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SWOT analysis: Do you know your business’s strengths and weaknesses?
Strategic planning is essential for realizing your company's potential. Essential to that plan is an awareness of your company’s strengths and weaknesses, as well as understanding opportunities and threats facing your business.
A SWOT analysis takes a global view of your company but also evaluates smaller-scale elements of the business. It points out where you are strong, or not so strong, and can help you explore the opportunities and threats existing in your market. It’s this type of knowledge that makes your strategic planning that much more robust.
This is not an intellectual exercise. A SWOT analysis is the foundation of your strategic planning.
Director, Small Business, Advisory Services at BDC
What does SWOT stand for?
SWOT is an acronym for strengths, weaknesses, opportunities and threats .
Since your strengths and weaknesses are internal to your organization, and opportunities and threats external factors, SWOT analysis is sometimes called internal-external analysis.
What is a SWOT analysis?
SWOT analysis is a framework for identifying and analyzing your organization’s strengths and weaknesses, as well as the opportunities and threats you are facing.
“The strengths and weaknesses should not be seen as simple attributes of your company, but more specifically as something that stacks up against your competitors or that affects your clients’ experiences,” explains Michelle Feder, Director, Small Business, BDC Advisory Services.
As for opportunities and threats, these typically refer to changes in your market, or in the wider world, that may take on a positive or negative risk for your business.
Feder says you need to capitalize on your strengths while preventing your weaknesses from becoming a liability.
Put more effort into leveraging your strengths as they will be the key to your outperformance.
Working on your organization’s weaknesses can only get you so far. While it is important to neutralize your weaknesses so that they don’t undermine your success, Feder suggests instead to keep building on your obvious strengths, the ones that will differentiate you from your competitors.
The four elements of a SWOT analysis
Strengths are the things that your company does particularly well, or resources and assets that it owns that distinguish it from your competitors. You need to know your company’s strengths; they’re what make it thrive.
Examples of strengths:
- solid financing
- a positive reputation
- valuable intellectual property
- an innovative mindset
- low production costs
- product variety
- a healthy company culture
- a strong online presence and following
Weaknesses are internal attributes and resources that your company lacks. You need to know your weaknesses because they make your business vulnerable. To identify the underlying cause of your company’s weaknesses (or its strengths), Feder suggests
using root cause analysis .
Examples of weaknesses:
- high levels of debt
- low customer satisfaction
- long delivery times
- outdated equipment and/or machinery
- gaps in expertise
- poor employee engagement and retention
- products slow to get to market
- rigid structures and a lack of agility
Opportunities are a set of external circumstances that, with the right decisions, can grow your company or put you in a favourable strategic position.
Examples of opportunities—and some possibilities for your business:
- new trade agreement—export possibilities
- new environmental, social and corporate governance (ESG) reporting requirements—can showcase your track record
- buy-local trend—favours your locally made products
- work-from-home trend—can promote your communication app
- expanding industry
- new government support programs
Threats are external forces that constitute a risk to your business. Your company should be on the lookout for external obstacles; it will have to overcome them if it is to flourish. To analyze the threats (and opportunities) facing your business, Feder suggests one of the tools be a PESTLE analysis, which takes in the political, economic, sociological, technological, legal and environmental factors that influence an organization.
Examples of threats:
- new trade agreement—which can bring increased competition
- new ESG reporting requirements—with possible heavier paperwork
- supply-chain problems
- shortage of recruits
- aging customer base
- changing product standards
An example of a SWOT analysis
Abc pharmaceuticals co..
In this example, ABC Pharmaceuticals is strong in developing pharmaceuticals but weak at manufacturing them. Moreover, new reporting standards will make manufacturing more complex, while opportunities in the supply chains are opening up avenues for low-cost manufacturing. Given that its source of competitive advantage is its R&D capability, it may be better off outsourcing its manufacturing.
“ABC Pharmaceuticals’ competitive advantage is its ability to develop new formulations, and this is what it should focus on, while its competitor may be in the opposite situation and should probably focus on manufacturing,” says Feder.
When to conduct a SWOT analysis?
A SWOT analysis should be performed on a regular basis.
It’s recommended that a company perform a comprehensive analysis, using extensive data and looking at key industry players, every three to five years. The company can then spend a few hours doing a review of its initial assessment every year or every other year.
“Has anything changed in a fundamental way in the company or in the business environment?” asks Feder. Of course, the frequency of reviews and in-depth analyses will vary depending on the stability of your company and industry. “Hydro-Québec may not need to do a SWOT analysis more often than every five years,” says Feder. “On the other hand, TikTok will undoubtedly need to do it more often.”
Beyond those systematic analyses, a company can and should conduct a SWOT analysis on a smaller scale whenever it changes direction, and whenever it is facing a challenge on a more tactical level. A SWOT analysis can be very useful, for instance, if a specific business unit is underperforming or if the company wants to gain a deeper understanding of its product mix.
How often should you perform a SWOT analysis?
- In-depth analysis every 3-5 years
- Review every 1-2 years
- Small-scale analysis whenever smaller-scale problems come up, or at the department or team level
How to perform a SWOT analysis
A SWOT analysis is usually conducted in a workshop session, with leaders from every department present. Key employees and managers also typically take part in the sessions.
“You need to have a deliberate conversation about the four components of the SWOT analysis. You try to identify your strengths and weaknesses, and identify the opportunities and threats facing your company,” explains Feder.
To help with the process, it is important for everyone involved, when possible, to gather and present relevant data that point to every strength, weakness, opportunity and threat.
It can be useful to gather the following information before completing a SWOT analysis:
Outside your company:
- What are the market trends in your industry?
- What is your market share?
- Who are your main competitors?
- How can you stand out in the market?
- How do clients perceive you?
- What pitfalls and dangers await you?
Inside your company:
- Sales and marketing performance
- Financial performance and trends
- Efficiency of your systems and processes
- Key internal personnel, competencies and governance structure
- Your company’s culture and strategy
- You mission, vision and values
Consider getting an outside expert
While it’s possible for most companies to perform their own SWOT analysis, it may be a good idea to involve a neutral third party, suggests Feder.
“Leaders will sometimes sit and discuss together, and say ‘We’re strong at this and this and this,’ and before your know it, they have come up with a lengthy list of strengths while the weakness list remains pretty thin.”
Feder says that business owners are often surprised to learn that their strengths don’t necessarily lie where they thought, but also, that they have weaknesses they did not suspect they had.
Ask your clients, ask your business partners, ask your friends, ask your suppliers: what are our strengths and weaknesses?
The effort should culminate in a report summarizing the results of the analysis.
“It doesn’t need to be a long, complicated report involving the hiring of a new employee,” reassures Feder. “You can do a four-hour meeting and summarize your conclusions in a few pages, or maybe even on a white board. What’s important is for everyone to keep this framework in mind.”
SWOT – Questions to consider
This article is part of our “ Business Planning Guide “ —a curated list of our articles that will help you with the planning process!
Conducting a SWOT analysis of your business is a lot more fun than it sounds. It won’t take much time, and doing it forces you to think about your business in a whole new way.
The point of a SWOT analysis is to help you develop a strong business strategy by making sure you’ve considered all of your business’s strengths and weaknesses, as well as the opportunities and threats it faces in the marketplace.
What is a SWOT analysis?
S.W.O.T. is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is an organized list of your business’s greatest strengths, weaknesses, opportunities, and threats.
Strengths and weaknesses are internal to the company (think: reputation, patents, location). You can change them over time but not without some work. Opportunities and threats are external (think: suppliers, competitors, prices)—they are out there in the market, happening whether you like it or not. You can’t change them.
Existing businesses can use a SWOT analysis, at any time, to assess a changing environment and respond proactively. In fact, I recommend conducting a strategy review meeting at least once a year that begins with a SWOT analysis.
New businesses should use a SWOT analysis as a part of their planning process. There is no “one size fits all” plan for your business, and thinking about your new business in terms of its unique “SWOTs” will put you on the right track right away, and save you from a lot of headaches later on.
Looking to get started right away? Download our free SWOT Analysis template.
In this article, I will cover the following:
How to conduct a swot analysis, questions to ask during a swot analysis.
- Example of a SWOT analysis
- TOWS analysis: Developing strategies for your SWOT analysis
To get the most complete, objective results, a SWOT analysis is best conducted by a group of people with different perspectives and stakes in your company. Management, sales, customer service, and even customers can all contribute valid insight. Moreover, the SWOT analysis process is an opportunity to bring your team together and encourage their participation in and adherence to your company’s resulting strategy.
A SWOT analysis is typically conducted using a four-square SWOT analysis template, but you could also just make lists for each category. Use the method that makes it easiest for you to organize and understand the results.
I recommend holding a brainstorming session to identify the factors in each of the four categories. Alternatively, you could ask team members to individually complete our free SWOT analysis template, and then meet to discuss and compile the results. As you work through each category, don’t be too concerned about elaborating at first; bullet points may be the best way to begin. Just capture the factors you believe are relevant in each of the four areas.
Once you are finished brainstorming, create a final, prioritized version of your SWOT analysis, listing the factors in each category in order of highest priority at the top to lowest priority at the bottom.
I’ve compiled some questions below to help you develop each section of your SWOT analysis. There are certainly other questions you could ask; these are just meant to get you started.
Strengths (internal, positive factors)
Strengths describe the positive attributes, tangible and intangible, internal to your organization. They are within your control.
- What do you do well?
- Positive attributes of people , such as knowledge, background, education, credentials, network, reputation, or skills.
- Tangible assets of the company , such as capital, credit, existing customers or distribution channels, patents, or technology.
- What advantages do you have over your competition?
- Do you have strong research and development capabilities? Manufacturing facilities?
- What other positive aspects, internal to your business, add value or offer you a competitive advantage?
Weaknesses (internal, negative factors)
Weaknesses are aspects of your business that detract from the value you offer or place you at a competitive disadvantage. You need to enhance these areas in order to compete with your best competitor.
- What factors that are within your control detract from your ability to obtain or maintain a competitive edge?
- What areas need improvement to accomplish your objectives or compete with your strongest competitor?
- What does your business lack (for example, expertise or access to skills or technology)?
- Does your business have limited resources?
- Is your business in a poor location?
Opportunities (external, positive factors)
Opportunities are external attractive factors that represent reasons your business is likely to prosper.
- What opportunities exist in your market or the environment that you can benefit from?
- Is the perception of your business positive?
- Has there been recent market growth or have there been other changes in the market the create an opportunity?
- Is the opportunity ongoing, or is there just a window for it? In other words, how critical is your timing?
Threats (external, negative factors)
Threats include external factors beyond your control that could place your strategy, or the business itself, at risk. You have no control over these, but you may benefit by having contingency plans to address them if they should occur.
- Who are your existing or potential competitors?
- What factors beyond your control could place your business at risk?
- Are there challenges created by an unfavorable trend or development that may lead to deteriorating revenues or profits?
- What situations might threaten your marketing efforts?
- Has there been a significant change in supplier prices or the availability of raw materials?
- What about shifts in consumer behavior, the economy, or government regulations that could reduce your sales?
- Has a new product or technology been introduced that makes your products, equipment, or services obsolete?
Examples of a SWOT analysis
For illustration, here’s a brief SWOT example from a hypothetical, medium-sized computer store in the United States:
See our SWOT analysis examples article for in-depth examples of SWOT analyses for several different industries and business types or download our free SWOT analysis template .
TOWS analysis: Developing strategies from your SWOT analysis
Once you have identified and prioritized your SWOT results, you can use them to develop short-term and long-term strategies for your business. After all, the true value of this exercise is in using the results to maximize the positive influences on your business and minimize the negative ones.
But how do you turn your SWOT results into strategies? One way to do this is to consider how your company’s strengths, weaknesses, opportunities, and threats overlap with each other. This is sometimes called a TOWS analysis.
For example, look at the strengths you identified, and then come up with ways to use those strengths to maximize the opportunities (these are strength-opportunity strategies). Then, look at how those same strengths can be used to minimize the threats you identified (these are strength-threats strategies).
Continuing this process, use the opportunities you identified to develop strategies that will minimize the weaknesses (weakness-opportunity strategies) or avoid the threats (weakness-threats strategies).
The following table might help you organize the strategies in each area:
Once you’ve developed strategies and included them in your strategic plan, be sure to schedule regular review meetings. Use these meetings to talk about why the results of your strategies are different from what you’d planned (because they always will be) and decide what your team will do going forward.
Looking for more?
See our SWOT analysis examples article for in-depth examples of SWOT analyses for several different industries, or download our free SWOT analysis template .
Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry .
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What Is A SWOT Analysis? A Thorough Explanation With Examples
Historically, corporate planning has always been difficult. Many organizations have failed at trying to get everyone on the same page and agree to the details of a plan—more often than not, their efforts proved to be both ineffective and time consuming. Something had to be done.
Albert Humphrey of the Stanford Research Institute determined in the 1960s to identify why corporate planning consistently failed. Thus the origination of the SWOT analysis. Today, the SWOT analysis is one of the most important concepts in the business world and is widely used by all types of organizations to help build a strategic plan.
So, what is a SWOT analysis, how do you create one, and what do you do with it? In this article, we’ll explain it all (and share some SWOT analysis examples to boot) from start to finish.
What is a SWOT analysis?
A SWOT analysis is a high-level strategic planning model that helps organizations identify where they’re doing well and where they can improve, both from an internal and an external perspective. SWOT is an acronym for “Strengths, Weaknesses, Opportunities, and Threats.”
SWOT works because it helps you evaluate your business by considering multiple factors:
- Strengths and weaknesses are internal factors (things you can control), like team members, software, and geographic location.
- Opportunities and threats represent external factors (things you can’t control), such as competitors, regulations, and economic trends.
Organizations use SWOT to plot out a future course that plays on their strengths and minimizes risks. Taking the time to look at your organization from different perspectives and honestly assess your future prospects is a worthwhile activity; the insights you glean as a result you should then use constructively as part of the strategic planning process.
How To Do A SWOT Analysis
To help you get started, we’ve created this step-by-step SWOT analysis template. The examples below are specific to the airline industry (since that’s the example we use in our grid), but the SWOT analysis exercise is applicable to all businesses.
You’ll notice we divided our hypothetical examples for strengths, weaknesses, opportunities, and threats based on the four Balanced Scorecard perspectives. You don’t have to use the Balanced Scorecard to be successful with your SWOT analysis, but this method does provide a strong framework for your discussion.
Not using the Balanced Scorecard? Look to the guiding principles of whatever strategic management framework you are using for ways to think about your business. For example, the VRIO framework emphasizes value, rarity, imitability, and organization; you can conduct a SWOT analysis through the lens of these criteria instead.
TIP: Before you start, get organized.
Undertaking a SWOT analysis requires planning and organization; it can also be a lengthy process. For those reasons, we recommend treating it like a project. If you already have project management (PM) software, by all means use it.
If you don’t have software (or if you’re considering making a change), we encourage you to take a look at ClearPoint. It’s ideal for keeping individual projects on track, but it also does much more than that— it shows you how important projects impact your organization’s overall strategy. Are your projects moving the needle when it comes to your larger goals? That’s an important aspect of project management you can’t get with any other PM tool.
Viewing your SWOT analysis as a project within ClearPoint has multiple benefits:
- You can maintain forward momentum by creating deadlines for each component, assigning responsible “owners” to tasks, and tracking milestones and overall progress.
- You can simplify the information-gathering portion of SWOT by sending automated messages to relevant team members on when and how to input information.
- You can facilitate collaboration among all parts of the organization by providing everyone access to a single tool that handles data collection.
- You can encourage participation and increase engagement by making the SWOT analysis visible to as many or as few people as you like.
- You can see how your SWOT connects to various parts of your strategy by linking elements to high-level objectives, other projects, measures, etc.—anything that adds context to the analysis.
Another benefit of treating your SWOT analysis as a project in ClearPoint: You won’t have to reinvent the wheel every time you repeat the process. You can just duplicate the framework, make any necessary adjustments, and then repeat the process as before, even comparing your newest SWOT to the previous analysis if necessary.
Below is a screenshot of what it might look like to set up a SWOT analysis as a project within ClearPoint, with some sample milestones shown.
Now, let’s dig into the steps of the analysis process.
1. Create a SWOT matrix.
This is the grid-like matrix that will house the information you gather. As you can see in the SWOT analysis template below, each quadrant features one of the four elements you’ll be focusing on—strengths, weaknesses, opportunities, and threats. Using a matrix helps present your findings in a clear, easy-to-understand way.
2. Gather the right participants.
Pull people from all departments to participate in the analysis. Your entire leadership team should be involved because they can provide a broad view of the organization and offer insight into the competitive landscape. But having lots of different perspectives is beneficial, and that means including leaders from every department—and anyone else you think might have valuable input. The more diverse the group, the better insights you’ll generate. Not all ideas will make it to the final list, but it’s important to consider them all.
3. List your strengths.
Ask the group: What are we good at? How are we better than our competitors? These are broad questions, but in the beginning stages of your discussion, you should accept all answers.
Examine these questions in relation to the Balanced Scorecard perspectives. For the fictional company Upward Airlines, the discussion might look like this:
- Financial strengths: What is our most reliable source of financial growth? Is it our service destinations? A large fleet size? Our customer loyalty program?
- Customer strengths: Where is our customer growth coming from? Is it due to excellent service ratings or low prices? Why are customers choosing us over our competitors?
- Internal strengths: What do we do very well as an organization? Are our operations easily scalable? Do we have an exceptionally high employee retention rate? How complex is our maintenance program?
- Learning & growth strengths: Where do we excel as far as our employees are concerned? Is it our compensation model? Could it be our workforce development program? Are people coming or leaving because of our culture?
Having considered these questions for your own organization, you might come up with multiple responses in some categories. Below is a sample of the strengths portion of the SWOT analysis for Upward Airlines:
TIP: As mentioned above, you can use ClearPoint to simplify this and the remaining information-gathering steps. Rather than asking everyone to brainstorm simultaneously in a conference room, give people time to review relevant data (also housed in ClearPoint) that would help identify strengths and weaknesses, as well as potential opportunities. Participants can then input their thoughts into ClearPoint, link to key supporting metrics, and even add contextual information surrounding their thought process.
Doing your analysis within a single tool not only makes it easier to collect the information but also gives you the visibility to see how the various components that make up your SWOT might be linked. Further, ClearPoint has a discussion feature that allows users to @ mention other users, and thus facilitates conversations about your strengths and weaknesses.
4. List your weaknesses.
Ask the group: What are we not good at? Where can we grow? What are we lacking? The Upward Airlines discussion might look like this:
- Financial weaknesses: What is our biggest financial weakness? Our destinations are all in the U.S., which may be limiting our growth. Or, we know that a large number of new competitors entering the market are decreasing our market share. Do we have challenges with debt or credit?
- Customer weaknesses: Where do our customers think we need to improve? This could be related to frequently canceled flights, lost baggage, complexity of the reservation process, or cleanliness, for instance.
- Internal weaknesses: What do we do poorly? Are we slow at handling customer complaints? Are our maintenance costs above industry average? What about plane utilization?
- Learning & growth weaknesses: What are our biggest challenges with employees? Is our staff security training proving ineffective, or is there a negative perception of the organizational culture? Do our employee surveys reveal low engagement?
5. Identify your opportunities.
Ask the group: Where do we see big (and small) possibilities for our organization? What do we see happening in the future?
The Upward Airlines group might discuss the following:
- Financial opportunities: What is our biggest opportunity to improve our finances? This might mean taking advantage of federal loans in a time of crisis (like COVID-19) or adopting specific technology to lower costs. Maybe there is an opportunity to purchase a weaker competitor.
- Customer opportunities: Where could we dramatically improve with our customers? Could we enhance our online interface? Can we create and promote new standards of cleanliness? What about finding new ways to engage with customers when travel opportunities are low?
- Internal opportunities: What processes will drive us well into the future if we could improve upon them? Adopting certain climate initiatives to reduce our carbon footprint, for instance, will make us more eco-friendly (and, by extension, more appealing to customers). Maybe now is the time to upgrade a reservation or pricing system.
- Learning & growth opportunities: What opportunities do we have to leverage staff? For example, do we have cross-training opportunities? Could we make a few tweaks to improve our culture and thus our retention?
Upward Airlines’ opportunities for the foreseeable future might be:
6. Identify your potential threats.
Ask the group: What do we see as a threat? What obstacles do we anticipate? What is changing that could hurt us? As a travel-related company in a tough economy, Upward Airlines might uncover a number of potential threats:
- Financial threats: What threats could seriously impact our financial health? This could be low-cost competitors, ongoing global health issues that prevent travel, or rising oil costs.
- Customer threats: What is our biggest concern about our customers? Has a competitor created a more attractive loyalty program? Is our number of business clients trending downward?
- Internal threats: What current areas of our business might harm us later? Is a contract dispute imminent that could disrupt business? Is a potential merger or acquisition on the horizon?
- Learning & growth threats: What threatens the people within your organization? This could be anything from instability in our customer support department to staff member departures to a department-specific pushback against new technology.
The external threats deemed most imminent for Upward Airlines might be:
7. Examine your matrix for connections.
In looking at your SWOT matrix, do some of your strengths naturally support the identified opportunities? If you eliminate weaknesses, would that present additional opportunities?
At this point, we recommend running a “brown paper exercise”—print your SWOT matrix in large size, and ask employees to add post-it notes in any or all of the matrix’s four boxes if they feel the leadership team missed something. (You can also ask employees to add their names next to their suggestions so leadership can follow up with them.) Not only is this exercise great for inter-office discussion, but it also gives leaders the chance to consider opinions from staff in the field.
Done correctly, the SWOT analysis is another valuable tool in your toolbox for improving business performance and minimizing threats and weaknesses going forward. It can also prompt organizations to be more innovative with their strategy—new ideas may emerge that leadership would not normally have considered without such a thorough examination of the business from all angles.
Complement SWOT With PEST A SWOT analysis is a way of understanding and evaluating all facets of your company so you’re in a better position to make decisions about the future. But there are also external factors that will impact your company’s future; these things are beyond your control but still require consideration as you map out your strategy. That’s why many organizations choose to complement a SWOT analysis with a PEST analysis—together, they provide a complete picture of your business environment for effective strategic planning. PEST stands for political, economic, social, and technological—the four key areas outside your business that are likely to impact it. These factors tend to play out over long time frames. An economic slowdown, for instance, could take years to resolve, but you can take action to address staff training issues fairly quickly. Thus, a PEST analysis is more valuable than SWOT when it comes to formulating longer-term plans and business strategies. Our recommendation is to do a SWOT analysis first, followed by a PEST analysis, to get a complete picture of the business landscape.
What should you do with your SWOT analysis?
Congratulations! Hopefully, you understand your business a little better after completing your SWOT analysis; now it’s time to put those insights to good use. Your ideas on how to use your strengths and overcome your weaknesses should inform your strategy.
Developing a strategy is in and of itself a big step. It involves defining objectives for your company to move toward, creating priority initiatives (projects) to help make them a reality, and identifying measures to make sure the strategy is unfolding the way it should.
Our Upward Airlines SWOT analysis example, for instance, lists four weaknesses:
- High maintenance costs
- Fewer direct travel routes than our competitors
- No uniform project management system in place
- Below-average employee satisfaction
Some of these weaknesses are easier to address than others, such as improving employee satisfaction and your project management practices. Others, like the lack of direct travel routes, may be difficult to address in a time when airlines are still recovering from the COVID-19 fallout and profits are low. Similarly, you want to continue supporting your current strengths. While you shouldn’t let your excellent training program lapse, it needn’t be a focus if you expect the number of new hires over the next year to be low. However, improving your virtual communication practices will most likely prove to be beneficial moving forward.
Therefore, the Upward Airlines SWOT analysis above might drive strategy in the following ways:
- An objective might be to “improve employee satisfaction”; to accomplish that goal, the company might initiate new projects that include reevaluating the benefits plan or starting a surveying program for employee feedback.
- An objective might be to “make flying as safe as possible for customers”; to reach that goal, they might implement a new cleaning regimen and increase communication with customers about new procedures.
- An objective might be to increase revenue by 10%; to help achieve that goal they might create a problem-solving team whose purpose is to reevaluate the current capacity strategy and recommend changes to offset the rising cost of fuel.
Make sure there is a clear and strong link between your SWOT analysis and your strategy map. For example, if you’re a for-profit organization, your financial perspective will be the top priority—build your analysis into your map in a manner that drives those finances in the right direction. Maybe your SWOT analysis foretold an opportunity to hit a new line of business or forecast that a line of business would dry up. Your strategy needs to reflect that information.
If you’re using ClearPoint for strategy execution, you can make sure the projects you initiate as a result of your SWOT will actually have an impact by a) creating links within the software to show clear connections between projects and objectives, and b) tracking progress on your goals and initiatives over time. That way, you’ll be able to see if, for example, your revised capacity plan positively impacted revenue in any substantial way—or if it had a negative effect on the bottom line. If you’re continuously monitoring progress, you’ll be able to adjust your course of action in a timely manner if needed. Those insights will also be useful for your next SWOT analysis.
Real-world SWOT Analysis Examples
Still uncertain as to how your team can use the information produced by a SWOT analysis? We reached out to the business community to ask about their experiences with SWOT. Their answers, listed below, show that SWOT can be applied to any number of business activities, from developing a long-term overall strategy to launching campaigns, new products, and more.
Seize New Opportunities
"We focus on the opportunity aspect of SWOT. We are always looking to find new ways of growing our company, and we use this analysis to show us areas where our business might thrive. A SWOT analysis showed us how important it would be for us to partner with over 15 different insurance companies, so that we can freely match each client with whichever one is best for them. Most companies like ours only work with one or two companies, but we have seized the opportunity, and we are growing because of it." —Anthony Martin of Choice Mutual
"We took action to understand that it's not enough to simply have a great product; we need to make sure our customers know how it can help them. By servicing the market, we found ways to add value for our customers and build relationships with them by providing helpful resources on our website and offering free trials. This has helped us to focus on creating and providing value to our customers, rather than just trying to get them to buy our product. As a result, we've created a much more sustainable and successful business." —Diana Stepanova of Monitask
"One of the most important things that came out of our SWOT analysis was identifying untapped opportunities. After changing the game with our magnetic lashes, we saw a gap in the acrylic nail market. Through a SWOT analysis, we have realized our strength in reimagining highly used beauty products and making them better for the consumer. That has opened up even more opportunities to revolutionize the billion-dollar beauty industry." —Ann McFerran of Glamnetic
"Our SWOT analysis revealed that we could create additional revenue streams by white-labeling our writing service and marketing it to other agencies. We offered interested parties discounts on our already-competitive rates, which made working with us very attractive and profitable for both sides. This allowed us to effectively double the size of our market. Most of the work we do now is for our agency partners, which means we can spend less time chasing sales and instead focus on ensuring quality in our service." —Milo Cruz of Freelance Writing Jobs
“The best insight I gained from performing a SWOT analysis of my organization is that we are very good at what we do and have a lot of growth potential. One action that we took because of this insight was to expand our product line. We now offer various [photo] backdrops, including some specifically designed for events. We have also started marketing to new customers, which has helped us grow our business. At first, we didn't think that expanding our product line would help us much, but it has been one of the best things we've done for our business. It's enabled us to attract new customers and grow our sales. Marketing to new customers has also been helpful in terms of growing our business. These actions have made us a more prosperous and well-rounded company. " —Kate Zhang of Kate Backdrop
Evaluate Your Competitive Advantage
"The SWOT analysis helped us identify potential opportunities that were unique to us in terms of reach. This allowed us to focus on key areas and strategies that would allow us to be the go-to choice of a specific market. "Knowing where your company stands in relation to its competitors is crucial for developing strategies that will give you a competitive advantage. It also gives you insight into your unique opportunities that your competitors may not have. This is the kind of information that can help you make decisions that will take your company to the next level." —Linda Shaffer of Checkr
"There are many roofing contractors competing for business, and it can be difficult for customers to understand what sets us apart from the rest. In order to address this issue, we have revamped our marketing materials to better communicate our unique selling points. As a result, potential customers can now see that our company is the best choice for quality roofing services, and we have experienced a significant increase in sales." —Marty Ford of BulletpRoof Roof Systems Ltd.
“Owners of startups and small businesses need, but cannot find, a system to start, market, operate, or finance a business. Through our SWOT analysis, we noticed that our competitors left important questions and needs unanswered. For example, a competitor might help you set up a corporation, but have nothing for you after that. You started the business, but now need marketing, operational, or finance help. We strive to be the entrepreneur's best friend by giving you the needed tools." —James Chittenden of One Click Advisor
Learn Business Strengths
"SWOT analysis was incredibly helpful when it came to understanding the strengths of my business. I was then able to play to those strengths and build on them. One strength was integrity—my business is always honest—and I’ve built that honesty into our brand." —Keith Terrell of Backpacks Global
"Overcoming our weaknesses doesn't mean we are not keeping an eye on our existing strengths. If there's one thing SWOT analysis has taught us, it’s that we should treasure the things that keep our company strong by being innovative. Our positive attributes can become a weakness if we refuse to adapt to changes. Consistently monitoring our strengths has allowed us to hit all our targets and go beyond our goals. As a result, we have outperformed our competitors by always bringing something new to the table." —Adam Garcia of The Stock Dork
Address Future Business Challenges
"Two of the issues we identified were the great resignation and the recession. Knowing them in advance gave us plenty of time to make the necessary changes (like retaining your best employees by offering new benefits—remote work, PTO, and unlimited growth opportunities). We also changed our inventory strategy and made sure we had enough to counter the price increases, shortages, and demand. These strategy changes helped us limit the adverse effects of the recession, optimize our stocks, and make sure all our orders were fulfilled on time. The changes were also able to help us retain our best employees; thus, we never even had any problems throughout the great resignation." —Michael Perry of Fitness Fixed Gear
Shore Up Weaknesses
"In our SWOT analysis, we were able to pinpoint areas where our employees may be lacking the skills they needed to succeed in our company. We decided to offer free online learning to our workers to help them add to their skill set. This has helped us not only improve the skill sets of our employees, but it has also increased employee retention. Employees want to stay loyal to a company that helps them grow." —Mark Daoust of Quiet Light
"Prior to the SWOT analysis, I had always approached marketing from a product-centric perspective; however, the SWOT analysis made me realize that we needed to focus more on customer-centric marketing. We needed to connect with our target audience and build relationships with them. As a result, we've made some changes to our marketing approach, and I believe that these changes will help us to be more successful in the long run." —Jacob Villa of Authority
"We have always prided ourselves on having good client relationships, but this exercise showed us that we needed to have strong client relationships. We have studied our weakness (why we have monthly policy cancellations or non-renewals) and the results showed that we need to focus on building and maintaining client relationships. After doing that, we have seen a significant increase in the average tenure of our clients and customer satisfaction scores." —Loran Marmes of Medicare Solutions Team
"One threat we encountered in our business was the sudden and huge dip in our customer satisfaction score, which has never happened in the past five years. To resolve this issue and ensure we eliminate the threat that's harming our relationship with customers, we allocated time to engage with our employees and immediately gave them intensive customer service training. Our urgent action to eradicate this threat has helped our business bounce back and we’ve regained the trust of our customers. It has also taught us to listen to customer feedback seriously and do our best to live up to their expectations." —Jake Smith of Absolute Reg LTD
See Different Perspectives
"A successful SWOT analysis encourages discussion from employees of different levels, from operational, to managerial, to administrative level. By doing this, everyone contributes their thoughts on the status and standing of the company—it’s not just about how one person sees it. This way, all aspects of the business are considered and addressed from all levels." —Corey Morgan of Kind Home Painting
SWOT Analysis Best Practices
To create the most accurate and effective SWOT analysis, we recommend the following best practices:
- Encourage open and honest conversation. Create an environment that encourages candidness. That might mean using sticky notes to gather anonymous feedback, rather than having people raise their hand to state a company weakness out loud.
- Promote collaboration. Have everyone write all their ideas on sticky notes, put them on a board, and then walk through them as a group. Combining similar ideas might help people to think of more. You might also consider breaking up a large group into smaller groups of three or four employees to encourage the sharing of ideas.
- Vote to narrow down ideas. The group will generate lots of ideas. You want to take them all into consideration, but you don’t need to keep every idea; this should be a fairly high-level exercise. Rank the top 10 and list those to focus on. And remember—the SWOT isn’t intended to project 10 years down the road; it should look at where you are now and in the very near future.
- To identify external factors, look at the competition. In addition to a PEST analysis, another way to identify external threats and opportunities is to look at your competitors. What opportunities are they currently after, and can you use that to your advantage? What threats are they currently facing, and how does that apply to you?
- Be specific when describing internal factors. For example, “brand image” can be both a strength and a weakness, depending on how you word it. Be specific in your descriptions; ultimately, that specificity will also help you define the right measures and benchmark your performance over time.
- Keep emotion out of the room. This exercise should be objective, not subjective. If a statement can’t be backed up with facts, it doesn’t count.
- Try to make your resulting strategy “weatherproof.” Current threats may include the possibility of more political and economic turmoil, but these kinds of obstacles tend to be much more complicated than those you’d see in most SWOT analyses. While it may be difficult to address them fully, try to develop a strategy that will bolster your organization during hard times. For example, a retail store might consider creating an objective to ensure its online and in-person stores perform equally well should either avenue be cut off due to external circumstances.
Download our strategic planning tools—including a SWOT analysis template.
If you need some guidance with this process, download our free strategic planning booklet. It includes eight of the most popular templates to build strategic plans, including a SWOT analysis template.
The strategic plan you develop from your SWOT analysis is powerful, so once you’ve created it, don’t let it sit! Use strategy execution software like ClearPoint to track your progress over time. ( Read more about strategy execution and how you can use ClearPoint for tracking here. ) Ready to take action? tart planning for the future now!
Ted is a Founder and Managing Partner of ClearPoint Strategy and leads the sales and marketing teams.
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What Is SWOT Analysis?
Understanding swot analysis, how to do a swot analysis.
- SWOT Analysis FAQs
The Bottom Line
SWOT Analysis: How To With Table and Example
These frameworks are essential to fundamentally analyzing companies
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Investopedia / Xiaojie Liu
SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework used to evaluate a company's competitive position and to develop strategic planning. SWOT analysis assesses internal and external factors, as well as current and future potential.
A SWOT analysis is designed to facilitate a realistic, fact-based, data-driven look at the strengths and weaknesses of an organization, initiatives, or within its industry. The organization needs to keep the analysis accurate by avoiding pre-conceived beliefs or gray areas and instead focusing on real-life contexts. Companies should use it as a guide and not necessarily as a prescription.
- SWOT analysis is a strategic planning technique that provides assessment tools.
- Identifying core strengths, weaknesses, opportunities, and threats leads to fact-based analysis, fresh perspectives, and new ideas.
- A SWOT analysis pulls information internal sources (strengths of weaknesses of the specific company) as well as external forces that may have uncontrollable impacts to decisions (opportunities and threats).
- SWOT analysis works best when diverse groups or voices within an organization are free to provide realistic data points rather than prescribed messaging.
- Findings of a SWOT analysis are often synthesized to support a single objective or decision that a company is facing.
SWOT analysis is a technique for assessing the performance, competition, risk, and potential of a business, as well as part of a business such as a product line or division, an industry, or other entity.
Using internal and external data , the technique can guide businesses toward strategies more likely to be successful, and away from those in which they have been, or are likely to be, less successful. Independent SWOT analysts, investors, or competitors can also guide them on whether a company, product line, or industry might be strong or weak and why.
SWOT analysis was first used to analyze businesses. Now, it's often used by governments, nonprofits, and individuals, including investors and entrepreneurs. There is seemingly limitless applications to the SWOT analysis.
Components of SWOT Analysis
Every SWOT analysis will include the following four categories. Though the elements and discoveries within these categories will vary from company to company, a SWOT analysis is not complete without each of these elements:
Strengths describe what an organization excels at and what separates it from the competition : a strong brand, loyal customer base, a strong balance sheet, unique technology, and so on. For example, a hedge fund may have developed a proprietary trading strategy that returns market-beating results. It must then decide how to use those results to attract new investors.
Weaknesses stop an organization from performing at its optimum level. They are areas where the business needs to improve to remain competitive: a weak brand, higher-than-average turnover, high levels of debt, an inadequate supply chain, or lack of capital.
Opportunities refer to favorable external factors that could give an organization a competitive advantage. For example, if a country cuts tariffs, a car manufacturer can export its cars into a new market, increasing sales and market share .
Threats refer to factors that have the potential to harm an organization. For example, a drought is a threat to a wheat-producing company, as it may destroy or reduce the crop yield. Other common threats include things like rising costs for materials, increasing competition, tight labor supply. and so on.
Analysts present a SWOT analysis as a square segmented into four quadrants, each dedicated to an element of SWOT. This visual arrangement provides a quick overview of the company’s position. Although all the points under a particular heading may not be of equal importance, they all should represent key insights into the balance of opportunities and threats, advantages and disadvantages, and so forth.
The SWOT table is often laid out with the internal factors on the top row and the external factors on the bottom row. In addition, the items on the left side of the table are more positive/favorable aspects, while the items on the right are more concerning/negative elements.
A SWOT analysis can be broken into several steps with actionable items before and after analyzing the four components. In general, a SWOT analysis will involve the following steps.
Step 1: Determine Your Objective
A SWOT analysis can be broad, though more value will likely be generated if the analysis is pointed directly at an objective. For example, the objective of a SWOT analysis may focused only on whether or not to perform a new product rollout . With an objective in mind, a company will have guidance on what they hope to achieve at the end of the process. In this example, the SWOT analysis should help determine whether or not the product should be introduced.
Step 2: Gather Resources
Every SWOT analysis will vary, and a company may need different data sets to support pulling together different SWOT analysis tables. A company should begin by understanding what information it has access to, what data limitations it faces, and how reliable its external data sources are.
In addition to data, a company should understand the right combination of personnel to have involved in the analysis. Some staff may be more connected with external forces, while various staff within the manufacturing or sales departments may have a better grasp of what is going on internally. Having a broad set of perspectives is also more likely to yield diverse, value-adding contributions.
Step 3: Compile Ideas
For each of the four components of the SWOT analysis, the group of people assigned to performing the analysis should begin listing ideas within each category. Examples of questions to ask or consider for each group are in the table below.
What occurs within the company serves as a great source of information for the strengths and weaknesses categories of the SWOT analysis. Examples of internal factors include financial and human resources , tangible and intangible (brand name) assets, and operational efficiencies.
Potential questions to list internal factors are:
- (Strength) What are we doing well?
- (Strength) What is our strongest asset?
- (Weakness) What are our detractors?
- (Weakness) What are our lowest-performing product lines?
What happens outside of the company is equally as important to the success of a company as internal factors. External influences, such as monetary policies , market changes, and access to suppliers, are categories to pull from to create a list of opportunities and weaknesses.
Potential questions to list external factors are:
- (Opportunity) What trends are evident in the marketplace?
- (Opportunity) What demographics are we not targeting?
- (Threat) How many competitors exist, and what is their market share?
- (Threat) Are there new regulations that potentially could harm our operations or products?
Companies may consider performing this step as a "white-boarding" or "sticky note" session. The idea is there is no right or wrong answer; all participants should be encouraged to share whatever thoughts they have. These ideas can later be discarded; in the meantime, the goal should be to come up with as many items as possible to invoke creativity and inspiration in others.
Step 4: Refine Findings
With the list of ideas within each category, it is now time to clean-up the ideas. By refining the thoughts that everyone had, a company can focus on only the best ideas or largest risks to the company. This stage may require substantial debate among analysis participants, including bringing in upper management to help rank priorities.
Step 5: Develop the Strategy
Armed with the ranked list of strengths, weaknesses, opportunities, and threats, it is time to convert the SWOT analysis into a strategic plan. Members of the analysis team take the bulleted list of items within each category and create a synthesized plan that provides guidance on the original objective.
For example, the company debating whether to release a new product may have identified that it is the market leader for its existing product and there is the opportunity to expand to new markets. However, increased material costs, strained distribution lines, the need for additional staff, and unpredictable product demand may outweigh the strengths and opportunities. The analysis team develops the strategy to revisit the decision in six months in hopes of costs declining and market demand becoming more transparent.
Use a SWOT analysis to identify challenges affecting your business and opportunities that can enhance it. However, note that it is one of many techniques, not a prescription.
Benefits of SWOT Analysis
A SWOT analysis won't solve every major question a company has. However, there's a number of benefits to a SWOT analysis that make strategic decision-making easier.
- A SWOT analysis makes complex problems more manageable. There may be an overwhelming amount of data to analyze and relevant points to consider when making a complex decision. In general, a SWOT analysis that has been prepared by paring down all ideas and ranking bullets by importance will aggregate a large, potentially overwhelming problem into a more digestible report.
- A SWOT analysis requires external consider. Too often, a company may be tempted to only consider internal factors when making decisions. However, there are often items out of the company's control that may influence the outcome of a business decision. A SWOT analysis covers both the internal factors a company can manage and the external factors that may be more difficult to control.
- A SWOT analysis can be applied to almost every business question. The analysis can relate to an organization, team, or individual. It can also analyze a full product line , changes to brand, geographical expansion, or an acquisition. The SWOT analysis is a versatile tool that has many applications.
- A SWOT analysis leverages different data sources. A company will likely use internal information for strengths and weaknesses. The company will also need to gather external information relating to broad markets, competitors, or macroeconomic forces for opportunities and threats. Instead of relying on a single, potentially biased source, a good SWOT analysis compiles various angles.
- A SWOT analysis may not be overly costly to prepare. Some SWOT reports do not need to overly technical; therefore, many different staff members can contribute to its preparation without training or external consulting.
SWOT Analysis Example
In 2015, a Value Line SWOT analysis of The Coca-Cola Company noted strengths such as its globally famous brand name, vast distribution network, and opportunities in emerging markets. However, it also noted weaknesses and threats such as foreign currency fluctuations, growing public interest in "healthy" beverages, and competition from healthy beverage providers.
Its SWOT analysis prompted Value Line to pose some tough questions about Coca-Cola's strategy, but also to note that the company "will probably remain a top-tier beverage provider" that offered conservative investors "a reliable source of income and a bit of capital gains exposure."
Five years later, the Value Line SWOT analysis proved effective as Coca-Cola remains the 6th strongest brand in the world (as it was then). Coca-Cola's shares (traded under ticker symbol KO) have increased in value by over 60% during the five years after the analysis was completed.
To get a better picture of a SWOT analysis, consider the example of a fictitious organic smoothie company. To better understand how it competes within the smoothie market and what it can do better, it conducted a SWOT analysis. Through this analysis, it identified that its strengths were good sourcing of ingredients, personalized customer service, and a strong relationship with suppliers. Peering within its operations, it identified a few areas of weakness: little product diversification, high turnover rates, and outdated equipment.
Examining how the external environment affects its business, it identified opportunities in emerging technology, untapped demographics, and a culture shift towards healthy living. It also found threats, such as a winter freeze damaging crops, a global pandemic, and kinks in the supply chain. In conjunction with other planning techniques, the company used the SWOT analysis to leverage its strengths and external opportunities to eliminate threats and strengthen areas where it is weak.
SWOT (strengths, weaknesses, opportunities, and threats) analysis is a method for identifying and analyzing internal strengths and weaknesses and external opportunities and threats that shape current and future operations and help develop strategic goals. SWOT analyses are not limited to companies. Individuals can also use SWOT analysis to engage in constructive introspection and form personal improvement goals.
What Is an Example of SWOT Analysis?
Home Depot conducted a SWOT analysis, creating a balanced list of its internal advantages and disadvantages and external factors threatening its market position and growth strategy. High-quality customer service, strong brand recognition, and positive relationships with suppliers were some of its notable strengths; whereas, a constricted supply chain, interdependence on the U.S. market, and a replicable business model were listed as its weaknesses.
Closely related to its weaknesses, Home Depot's threats were the presence of close rivals, available substitutes, and the condition of the U.S. market. It found from this study and other analysis that expanding its supply chain and global footprint would be key to its growth.
What Are the 4 Steps of SWOT Analysis?
The four steps of SWOT analysis comprise the acronym SWOT: strengths, weaknesses, opportunities, and threats. These four aspects can be broken into two analytical steps. First, a company assesses its internal capabilities and determines its strengths and weaknesses. Then, a company looks outward and evaluates external factors that impact its business. These external factors may create opportunities or threaten existing operations.
How Do You Write a Good SWOT Analysis?
Creating a SWOT analysis involves identifying and analyzing the strengths, weaknesses, opportunities, and threats of a company. It is recommended to first create a list of questions to answer for each element. The questions serve as a guide for completing the SWOT analysis and creating a balanced list. The SWOT framework can be constructed in list format, as free text, or, most commonly, as a 4-cell table, with quadrants dedicated to each element. Strengths and weaknesses are listed first, followed by opportunities and threats.
Why Is SWOT Analysis Used?
A SWOT analysis is used to strategically identify areas of improvement or competitive advantages for a company. In addition to analyzing thing that a company does well, SWOT analysis takes a look at more detrimental, negative elements of a business. Using this information, a company can make smarter decisions to preserve what it does well, capitalize on its strengths, mitigate risk regarding weaknesses, and plan for events that may adversely affect the company in the future.
A SWOT analysis is a great way to guide business-strategy meetings. It's powerful to have everyone in the room discuss the company's core strengths and weaknesses, define the opportunities and threats, and brainstorm ideas. Oftentimes, the SWOT analysis you envision before the session changes throughout to reflect factors you were unaware of and would never have captured if not for the group’s input.
A company can use a SWOT for overall business strategy sessions or for a specific segment such as marketing, production, or sales. This way, you can see how the overall strategy developed from the SWOT analysis will filter down to the segments below before committing to it. You can also work in reverse with a segment-specific SWOT analysis that feeds into an overall SWOT analysis.
Although a useful planning tool, SWOT has limitations. It is one of several business planning techniques to consider and should not be used alone. Also, each point listed within the categories is not prioritized the same. SWOT does not account for the differences in weight. Therefore, a deeper analysis is needed, using another planning technique.
Business News Daily. " SWOT Analysis: What It Is and When to Use It ."
Value Line. " The Coca-Cola Company: A Short SWOT Analysis ."
Panmore. " Home Depot SWOT Analysis & Recommendations ."
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What is SWOT analysis? A strategic tool for achieving objectives
SWOT analysis can help your business identify what it's doing right and what needs to change in the organization — and the process is surprisingly simple.
SWOT analysis is a planning methodology that helps organizations build a strategic plan to meet goals, improve operations and keep the business relevant. During SWOT analysis, organizations identify strengths, weaknesses, opportunities and threats (the four factors SWOT stands for) pertaining to organizational growth, products and services, business objectives and market competition.
A two-by-two matrix is used to build a SWOT analysis, with horizontal pairings of internal (strengths and weakness) and external (opportunities and threats) factors and vertical pairings of helpful (strengths and opportunities) and harmful (weaknesses and threats) factors in achieving an objective. Final results of the analysis will help the organization determine whether objectives, products, services, projects or goals are a strategic fit. The best strategic fits are when the internal environment (strengths and weaknesses) aligns with the external environment (opportunities and threats).
Strengths and weaknesses
Strengths and weaknesses are internal factors that are dependent on the objective, project or initiative being analyzed. Since it’s subjective to the chosen objective, what’s considered a strength for one objective or project might be a weakness for another.
Strengths are within the organization’s control and this category includes everything the business does right when trying to achieve a specific goal, initiative, project or objective. Anything that gives the organization an advantage or that helps processes and projects run smoothly or helps the organization achieve business goals will fall into this category.
Weaknesses are also within the organization’s control, but the category includes everything that keeps the business from staying on track to achieving business or project goals and objectives. These are the things that need to be fixed or changed in order to achieve success.
Opportunities and threats
Opportunities and threats are part of the external environment — it includes factors that impact the objective or project from outside the company. This can include economics, technology, regulation and legislation, sociocultural changes and shifts in competition.
Opportunities are factors outside the organization that the business can take advantage of to reach business goals and move the business forward. Threats include anything in the external environment that might cause issues for a project or that pose a future threat to the organization’s success.
When to conduct a SWOT analysis
A SWOT analysis can be used in a variety of situations — it’s not restricted by a specific industry or department, according to the SWOT Analysis Guide . SWOT can be used to explore new ventures, products, acquisitions or mergers. It can help businesses change course mid-project, plan out how to invest money, understand competitors and to identify the brand’s mission. SWOT can also help non-profit companies and government agencies manage or allocate grants, donations and funding. It’s a flexible analysis tool that can be applied to a range of business situations relating to everything from IT to marketing to operations.
How to conduct a SWOT analysis
You don’t need much to perform a SWOT analysis — the process can be as simple or complex as you make it. It’s something that can be done during workshops, meetings, brainstorming sessions or when evaluating products or competition.
A SWOT analysis begins with listing out the objectives, business venture or project and identify any internal or external factors that will help or hurt the path to achieving those objectives. Objectives can include anything from small or major business decisions to new or improved products and services. If an objective is deemed attainable, the process starts over with a different objective.
According to the SWOT Analysis Guide, the three main steps for performing a SWOT analysis are:
- Collect relevant information and list all current known strengths and weaknesses. This can be achieved through talking to others in the organization or through larger brainstorming sessions. You should come prepared with questions pertaining to the SWOT objective and aim to get thoughtful and insightful responses from your team.
- Consider all the potential opportunities that exist for the organization, including future trends and technologies.
- Review the SWOT matrix to build a plan that addresses each area including everything that’s working and everything that needs to change.
What will SWOT analysis achieve?
A SWOT analysis is essentially a way to get the organization focused on specific goals, projects and objectives. It’s an organized approach that helps businesses identify ways to improve efficiency and productivity.
According to Baruch College, a SWOT analysis will answer the following questions:
- What are the internal strengths and weaknesses of your company?
- What are the external opportunities and threats in your industry and its environment?
- Can any weaknesses be converted to strengths? Any threats into opportunities?
- How can your company take advantage of strengths and opportunities?
- What strategic changes can your company implement as a result of the SWOT analysis?
SWOT analysis examples
SWOT analyses from major corporations can help you get an idea of how the process works. Strategic Management Insight offers examples of SWOT analyses for a wide range of companies, including Google , Starbucks and Amazon .
Its example SWOT analysis of Microsoft evaluates the potential impact of a major leadership change in the organization — in this case, the hiring of CEO Satya Nadella. SM Insight identifies Microsoft’s strengths as the company’s brand awareness, it’s wide acceptance in the enterprise, easy-to-use products, a worldwide network of distributors and an ability to beat analyst’s expectations. Weaknesses include being late to mobile computing, a lack of urgency when the internet was introduced and security flaws in its software.
Cloud computing was seen as a big opportunity for Microsoft at that time, as the organization had the chance to take the lead in this trend, and the company was economically strong. Microsoft’s biggest threats included the company’s size, which can slow progress, as well as a failure to notice emerging trends, piracy and lawsuits.
The SWOT analysis concludes that Microsoft needs to keep an eye on market trends to avoid misreading major technological shifts. The organization should also focus more heavily on the enterprise to set itself apart from other tech companies that are only focused on the consumer base.
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Are You Doing the SWOT Analysis Backwards?
- Laurence Minsky
Don’t worry about strengths and weaknesses until you’ve identified opportunities and threats.
The SWOT analysis is a recognized tool to identify an organization, department, product, or service’s strengths, weaknesses, opportunities, and threats. Yet, despite the tool’s wide use, it’s often conducted ineffectively, making the analysis less than insightful with no clear path to action. Part of the problem lies in focusing on internal factors — strengths and weaknesses — first. But by turning it on its head, you can conduct a better analysis that can result in more actionable strategic recommendations. First, gather an inventory of relevant environmental conditions — the threats and opportunities. Next, explore internal strengths and weaknesses. Finally, generate recommendations using this simple sentence: “Given the condition of [external factor], our ability to [internal factor] leads to our recommendation that we [recommendation].” By looking at the external conditions first and internal internal attributes second, you will generate a better set of clear-cut and supported ideas for moving forward.
There are few tools more ubiquitous in management, marketing, and other key business functions than the SWOT analysis: It involves listing the strengths, weaknesses, opportunities, and threats facing your firm, division, functional area, or other aspects of your organization, products, or services. The results of a SWOT analysis can be (and almost always are) presented simply as a 2 x 2 grid, with one dimension representing the internal versus external factors, and the other depicting positive versus negative valence.
The problem is, as typically conducted, the SWOT is not really an analysis or diagnosis at all. It is simply list and categorization of the internal and external situational factors related to the subject that you’re evaluating, usually produced during a group brainstorming session. The resulting document is typically less than insightful and does not offer a clear path to action. It is simply an elegant organizational tool. That might be part of its attractiveness — besides its catchy acronym — and a key reason for its popularity.
There are a few reasons that SWOT, in its current form, falls short of desired outcomes. First, the traditional 2 x 2 grid layout for the analysis, which encourages users to present all of the information on a single PowerPoint slide or piece of paper, often leads to exceedingly short, often one- or two-word descriptions. This desire for brevity also often leads to shortcuts in thinking. In our experience as both consultants and teachers, for instance, we’ve found that an important attribute like “price” might be listed as a strength, weakness, opportunity, and threat without any further explanation. The SWOT offers no analysis or insight as to whether the price is too comparatively high, if competitors can undercut it, if a firm can run a promotion, or any other factor related to pricing.
Second, the SWOT analysis is surprisingly difficult to interpret, primarily because of the lack of a hierarchy. All four quadrants of the grid are emphasized equally. It is merely a snapshot of the current situation — or, worse, a snapshot of what’s currently on the minds of brainstorming session attendees.
Third, our natural instinct is to jump to solutions, particularly when it comes to listing opportunities. In too many cases that we’ve seen, SWOT users misinterpret what “opportunities” are, presuming that they are recommendations of “what could be done.” For instance, we once saw a bicycle tour service provider list “create a mobile application with a live map” as an opportunity. But this isn’t an opportunity in the SWOT sense of the word; rather, it is merely a recommendation that has not been fully processed. Rather, an opportunity might be the growth in the adoption of voice technology. Another: That phone apps are becoming easier to develop, yet the competition isn’t using them.
Despite these issues, SWOT can still be helpful tool for insight or planning if you change the way you use it. How do we mean? By turning the SWOT process on its head.
Drawing from our experience coaching leading brands and thousands of students, as well as building on the research of others , we have found that the traditional approach of identifying internal factors first (strengths and weaknesses) and then moving to external factors (opportunities and threats) just isn’t effective. To improve the inventory collection, you should start with the external factors, then turn your attention to the firm’s internal ones.
There are several reasons we recommend taking this approach. First, these environmental conditions exist not only for your firm but for all competitors. In effect, the external factors create the arena in which the competition takes place. Managers must adjust their strategies to reflect it, even as this environment changes. Since no business operates in a vacuum, it is the context around it that helps determine to what extent any particular internal attribute is relevant. Meanwhile, focusing on the external factors first can get you thinking more broadly about the internal factors, reducing the risk of myopia. In other words, taking this approach can lead you to uncover internal factors that you might not have otherwise considered.
Then, once you complete your inventory, you can actually use the factors to conduct a true analysis that can result in strategic recommendations for planning. Specifically, here’s how we recommend proceeding.
First, gather an inventory of relevant environmental conditions — the threats and opportunities. At this stage, don’t worry about whether these are positive or negative. Remember, we don’t want to take shortcuts. There are existing tools designed for organizing an environmental scan, such as the PEST , PESTEL , and STEEP , but don’t feel limited to these tools. If you have other preferred tools to help you organize the external factors, you can use them.
Next, explore internal strengths and weaknesses . Here, too, ignore whether they are potentially positive or negative. Your first job is to inventory the attributes. The relative positivity or negativity of a factor included in the inventory may again be a function of the external environment. At this early stage of the analysis, it is more important that the factors are included than how they’re categorized beyond simply being external or internal. Don’t settle for one- or two-word descriptors like “price” or “technology.” Explicitly spell out the situation with a detailed phrase or a sentence.
Generate recommendations with a simple sentence. With your external and internal inventories in hand, generating recommendations is now much easier. Simply consider each external factor’s relationship to each internal factor. To help, you might want to complete this sentence:
Given the condition of [external factor], our ability to [internal factor] leads to our recommendation that we [recommendation].
You may find that some external factors will not readily apply to certain internal factors, which means they might not lead to a recommendation. Yet, given enough time or with a creative group working on this analysis, you might develop options that you would not expect to reach, based on combinations of external factors and internal factors.
Let’s take an example, using the external factor of an economic recession as a starting point.
In a traditionally conducted SWOT analysis, one might include the objectively internal attribute of “price” in all four of the cells because it’s a strength (the firm’s product costs less to purchase than the competition’s), a weakness (people have less money to spend on the product), an opportunity (the firm can afford to run a price promotion), and a threat (the competition can easily undercut what the firm charges). This is not an analysis; it is merely a set of poorly supported suggestions.
In our model, the template listed above could lead to one or more thoughtfully developed recommendations such as:
Given the condition of our current recession , our ability to realize cost savings over our competitors leads to our recommendation that we reduce our price .
The model doesn’t stop there. Several other recommendations might flow from the use of this template, under the stated conditions. For instance, following the prescribed process for the analysis, the external factor would then be combined with another factor from the internal inventory, and then another, with each possibly (but not necessarily) leading to a unique recommendation:
Given the condition of our current recession , our ability to maintain strong relationships throughout our distribution channel leads to our recommendation that we offer discounts to our channel partners to help them weather the storm .
Or, for a perceived weakness:
Given the condition of our current recession , our low brand recognition leads to our recommendation that we target this brand for reduced marketing support, in favor of our stronger brands .
By looking at the external conditions, in conjunction with internal attributes, a set of clear-cut and supported recommendations can be generated. And this should be your goal: Using an analytical tool to help you identify a wide range of possible actionable outcomes. The process is straightforward and demands attention to a range of internal and external factors, and the results are recommendations that are more thoroughly developed and grounded. Try this approach the next time you’re asked to generate a SWOT and see the power of it for yourself.
- LM Laurence Minsky is an Associate Professor at Columbia College Chicago. His most recent books include Global Brand Management , The Activation Imperative , and Audio Branding .
- DA David Aron is Professor of Marketing and Director of Graduate Programs at Dominican University . A frequent conference presenter, his research on consumer satisfaction and marketing pedagogy has been widely published in academic journals.
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SWOT analysis: What it is and how to use it (with examples)
A SWOT analysis helps you identify strengths, weaknesses, opportunities, and threats for a specific project or your overall business plan. It’s used for strategic planning and to stay ahead of market trends. Below, we describe each part of the SWOT framework and show you how to conduct your own.
Whether you’re looking for external opportunities or internal strengths, we’ll walk you through how to perform your own SWOT analysis with helpful examples along the way.
What is a SWOT analysis?
A SWOT analysis is a technique used to identify strengths, weaknesses, opportunities, and threats for your business or even a specific project. It’s most widely used by organizations—from small businesses and non-profits to large enterprises—but a SWOT analysis can be used for personal purposes as well.
While simple, a SWOT analysis is a powerful tool for helping you identify competitive opportunities for improvement. It helps you improve your team and business while staying ahead of market trends.
What does SWOT stand for?
SWOT is an acronym that stands for:
When analyzed together, the SWOT framework can paint a larger picture of where you are and how to get to the next step. Let’s dive a little deeper into each of these terms and how they can help identify areas of improvement.
Strengths in SWOT refer to internal initiatives that are performing well. Examining these areas helps you understand what’s already working. You can then use the techniques that you know work—your strengths—in other areas that might need additional support, like improving your team’s efficiency .
When looking into the strengths of your organization, ask yourself the following questions:
What do we do well? Or, even better: What do we do best?
What’s unique about our organization?
What does our target audience like about our organization?
Which categories or features beat out our competitors?
Example SWOT strength:
Customer service: Our world-class customer service has an NPS score of 90 as compared to our competitors, who average an NPS score of 70.
Weaknesses in SWOT refer to internal initiatives that are underperforming. It’s a good idea to analyze your strengths before your weaknesses in order to create the baseline of success and failure. Identifying internal weaknesses provides a starting point for improving those projects.
Identify the company’s weaknesses by asking:
Which initiatives are underperforming and why?
What can be improved?
What resources could improve our performance?
How do we rank against our competitors?
Example SWOT weakness:
E-commerce visibility: Our website visibility is low because of a lack of marketing budget , leading to a decrease in mobile app transactions.
Opportunities in SWOT result from your existing strengths and weaknesses, along with any external initiatives that will put you in a stronger competitive position. These could be anything from weaknesses that you’d like to improve or areas that weren’t identified in the first two phases of your analysis.
Since there are multiple ways to come up with opportunities, it’s helpful to consider these questions before getting started:
What resources can we use to improve weaknesses?
Are there market gaps in our services?
What are our business goals for the year?
What do your competitors offer?
Example SWOT opportunities:
Marketing campaign: To improve brand visibility, we’ll run ad campaigns on YouTube, Facebook, and Instagram.
Threats in SWOT are areas with the potential to cause problems. Different from weaknesses, threats are external and out of your control. This can include anything from a global pandemic to a change in the competitive landscape.
Here are a few questions to ask yourself to identify external threats:
What changes in the industry are cause for concern?
What new market trends are on the horizon?
Where are our competitors outperforming us?
Example SWOT threats:
New competitor: With a new e-commerce competitor set to launch within the next month, we could see a decline in customers.
When should you use a SWOT analysis?
You won’t always need an in-depth SWOT analysis. It’s most useful for large, general overviews of situations, scenarios, or your business.
A SWOT analysis is most helpful:
Before you implement a large change—including as part of a larger change management plan
When you launch a new company initiative
If you’d like to identify opportunities for growth and improvement
Any time you want a full overview of your business performance
If you need to identify business performance from different perspectives
SWOT analyses are general for a reason—so they can be applied to almost any scenario, project, or business.
SWOT analysis example
One of the most popular ways to create a SWOT analysis is through a SWOT matrix—a visual representation of strengths, weaknesses, opportunities, and threats. The matrix comprises four separate squares that create one larger square.
A SWOT matrix is great for collecting information and documenting the questions and decision-making process . Not only will it be handy to reference later on, but it’s also great for visualizing any patterns that arise.
Check out the SWOT matrix below for a simple example. As you can see, each of the quadrants lists out the company's strengths, weaknesses, opportunities, and threats.
When used correctly and effectively, your matrix can be a great toolkit for evaluating your organization’s strengths and weaknesses.
How do you write a good SWOT analysis?
A SWOT analysis can be conducted in a variety of ways. Some teams like to meet and throw ideas on a whiteboard while others prefer the structure of a SWOT matrix. However you choose to make your SWOT analysis, getting creative with your planning process allows new ideas to flow and results in more unique solutions.
There are a few ways to ensure that your SWOT analysis is thorough and done correctly. Let’s take a closer look at some tips to help you get started.
Tip 1: Consider internal factors
Often, strengths and weaknesses stem from internal processes. These tend to be easier to solve since you have more control over the outcome. When you come across internal factors, you can start implementing improvements in a couple of different ways.
Meet with department stakeholders to form a business plan around how to improve your current situation.
Research and implement new tools, such as a project management tool , that can help streamline these processes for you.
Take immediate action on anything that can be changed in 24 hours or less. If you don’t have the capacity, consider delegating these items to others with deadlines.
The way you go about solving internal factors will depend on the type of problem. If it’s more complex, you might need to use a combination of the above or a more thorough problem management process.
Tip 2: Evaluate external factors
External factors stem from processes outside of your control. This includes competitors, market trends, and anything else that’s affecting your organization from the outside in.
External factors are trickier to solve, as you can’t directly control the outcome. What you can do is pivot your own processes in a way that mitigates negative external factors.
You can work to solve these issues by:
Competing with market trends
Forecasting market trends before they happen
Improving adaptability to improve your reaction time
Track competitors using reporting tools that automatically update you as soon as changes occur
While you won’t be able to control an external environment, you can control how your organization reacts to it.
Let’s say, for instance, that you’re looking to compete with a market trend. For example, a competitor introduced a new product to the market that’s outperforming your own. While you can’t take that product away, you can work to launch an even better product or marketing campaign to mitigate any decline in sales.
Tip 3: Hold a brainstorming session
Brainstorming new and innovative ideas can help to spur creativity and inspire action. To host a high impact brainstorming session, you’ll want to:
Invite team members from various departments. That way, ideas from each part of the company are represented.
Be intentional about the number of team members you invite, since too many participants could lead to a lack of focus or participation. The sweet spot for a productive brainstorming session is around 10 teammates.
Use different brainstorming techniques that appeal to different work types.
Set a clear intention for the session.
Tip 4: Get creative
In order to generate creative ideas, you have to first invite them. That means creating fun ways to come up with opportunities. Try randomly selecting anonymous ideas, talking through obviously bad examples, or playing team building games to psych up the team.
Tip 5: Prioritize opportunities
Now, rank the opportunities. This can be done as a team or with a smaller group of leaders. Talk through each idea and rank it on a scale of one through 10. Once you’ve agreed on your top ideas based on team capabilities, competencies, and overall impact, it’s easier to implement them.
Tip 6: Take action
It’s all too easy to feel finished at this stage —but the actual work is just beginning. After your SWOT analysis, you’ll have a list of prioritized opportunities. Now it is the time to turn them into strengths. Use a structured system such as a business case , project plan, or implementation plan to outline what needs to get done—and how you plan to do it.
Why is a SWOT analysis important?
A SWOT analysis can help you improve processes and plan for growth. While similar to a competitive analysis , it differs because it evaluates both internal and external factors. Analyzing key areas around these opportunities and threats will equip you with the insights needed to set your team up for success.
A SWOT analysis isn’t only useful for organizations. With a personal SWOT analysis, you can examine areas of your life that could benefit from improvement, from your leadership style to your communication skills. These are the benefits of using a SWOT analysis in any scenario.
1. Identifies areas of opportunity
One of the biggest benefits of conducting an analysis is to determine opportunities for growth. It’s a great starting point for startups and teams that know they want to improve but aren’t exactly sure how to get started.
Opportunities can come from many different avenues, like external factors such as diversifying your products for competitive advantage or internal factors like improving your team’s workflow . Either way, capitalizing on opportunities is an excellent way to grow as a team.
2. Identifies areas that could be improved
Identifying weaknesses and threats during a SWOT analysis can pave the way for a better business strategy.
Ultimately, learning from your mistakes is the best way to excel. Once you find areas to streamline, you can work with team members to brainstorm an action plan . This will let you use what you already know works and build on your company’s strengths.
3. Identifies areas that could be at risk
Whether you have a risk register in place or not, it’s always crucial to identify risks before they become a cause for concern. A SWOT analysis can help you stay on top of actionable items that may play a part in your risk decision-making process.
It may be beneficial to pair your SWOT analysis with a PEST analysis which examines external solutions such as political, economic, social, and technological factors—all of which can help you identify and plan for project risks .
Plan for growth with a SWOT analysis
A SWOT analysis can be an effective technique for identifying key strengths, weaknesses, opportunities, and threats. Understanding where you are now can be the most impactful way to determine where you want to go next.
Don’t forget, a bit of creativity and collaboration can go a long way. Encourage your team to think outside of the box with 100+ team motivational quotes .
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