input from many people so the process should be transparent to everybody.