Are you using SWOT analysis to form the future strategy of your business?
You definitely should be.
It’s an effective way to identify what your company is doing well, where it needs to grow, what it needs to improve, and what could be its undoing.
Plus, it lets you minimize the negative factors associated with a given task or goal.
When you’re analyzing the competition or putting together a business plan, you could turn to the findings of your SWOT to identify potential gaps in your strategy.
And the best part is, conducting a SWOT analysis doesn’t require a big investment of time. In fact, it is something that can be quick, simple and fun. When you get it right, it will give your business an advantage. It’s that powerful.
In this article, we’ll discuss what a SWOT analysis is, highlight some scenarios where it makes sense to conduct a SWOT analysis of a company, and provide tips and advice for conducting a SWOT analysis of your own. We’ll also share a few examples and templates that you can use to evaluate your current position in the market.
Let’s get going.
What Is SWOT Analysis?
SWOT is an acronym for strengths, weaknesses, opportunities, and threats.
The first two of these, strengths and weaknesses, are referred to as internal factors, which include things that you have control over and can change, like your workforce or your product packaging.
Opportunities and threats, on the other hand, are external factors that are outside the scope of your control, like market trends or competing businesses. However, they can still impact your establishment for better or worse.
The purpose of SWOT analysis is to offer a blueprint, but it’s up to you to analyze the factors and decide what to do next.
Companies usually conduct a SWOT analysis to shape their business strategy, but individuals can gain from a SWOT analysis as well. If you’re confused about switching jobs, pursuing a new career, or working remotely, you can use the SWOT analysis framework to help you decide.
Why Do a SWOT Analysis?
With a range of techniques to assess a business venture available at a company’s disposal, you might be wondering why you should pick SWOT analysis over other methods. Well, there are several advantages to SWOT analysis.
For one, it gives you a broader, 360-degree view of your industry standing and where you lack against your competitors. You can then take steps to improve your operations in those areas in a way that makes your company stand out from the rest.
Another key benefit of SWOT analysis is flexibility. You can use it to inform all kinds of strategic decisions, from minor tweaks in existing campaigns to major business initiatives. Moreover, it can be used to assess locations, investments, employee performance and even to conduct self-assessments.
When to Use a SWOT Analysis
There are numerous scenarios in which a SWOT analysis can prove beneficial.
Ideally, you should use it during early planning and brainstorming to get a feel for a new feature, new product, new approach, etc. If you’re not sure about the best social media strategy for your ecommerce website, for instance, you can conduct an analysis for each of your options.
Likewise, a SWOT analysis can help you answer questions like:
- Do you need to reassess a particular marketing strategy mid-course?
- Should you explore the efficacy of a new merger, partnership, or acquisition?
- Does your company want to reinvest profits back into the business?
The big-picture insights that you gain through the analysis can help smoothen your journey through change, struggles, and growth.
How to Conduct a SWOT Analysis
Now that you’re familiar with the basics of SWOT analysis, let’s look at the key steps involved in its creation.
1. Visualize the SWOT Diagram
The first step of conducting a SWOT analysis is to visualize a SWOT diagram. We recommend using a 2×2 quadrant where each box is labeled with the relevant heading. Place strengths and weaknesses in the top row, and opportunities and threats in the bottom one.
Here’s how Canva visualizes it:
While you may be able to make a quadrant diagram yourself, it’s much easier to use a SWOT analysis template. Templates can be easily styled, and you can even customize them with brand colors, motifs or shapes. Here are some cool choices:
However, you’re not only restricted to a 2×2 grid. While this is the most popular layout for a SWOT diagram, you can also use a vertical or horizontal SWOT analysis template. Below are some options.
2. Set Up a Goal
In addition to visualizing the SWOT, you need to have a clear objective. Are you planning to merge with another business? Are you considering expanding your local presence? Identify the strategy you want to develop and use that to establish your goal.
3. Hold A Brainstorming Session
Gather your team and brainstorm as much as you can. Get marketing, finance, and even consumer-facing personnel on board and encourage everyone to get a little creative. You can, for example, tell them to make a casual list of what they think are your company’s strengths and weaknesses as well as what they identify as opportunities and threats.
Don’t sweat over how relevant each point is at this phase – the idea is to hear everything the team has to say so that you don’t miss out on anything important. Who knows, you might discover a thing or two that could positively impact your bottom line.
4. Break Down the Four Components
Once you’ve determined the goal of your SWOT analysis and gathered input from your team, it’s time to work on the four components of the process: Strengths, Weaknesses, Opportunities, and Threats. Here’s a look at what influences these internal and external factors, and some questions to help get things moving.
SWOT Analysis Strengths
Strengths are the tangible and intangible advantages your business has at its disposal. Some examples of these advantages are:
- Having a great location
- Having a world-class development team
- Having a strong brand affinity
To determine your strengths, you could start by analyzing your company’s standing in terms of service, finance, company culture and brand leadership – resources and factors that you can control.
Questions to help identify your company’s strengths
- Which features of your product resonate with your target audience?
- Do you have unique attributes and processes that differentiate you from the competition?
- Are your cash reserves sufficient to keep your business afloat?
- What’s your USP (unique selling proposition)?
- What specialized services or knowledge do you have to offer?
- What do you do that no one else does?
SWOT Analysis Weaknesses
It’s also crucial to identify your company’s internal weaknesses. These are the areas in which you often struggle to meet expectations. Examples include low sales revenue, unclear branding strategy, budgetary limitations, and poor online reviews.
When identifying weaknesses, make sure to take input from your staff in different departments, as they’ll likely point out shortcomings you hadn’t considered. Keep in mind that you have control over your weaknesses – like strengths, they’re internal to your company.
Questions to help identify your company’s weaknesses
- Are there any aspects of your business that may cause customers to select the competition over you?
- Are your customers completely satisfied with your product?
- Do customers understand what your brand is about?
- Do you have clear business goals?
- Are there any areas of your business that have room for improvement?
- What is holding you back from achieving your goals?
- Is your company’s internal infrastructure performing at its best?
SWOT Analysis Opportunities
After you’ve identified your company’s strengths and weaknesses, it’s time to have a look at opportunities. These are favorable aspects external to your company that you can leverage to your advantage. A few examples of such aspects are:
- New or emerging markets
- The evolution of technology
- An increase in population
Questions to help identify your company’s opportunities
- Are there any new demands in the market that are not currently being met?
- Are there any additional resources that you could benefit from?
- Are there any new trends that you are not yet taking advantage of?
- Are there any changes in legislation or regulations that you may benefit from?
- Are there any opportunities for you to expand?
SWOT Analysis Threats
Lastly, you need to identify any threats that could prevent you from achieving your goals. These are conditions beyond your control that influence your chances at success. By evaluating these conditions, you can construct a contingency plan to minimize the negative impact they might have on your company.
Questions to help identify your company’s threats
- What advantages do your competitors have that you don’t?
- Are there any changes in the economy that could negatively impact your business?
- Are any of your suppliers unreliable?
- Will changes in federal taxes impact your company in any way?
- Does a community belief clash with the USP of your product or service?
5. Act Upon Your Findings
Now that you’ve made your SWOT, it’s time to analyze each of the four components and lay out your strategies.
Generally, you want to capitalize on your strengths and use them to eliminate your weaknesses. If you have a good reputation among adult consumers, for instance, you should continue to build and nurture relationships with them to strengthen it further. If marketing to younger generations is one of your weaknesses, you should take steps to improve your appeal, like encouraging adults to spread the word among their children.
Likewise, it’s critical to seize opportunities to neutralize potential threats. For example, if using a certain technology (like virtual reality) will give you a competitive edge over other businesses, consider hiring relevant expertise to make this happen. This, in turn, will help you overcome the threats posed by some of your closest competitors who’re striving to increase their market share.
SWOT Analysis Example
To help you gain a better understanding of the concept, we’re going to look at the SWOT analysis of Amazon, the world’s largest ecommerce company by online revenue.
One of Amazon’s strengths is its ability to satisfy customers. So, despite its late entry into key markets, the company has an advantage that it could use to overcome one of its weaknesses. For example, the ecommerce giant can run marketing campaigns communicating that people who shop from its website are more satisfied than those who purchase from other places.
Similarly, Amazon can capitalize on its opportunities to neutralize the threats. For instance, it can consider opening physical stores to see off the local competition and making efforts to improve ecommerce-related IT services may also help the company mitigate hacking and identity theft.
Here are some additional guidelines for getting the most out of your SWOT.
- Involve key departments in drawing up the SWOT analysis to gain their trust
- Put your egos aside and honestly discuss areas that could use some improvement
- Write suggestions on cards or Post-It notes that make it easy to arrange relevant ideas into groups
- Update your findings from any past SWOT analysis. For instance, an opportunity may no longer exist (e.g. if a competitor has already introduced a specific technology)
- Run a SWOT test against your competitors to see where you have an advantage and where you fall short
- Use tools like Creately to save time and create a beautiful SWOT analysis
Ready to SWOT It Out?
Every business has strengths and weaknesses, but they’re also affected by the threats and opportunities in the marketplace. Make sure you follow the above-mentioned tips and best practices to maximize your chances of success.
Once your SWOT analysis is complete, you’ll have the perspective you need to make the best decisions for your company. Ultimately, the strategic planning tool will provide key insights into how to optimize your operations for improved performance.
Have you conducted a SWOT analysis for your business? Did you uncover anything surprising once you took a closer look? We’d love to hear from you in the comments section below.