What is SWOT analysis and examples?
SWOTstands for Strengths, Weaknesses, Opportunities and Threats.
Why a SWOT analysis is used?
ASWOT analysiscan help you identify opportunities that your business could take advantage of to make greater profits. ... Conducting aSWOT analysiswill help you understand the internal factors (your business's strengths and weaknesses) that will influence your ability to take advantage of a new opportunity.
Strengths and weaknesses are internal to your company—things that you have some control over and can change. Examplesinclude who is on your team, your patents and intellectual property, and your location.
A SWOT analysis is an incredibly simple, yet powerful tool to help you develop your business strategy, whether you’re building a startup or guiding an existing company.
Strengths and weaknesses are internal to your company—things that you have some control over and can change. Examples include who is on your team, your patents and intellectual property, and your location.
Opportunities and threats are external—things that are going on outside your company, in the larger market. You can take advantage of opportunities and protect against threats, but you can’t change them. Examples include competitors, prices of raw materials, and customer shopping trends.
Why is SWOT analysis Important explain in 3 5 sentences?
Answer:SWOT Analysisis a simple but useful framework foranalyzingyour organization's strengths,weaknesses, opportunities, andthreats. It helps you to build on what you do well, to address what you're lacking, to minimize risks, and to take the greatest possible advantage of chances for success.
Use a SWOT (strengths, weaknesses, opportunities, threats) analysis to grow your business.
To run a successful business, you should regularly analyze your processes to ensure you are operating as efficiently as possible. While there are numerous ways to assess your company, one of the most effective methods is to conduct a SWOT analysis.
A SWOT (strengths, weaknesses, opportunities and threats) analysis is a planning process that helps your company overcome challenges and determine what new leads to pursue.
The primary objective of a SWOT analysis is to help organizations develop a full awareness of all the factors involved in making a business decision. This method was created in the 1960s by Albert Humphrey of the Stanford Research Institute, during a study conducted to identify why corporate planning consistently failed. Since its creation, SWOT has become one of the most useful tools for business owners to start and grow their companies.
When should you perform a SWOT analysis?
You can employ a SWOT analysis before you commit to any sort of company action, whether you are exploring new initiatives, revamping internal policies, considering opportunities to pivot or altering a plan midway through its execution. Sometimes it's wise to perform a general SWOT analysis just to check on the current landscape of your business so you can improve business operations as needed. The analysis can show you the key areas where your organization is performing optimally, as well as which operations need adjustment.
Don't make the mistake of thinking about your business operations informally, in hopes that they will all come together cohesively. By taking the time to put together a formal SWOT analysis, youcan see the whole picture of your business. From there, you can discover ways to improve or eliminate your company's weaknesses and capitalize on its strengths.
While the business owner should certainly be involved in creating a SWOT analysis, it is often helpful to include other team members in the process. Ask for input from a variety of team members and openly discuss any contributions made. The collective knowledge of the team will allow you to adequately analyze your business from all sides.
Characteristics of a SWOT analysis
A SWOT analysis focuses on the four elements of the acronym, allowing companies to identify the forces influencing a strategy, action or initiative. Knowing these positive and negative elements can help companies more effectively communicate what parts of a plan need to be recognized.
When drafting a SWOT analysis, individuals typically create a table split into four columns to list each impacting element side by side for comparison. Strengths and weaknesses won't typically match listed opportunities and threats verbatim, although they should correlate, since they are ultimately tied together.
Internal factors
Strengths (S) and weaknesses (W) refer to internal factors, which are the resources and experience readily available to you.
These are some commonly considered internal factors:
External factors
External forces influence and affect every company, organization and individual. Whether these factors are connected directly or indirectly to an opportunity (O) or threat (T), it is important to note and document each one.
External factors are typically things you or your company do not control, such as the following:
After you create your SWOT framework and fill out your SWOT analysis, you will need to come up with some recommendations and strategies based on the results. Linda Pophal, owner and
Who should do a SWOT analysis?
For a SWOT analysis to be effective, company founders and leaders need to be deeply involved. This isn’t a task that can be delegated to others.
But, company leadership shouldn’t do the work on their own, either. For best results, you’ll want to gather a group of people who have different perspectives on the company. Select people who can represent different aspects of your company, from sales and customer service to marketing and product development. Everyone should have a seat at the table.
Innovative companies even look outside their own internal ranks when they perform a SWOT analysis and get input from customers to add their unique voice to the mix.
If you’re starting or running a business on your own, you can still do a SWOT analysis. Recruit additional points of view from friends who know a little about your business, your accountant, or even vendors and suppliers. The key is to have different points of view.
Existing businesses can use a SWOT analysis to assess their current situation and determine a strategy to move forward. But, remember that things are constantly changing and you’ll want to reassess your strategy, starting with a new SWOT analysis every six to 12 months.
For startups, a SWOT analysis is part of the business planning process. It’ll help codify a strategy so that you start off on the right foot and know the direction that you plan on going.
How to do a SWOT analysis the right way
As I mentioned above, you want to gather a team of people together to work on a SWOT analysis. You don’t need an all-day retreat to get it done, though. One or two hours should be more than plenty.
Gather people from different parts of your company and make sure that you have representatives from every part. You’ll find that different groups within your company will have entirely different perspectives that will be critical to making your SWOT analysis successful.
Doing a SWOT analysis is similar to brainstorming meetings, and there are right and wrong ways to run them. I suggest giving everyone a pad of sticky-notes and have everyone quietly generate ideas on their own to start things off. This prevents groupthink and ensures that all voices are heard.
After five to 10 minutes of private brainstorming, put all the sticky-notes up on the wall and group similar ideas together. Allow anyone to add additional notes at this point if someone else’s idea sparks a new thought.
Once all of the ideas are organized, it’s time to rank the ideas. I like using a voting system where everyone gets five or ten “votes” that they can distribute in any way they like. Sticky dots in different colors are useful for this portion of the exercise.
Based on the voting exercise, you should have a prioritized list of ideas. Of course, the list is now up for discussion and debate, and someone in the room should be able to make the final call on the priority. This is usually the CEO, but it could be delegated to someone else in charge of business strategy.
You’ll want to follow this process of generating ideas for each of the four quadrants of your SWOT analysis: Strengths, Weaknesses, Opportunities, and Threats.
Questions that can help inspire your analysis
Here are a few questions that you can ask your team when you’re building your SWOT analysis. These questions can help explain each section and spark creative thinking.
Strengths
Strengths are internal, positive attributes of your company. These are things that are within your control.
Weaknesses
Weaknesses are negative factors that detract from your strengths. These are things that you might need to improve on to be competitive.
Opportunities
Opportunities are external factors in your business environment that are likely to contribute to your success.
Threats
Threats are external factors that you have no control over. You may want to consider putting in place contingency plans for dealing them if they occur.
What to do next
With your SWOT analysis complete, you’re ready to convert it into real strategy. After all, the exercise is about producing a strategy that you can work on during the next few months.
The first step is to look at your strengths and figure out how you can use those strengths to take advantage of your opportunities. Then, look at how your strengths can combat the threats that are in the market. Use this analysis to produce a list of actions that you can take.
With your action list in hand, look at your company calendar and start placing goals (or milestones) on it. What do you want to accomplish in each calendar quarter (or month) moving forward?
You’ll also want to do this by analyzing how external opportunities might help you combat your own, internal weaknesses. Can you also minimize those weaknesses so you can avoid the threats that you identified?
Again, you’ll have an action list that you’ll want to prioritize and schedule.
Back to the Uper Crust Pies example: Based on their SWOT analysis, here are a few potential strategies for growth to help you think through how to translate your SWOT into actionable goals.
Upper Crust Pies: Potential strategies for growth
More about SWOT analysis
A SWOT (strengths, weaknesses, opportunities and threats) analysis looks at internal and external factors that can affect your business. Internal factors are your strengths and weaknesses. External factors are the threats and opportunities. If an issue or situation would exist even if your business didn't (such as changes in technology or a major flood), it is an external issue.
Strategic planning, brainstorming and decision making
A SWOT analysis is a useful tool for brainstorming and strategic planning. You'll get more value from a SWOT analysis if you conduct it with a specific objective or question in mind. For example, you can use a SWOT analysis to help you decide if and how you should:
Building on strengths
A SWOT analysis will help you identify areas of your business that are performing well. These areas are your critical success factors and they give your business itscompetitive advantage.
Identifying these strengths can help you make sure you maintain them so you don't lose your competitive advantage. Growing your business involves finding ways of using and building on these strengths.
Minimising weaknesses
Weaknesses are the characteristics that put your business at a disadvantage to others. Conducting a SWOT analysis can help you identify these characteristics and minimise or improve them before they become a problem. When conducting a SWOT analysis, it is important to be realistic about the weaknesses in your business so you can deal with them adequately.
Seizing opportunities
A SWOT analysis can help you identify opportunities that your business could take advantage of to make greater profits. Opportunities are created by external factors, such as new consumer trends and changes in the market.
Conducting a SWOT analysis will help you understand the internal factors (your business's strengths and weaknesses) that will influence your ability to take advantage of a new opportunity. If your business doesn't have the capability to seize an opportunity but decides to anyway, it could be damaging. Similarly, if you do have the capability to seize an opportunity and don't, it could also be damaging.
Counteracting threats
Threats are external factors that could cause problems for your business, such as changes to the market, a competitor's new advertising campaign, or new government policy. A SWOT analysis can help you identify threats and ways to counteract them, depending on your strengths and weaknesses.
Addressing individual issues
You can conduct a SWOT analysis to address individual issues, such as:
When you're conducting an individual SWOT analysis, keep in mind that a strength for one issue might be a weakness for another. You might also identify a weakness, such as a gap in the market that you're not covering, that could be an opportunity for your business.
Benefits and limitations of SWOT analysis
The main advantages of conducting a SWOT analysis is that it has little or no cost – anyone who understands your business can perform a SWOT analysis. You can also use a SWOT analysis when you don't have much time to address a complex situation. This means that you can take steps towards improving your business without the expense of an external consultant orbusiness adviser.
Another advantage of a SWOT analysis is that it concentrates on the most important factors affecting your business. Using a SWOT, you can:
Limitations of SWOT analysis
When you are conducting a SWOT analysis, you should keep in mind that it is only one stage of the business planning process. For complex issues, you will usually need to conduct more in-depth research and analysis to make decisions.
Keep in mind that a SWOT analysis only covers issues that can definitely be considered a strength, weakness, opportunity or threat. Because of this, it's difficult to address uncertain or two-sided factors, such as factors that could either be a strength or a weakness or both, with a SWOT analysis (e.g. you might have a prominent location, but the lease may be expensive).
A SWOT analysis may be limited because it:
Tips for a successful SWOT analysis
Before conducting a SWOT (strengths, weaknesses, opportunities and threats) analysis, decide what you want to achieve with it and consider whether it is the best tool for your needs.
If you decide a SWOT analysis is the best tool, the following tips will help you get the most out of it:
Conducting a SWOT analysis
A SWOT analysis is a tool for documenting internal strengths (S) and weaknesses (W) in your business, as well as external opportunities (O) and threats (T). You can use this information in your business planning to help achieve your goals. To work out if something is an internal or external factor, ask yourself if it would exist even if your business didn't. If it would, then it's an external factor (e.g. new technology).
Use the following 8 steps to conduct a SWOT analysis.
1. Decide on the objective of your SWOT analysis
To get the most out of your SWOT analysis, you should have a question or objective in mind from the start. For example, you could use a SWOT analysis to help you decide if you should introduce a new product or service, or change your processes.
2. Research your business, industry and market
Before you begin the SWOT analysis you need to do some research to understand your business, industry and market. Get a range of perspectives by talking to your staff, business partners and clients. Also conduct somemarket researchand find out about your competitors.
3. List your business's strengths
The first step is to identify and list what you think are your business's strengths. Examples could include strengths relating to employees, financial resources, your business location, cost advantages and competitiveness.
At this stage of the SWOT analysis, the list does not need to be definitive. Any ideas and thoughts are encouraged. Step 7 is where the list is prioritized.
4. List your business's weaknesses
List things in your business that you consider to be weaknesses (i.e. that put your business at a disadvantage to others). Weaknesses could include an absence of new products or clients, staff absenteeism, a lack ofintellectual property, declining market share and distance to market.
Make sure you address the weaknesses raised in your SWOT analysis. The list of weaknesses can indicate how your business has grown over time. When you review the SWOT analysis after a year, you may notice that your weaknesses have been resolved. While you may find new weaknesses, the fact that the old ones are gone is a sign of progress.
5. List potential opportunities for your business
Think about the possible external opportunities for your business. These are not the same as your internal strengths, and are not necessarily definite – an opportunity for one aspect of your business could be a threat to another (e.g. you may consider introducing a new product to keep up with consumer trends, but your competitors may already have a similar product). Keep this in mind, but for the SWOT analysis, the same item shouldn't be listed as both an opportunity and a threat.
Opportunities could include new technology, training programs, partnerships, a diverse marketplace and a change of government.
6. List potential threats to your business
List external factors that could be a threat or cause a problem for your business. Examples of threats could include rising unemployment, increasing competition, higher interest rates and the uncertainty of global markets.
7. Establish priorities from the SWOT
When you have completed the steps above, you will have 4 separate lists. Ideally, these lists can be displayed side-by-side so you can have an overall picture of how your business is running and what issues you need to address. You can then work out what issues are the most important and what can be dealt with later (i.e. develop 4 prioritized lists).
8. Develop a strategy to address issues in the SWOT
Review your 4 prioritized lists by asking:
Once you have answered these questions and finalized your lists, you can now use the SWOT analysis to develop strategies for achieving your business goals.
Bottom-Line Benefits of SWOT Analysis and How to Get Started
In this blog post, we’ll go over the many benefits of a SWOT analysis, how they can impact sales, and how to do a SWOT analysis for your brand.
Why Is a SWOT Analysis Important for New Businesses?
The best thing about a SWOT analysis is that it’s absolutely free. (Well, apart from your time and attention.)
A SWOT analysis can be conducted by anyone who has a good understanding and is familiar with your brand, which means you don’t need to break the bank in order to use a seasoned advisor. You or one of your managers can conduct a SWOT analysis themselves.
For start-ups or smaller businesses, conducting a SWOT analysis is a good business practice because it helps clarify major internal and external factors affecting your business. In a way, a SWOT analysis is a situation analysis that pinpoints inefficiencies within your organization and highlight your strengths. By doing this, your team can improve productivity and increase sales.
A SWOT analysis will also focus on the real-world context of your business, which means you gain a clear understanding of your business compared to the competition.
What Is the Purpose of a SWOT Analysis?
It’s important to note that a SWOT analysis is just an analysis of the facts. So, what’s the purpose?
A SWOT analysis is conducted so your team can discuss the findings and drum up solutions that will enhance your brand. A SWOT analysis isn’t done purely for factual information; it’s done to create actionable steps your team can take to strengthen your business.
If you’re still wondering how to do a SWOT analysis, you can start by asking your team the following questions. These are by no means the only questions your team should be asking themselves in their SWOT work.
Let these questions be your guide and SWOT analysis worksheet from which to build. While you are finding the answers to these questions, remember to think about the steps your team can take to enforce what’s going well within your organization, and what steps your team needs to take to change your actions for the better.
Typical SWOT Analysis Questions
These questions will help you create your unique SWOT analysis template so all the information you gather is organized.
Strengths
Weaknesses
Opportunities
Threats
Implementing Your SWOT Findings into a Marketing Plan
After you’ve conducted your research, the next thing you’ll want to do is incorporate your findings into a marketing plan.
You first need to choose what you want to focus on based on what your team found amongst your strengths, weaknesses, opportunities and threats.
From there, you can introduce a plan of action to address the issue(s) and enhance your employees.
For example, if your biggest weakness is communication and you decide that you want to improve how your team speaks to one another, consider a digital solution like Basecamp or Slack. If you’re looking to improve your sales on digital and one of the main issues your team faces is lack of experience in the area, look into outsourcing part of your team in order tochoose the right digital agencyto do the work for you.
How you implement your findings is strictly based on what steps your individual team needs to take to reach your goals. There is no one SWOT analysis implementation process you can follow because all answers rely all on your business’ unique context. Scholly Bubenik, a Forbes Contributor, writes,
“[t]his process requires you take the time to analyze each of these areas and develop strategies to get ahead of them. As business owners we are faced with opportunities and threats on a regular basis but being proactive instead of reactive is imperative to staying competitive.”
Key Takeaways
Whether you’re doing a SWOT analysis for a small business or a large corporation, you’ll gain a more comprehensive understanding of where you are in the market today. Conducting a SWOT analysis is not only good for sales because it helps point out inefficiencies within your business, but also for internal operations as well.
Here are the key takeaways from today’s discussion one more time:
Now that you know how to do a SWOT analysis, it’s time to do one for your business—best of luck!
Your SWOT Analysis is Broken (Here’s How You Can Fix It)
Isn’t it wonderful to have certainty, confidence, and clarity about what you’re going to do going forward? In the context of our increasingly disrupted, globalizing, and multicultural world, business leaders greatly appreciate the security and comfort of clear-cut strategic plans for the future. After all, following our in-the-moment intuitions frequently leads to business disasters, and strategic plans help prevent such problems.
Tragically, popular business strategic analyses meant to address the weaknesses of human thinking through structures and planning are deeply flawed. They give a false sense of comfort and security to business leaders who use them, leading these leaders into the exact business disasters that they seek to avoid.
Take the most popular of them, the SWOT analysis, where you try to figure out the Strengths, Weaknesses, Opportunities, and Threats facing your business. SWOT doesn’t account for the dangerous judgment errors revealed by recent research in behavioral economics and cognitive neuroscience.
These mental blindspots – what scholars callcognitive biases– turn a SWOT analysis from a potentially valuable tool into a dangerous handicap. Relying on SWOT to inform your strategic plans without accounting for cognitive biases results inappalling oversightsthat ruin profitable businesses and bring down high-flying careers.
In order to succeed, youneed to evaluatewhere cognitive biases are hurting you and others in your team and organization. Then, you can use structured decision-making methods tomake “good enough” daily decisions quickly; more thorough ones formoderately important choices; and an in-depth one fortruly major decisions.
Such techniques will also help youimplement your decisions well, and formulate trulyeffective long-term strategic plans. In addition, you candevelop mental habits and skillsto notice cognitive biases and prevent yourself from slipping into them.
Nazmul Alam is a content writer and consultant forcareer Talkies, a digital marketing agency in NYC that specializes in eCommerce development solutions and all things digital. Therese dabbles in social media marketing and writes about everything from web development case studies to emerging marketing trends.
