SWOT analysis: What it is and how to use it (with examples)

Summary

A SWOT analysis helps you identify strengths, weaknesses, opportunities, and threats for a specific project or your overall business plan. It’s a tool that can help your team plan strategically and stay ahead of market trends. Below, we describe each part of the SWOT framework and provide step-by-step instructions to help you conduct your own analysis.

Looking for a way to separate your organization from the competition? A SWOT analysis is a technique used to identify strengths, weaknesses, opportunities, and threats in order to develop a strategic plan for your business. While it may sound difficult, it’s actually quite simple.

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. While most widely used by organizations from small businesses and non-profits to large enterprises, a SWOT analysis can be used for both personal and professional purposes.

While simple, a SWOT analysis is a powerful tool for helping you identify competitive opportunities for improvement. This way you can work to improve your team and your business while staying ahead of market trends.

What does SWOT stand for?

Simply put, SWOT stands for strengths , weaknesses , opportunities , and threats . Each of these factors is important to examine in order to properly plan for organizational growth. That’s where the analysis comes in.

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. This could be compared to other initiatives or an external competitive edge. 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 to get started:

What do we do well?

What’s unique about our organization?

What does our target audience like about our organization?

Here’s an example of a strength to help get you started.

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.

Similar to examining strengths, you can ask yourself different questions to get started on identifying your weaknesses:

Which initiatives are underperforming and why?

What could be improved?

What resources could improve our performance?

Here’s an example of a weakness.

Opportunities in SWOT are the result of 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 goals for the year?

Here’s an example of an opportunity based on the above strengths and weaknesses.

Threats in SWOT refers to areas that have the potential to cause problems. This is different from weaknesses as threats are external and generally 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?

Here’s an example of a threat that could leave your business vulnerable to problems.

SWOT analysis example

One of the most popular ways to create a SWOT analysis is by visually representing strengths, weaknesses, opportunities, and threats. This format is called a SWOT matrix. It’s usually organized into four separate squares that meet to create one larger square.

A SWOT matrix is great for collecting information and documenting the questions that brought you to your decisions. Not only will it be handy to reference later on, but it’s also great for visualizing any patterns that arise.

Here’s an example to give you an idea of how to get started on your own.

When used correctly and effectively, your matrix can be a great toolkit for evaluating your organization’s strengths and weaknesses. Once you’ve created your matrix, you can focus on how to actually implement the opportunities you found.

How to do a SWOT analysis

A SWOT analysis can be conducted in a variety of ways. While some teams like to meet and throw ideas on a board, others prefer to create a formal SWOT matrix. However you choose to create 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. Some of these tricks include gathering your team in a way that’s conducive for teamwork, preparing beforehand so you use time efficiently, and getting creative about how you choose ideas. Let’s take a closer look at some tips to help you get started.

Tip 1: Consider internal factors

Internal factors are strengths and weaknesses that stem from internal processes. These tend to be easier to solve if you have the means 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.

The way you go about solving internal factors will depend on the type of problem. You may even need to use a combination of both if it’s a complex improvement plan.

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 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

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. An example of this is a competitor introducing 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 to mitigate any decline in sales. Alternatively, you can attempt to forecast market trends so you’re prepared when external factors do occur.

Tip 3: Teamwork makes the dream work

It may be an age-old saying, but teamwork is incredibly effective for brainstorming new and innovative ideas. Invite different 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.

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. Some examples of this are randomly selecting anonymous ideas, talking through obviously bad examples, or playing team building games to psych up the team.

Tip 5: Rank ideas

Once the fun is done, it’s time to rank the best opportunities. This can be done as a team or with a smaller group of leaders. The best way to do this is to 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 and overall impact, you can work on implementing them by starting with a business case .

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 in that it evaluates both internal and external factors. Analyzing key areas around these opportunities and threats will equip you with the insights 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. However you choose to use it, a SWOT analysis is important for these three reasons.

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

Improving existing projects is another foolproof way to continue growing. Identifying weaknesses and threats during a SWOT analysis can pave the way to a better business strategy.

Ultimately, learning from your mistakes is the best way to excel. Once you find areas that can be streamlined, you can work with team members to brainstorm an action plan. This will mean using what you know works and building off of 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 any 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 potential risks ahead of time.

Plan for growth with a SWOT analysis

A SWOT analysis is can be an effective technique for identifying key strengths, weaknesses, opportunities, and threats.  Understanding where you are—and where you want to go—will help you grow as a team and organization.