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What is a SWOT Analysis? (Strength, Weakness, Opportunity, Threat)

SWOT text on colorful wooden cubes

What is a SWOT Analysis? (Strength, Weakness, Opportunity, Threat)

SWOT is an acronym denoting Strengths, Weaknesses, Opportunities, and Threats. Therefore, it’s an approach to analyze your business using these four aspects.

A SWOT analysis will help you identify areas where your business is thriving presently and draw up a good plan for the future. Additionally, it can reveal your business shortcomings or weak areas, which rivals can use to their advantage to position themselves ahead of you.

When carrying out a SWOT analysis, you’ll look into the external and internal factors affecting your business. It’s important to understand that you can only control a percentage of your business’s factors.

Some, however, are market conditions you have no control over. SWOT analysis aims to help you identify all the factors and give you the insight you need to work on the ones you can control.

Regardless of your circumstance, the best cause of action in response will only become apparent after identifying, recording, and analyzing all factors. In this post, we look into what a SWOT analysis is, why it is carried out and how to convert your findings into a plan of action.

Why Do a SWOT Analysis?

Conducting a SWOT analysis gives you a sound approach for highlighting the key areas you need to work on to expand your business.

You may think you already have a firm grasp of everything you need to know to run a successful business. However, carrying out a SWOT analysis will help you look at your business from a new perspective.

For instance, you’ll examine your business’s weaknesses and strengths and how you can take advantage of the opportunities and work on areas your competitors can exploit. A SWOT analysis can be instrumental in business success if you use it appropriately.

Similarly, you’ll identify key areas of weakness. After a thorough look into the analysis, you’ll also recognize previously missed opportunities you could exploit to give you a competitive edge over your competitors.

Conducting a SWOT analysis makes business meetings more productive. Once a SWOT analysis is performed, it reveals key insights for your organization to improve the way they work. The SWOT analysis results will guide your organization in the right direction.

Information gathered from a SWOT analysis assists key stakeholders in an organization in developing efficient recommendations and strategies.

Your meetings will become more productive as you’ll know the opportunities and threats affecting your business and have insights to start discussions to come up with interventions.

A SWOT analysis can also be helpful on a personal level. It can also help employees identify and develop strategies to work on their strengths and weaknesses.

Who Should Do a SWOT Analysis?

swot analysis

As a company leader or founder, you need to be involved for a SWOT analysis to be successful.

This doesn’t mean that the analysis is limited to managerial positions. You’ll need to get the views of other individuals who can offer a fresh perspective of the organization.

Choose individuals who speak for the different departments of your organization, from marketing and sales to customer support and production—everyone should give their input.

Some organizations go outside their internal team and engage external stakeholders such as customers to get a unique perspective when conducting a SWOT analysis.

You can also perform a SWOT analysis if you’re starting and running your own business and get input from those close to you—to have a picture of how your business operates. Similarly, you can engage your suppliers or accountant; the goal is to have multiple perspectives to help you cover all your bases when coming up with solutions.

If your business is already well established, perform a SWOT analysis to determine your current position and devise ways to go forward. However, remember that change is constant, and you may have to conduct a SWOT analysis at least twice a year.

A SWOT analysis is crucial for new businesses when charting their roadmap. It’ll help you strategize, so you start your business on a high note and give you a sense of direction.

How To Write a Good SWOT Analysis

Many people assume that performing a SWOT analysis is just making lists. However, there’s more to it than meets the eye. When you start looking into your strengths, you’ll automatically think of ideas that fit into the other aspects, i.e., opportunities, weaknesses, and threats.

If you analyze these lists concurrently, you’ll be able to identify overlapping areas and discrepancies that you’ll want to look into. Analyze all the lists simultaneously to make the process simpler and more effective.

You can download a SWOT analysis blueprint for free online or come up with your own. The matrix consists of two by two boxes with four aspects in each quadrant. Each segment has brief questions to help you get started.

How To Do A SWOT Analysis

A SWOT analysis is a strategy used to analyze the risks, potential, performance, and competition that a business has. Other aspects such as product division or line are also assessed.

The strategy can use external and internal data to direct businesses towards methods that have the potential of being successful and prevent them from using techniques that are already deemed less effective. Carrying out an independent SWOT analysis can help an organization determine the potential of a product and improve it before going to market.


These refer to what a company is good at and what sets them apart. Some examples of strengths include; loyal customers, distinctive tech, strong brand identity, a good balance sheet, e.t.c.

For instance, a hedge company may have designed a patented trading technique that offers excellent returns. The company must then use this to determine how to use the returns to entice investors.


Weaknesses are the features of an organization that presents drawbacks. They are negative factors inside an organization that affects its success, for instance, inexperienced leadership, irrelevant target market, poor systems, substandard financial performance, and many more.

Similar to strengths, weaknesses are fundamental components of your company, which is why you should pay attention to procedures, systems, people, and resources. Weaknesses can hinder an organization from functioning optimally and attaining its goals.

For a business to stay competitive, it must work on aspects like a high turnover rate, inadequate capital, a weak profile, or high amounts of debt.

You’ll only realize the value of a SWOT analysis if you gather all the necessary information.


These are chances for something worthwhile to materialize, but you have to be ready to jump on them when they present themselves.

Usually, they emerge from external cases and require you to notice possible future occurrences. Opportunities can surface as expansion in your target market or the technology you employ.

By identifying and exploiting opportunities, you can impart a big difference to your company’s capacity to thrive as a pioneer in the market you serve.

When looking for opportunities, look for ones that you can make the most of immediately. They don’t have to be game-changers; even the smallest wins will enhance your company’s competitiveness. Look at market trends, and figure out which ones would be impactful.

Keep an eye out for any changes in government policies that affect your field. Changes in the economic outlook, population profiles, lifestyles, and social patterns can present captivating opportunities.


A threat is anything that affects your production and bottom line. Threats range from external sources, like a scarcity of personnel, market requirements changes, and supply-chain issues. You should anticipate threats and tackle them before they become a problem that will stall your development.

Technology advancement is an inextinguishable threat and is also an opportunity. Consider the hurdles you experience in acquiring products. You might realize that specifications or quality standards for your commodities are shifting and that you’ll have to alternate the goods to remain competitive.

Keep tabs on your competitors’ progress, and consider changing your firm’s focus to tackle the challenge. But keep in mind that what works for your rivals may not be appropriate for your organization. So, refrain from duplicating their strategies without determining how they’ll benefit you.

Ensure you explore whether your firm is particularly vulnerable to external hurdles. For instance, are you in debt or have cash-flow troubles that could expose you to the slightest changes in your field? Stay alert because this type of threat can be detrimental to your business.

How to Use a SWOT Analysis

Strength Weaknesses Opportunities Threats Analysis Evaluation Strategy Concept
Source: Shutterstock

You can convert a complete SWOT analysis to an actual strategy. The exercise generates insights from which you can craft a suitable approach to improve your positioning in the marketplace.

The initial step is to weigh your strengths and determine how to use them to seize and benefit from opportunities. Next, examine how these strengths can counter the threats in your market. Employ this analysis to generate a list of measures to take.

After preparing an action list, check your organization’s calendar and set milestones and goals. Moving forward, determine what you want to achieve every month or calendar quarter and how to get there?

You can also accomplish this by examining how outside opportunities can help you counter your internal weaknesses.

Generally, SWOT analysis helps company’s devise strategies that’ll help them improve operations, attain their goals and keep the company relevant. The analysis outcome will help the company decide whether the services, products, objectives, and projects are strategic.

Frequently Asked Questions

1. What Are Threats in a SWOT Analysis?

Threats are outside forces that can negatively impact your organization’s success. They include government policies, out-of-control influences like natural calamities, rival competitive advantages, etc. Pointing out threats can uncover hurdles to success and help organizations come up with approaches to overcome them.

2. What Are Strengths in a SWOT Analysis?

Strengths are an organization’s commendatory behaviors, processes, and activities—what a firm excels in. These factors play a part in the success of an organization and its brand. Strengths like productive supply chain management and good customer support help organizations maintain and improve their competitive advantage.

3. What Is the Most Important Part of the SWOT Analysis?

Start with the strengths and weaknesses, and then process the outcome. Proceed to the threats and opportunities and repeat the process. You should be optimistic when discussing SWOT analysis outcomes. Threats and weaknesses can discourage the planning team.

4. How Often Should a SWOT Analysis Be Performed?

Since threats and opportunities shift frequently, you have to conduct a SWOT analysis (including the scenario analysis that accompanies it) based on how fast changes happen in your industry. Those in volatile markets or rapid development modes should often conduct a SWOT analysis to keep up with the changing trends.

5. Why Is a SWOT Important to Marketers?

In SWOT analysis, S stands for strengths. A marketer can apply this methodology to spot the difference between his trade and his competitors. SWOT helps marketers figure out the prominent features of their businesses and take advantage of this discovery.

Final Thoughts

You can use a SWOT analysis to lead business-strategy meetings effectively. Every member of an organization needs to discuss its strengths and weaknesses, point out the great opportunities and impending threats, and put their heads together to develop ideas that push its mission and vision forward.

An organization can implement a SWOT analysis for general business strategy meetings or a particular division like sales, production, or marketing. With this, you can establish how the general strategy established from SWOT analysis affects other departments of an organization before committing to it.

Alternatively, you can operate reverse with a department-specific SWOT analysis that flows into a general SWOT analysis. Even though SWOT is a helpful planning tool, it has drawbacks. It’s among the many business planning strategies to employ and shouldn’t be used solely.

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