Download a Free SWOT Analysis Template
What is a SWOT analysis?
A SWOT analysis shows the impact internal (strengths and weaknesses) and external (opportunities and threats) positives and negatives can have on a company, industry, product, place or person.
The definition of the SWOT analyses of a business is a planning tool used to develop a solid business strategy. It can be used for any business planning or strategizing, but is most commonly used in marketing planning and when planning a new business.
Giving consideration to the company’s strengths, weaknesses, opportunities and threats provide insight that can be used for strategic planning and decision-making. For example, a SWOT analysis can be used to decide whether or not to embark on a business venture. Or to discover a market niche where the company has a competitive advantage.
A thorough SWOT analysis involves the input of all relevant departments and people (even customers). Different perspectives are necessary for objective results. Involving employees in the business strategizing process also motivates them to achieve the business objectives.
How to do a SWOT analysis
A SWOT analysis is also called a SWOT matrix because of its format. The SWOT analysis template is a square with four quadrants for each of the elements. You can download free SWOT analysis templates for Excel and PowerPoint from Microsoft.
Brainstorm (as a group or individually) and make a bullet point list of all the strengths, weaknesses, opportunities and threats. Both internal (decision-makers within the company) and external (customers and the market) perspectives should be considered when examining the strengths and weaknesses. Think in terms of the company as it relates to competitors.
After brainstorming, list the factors – in the order of highest to lowest priority – under the four sections of the SWOT analysis template. A SWOT analysis should be targeted at a specific project or strategy to achieve specific results.
Some examples of SWOT analysis questions to ask yourself are:
- What do you do well?
- What unique or low-priced resources do you have?
- What are your unique skills?
- What experience do you have?
- What is your competitive advantage?
- What does your market consider to be your strengths?
- Which area of business is the most profitable?
- Where do you need to improve?
- What resources do you lack?
- What training and skills are inadequate?
- What negatively impacts your competitive advantage that you can control?
- What does your market consider to be your weaknesses?
- Which areas of business are not profitable?
- Which opportunities can you identify in your market or industry?
- What market trends can you identify?
- Have any recent changes in the market created an opportunity for your company?
- Have there been any changes in technology that could enhance your business?
- How can you create opportunities regarding existing customers or clients?
- Can you reach a new target market?
- For how long does the opportunity exist?
- What obstacles (beyond your control) do the business face?
- Who are your competitors, what are their strengths and what do they offer that you don’t?
- Are there any changes in the economy or industry that can have a negative impact on the business?
- Has there been an improvement in technology that renders your product or service obsolete?
- Does an unfavourable development or trend have a negative impact on revenues?
- Has there been a significant change in the availability or price of raw materials?
For an example of a SWOT analysis, see this SWOT analysis PDF document of examples.
How to use a SWOT analysis
The purpose of a SWOT analysis is to develop business strategies which maximises positive influences while minimizing negative factors. Therefore, SWOT results must be analysed to develop short- and long-term strategies for the business.
Using a SWOT analysis, a company can:
- devise a plan to enhance strengths;
- list ways to improve weaknesses;
- set goals for the opportunities identified; and
- devise a strategy to eliminate threats by using strengths.
Data from the different quadrants of a SWOT analysis can also be combined to develop strategies. One way of doing so is by pairing the strengths and weaknesses with the opportunities and threats (also called a “TOWS matrix”) to devise the following strategies:
- Opportunity-Strength (OS) Strategies – use strengths to take advantage of opportunities
- Opportunity-Weakness (OW) Strategies – overcome weaknesses by taking advantage of opportunities
- Threat-Strength (TS) Strategies – use strengths to avoid threats
- Threat-Weakness (TW) Strategies – minimize weaknesses and avoid threats