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What Is a SWOT Analysis?
A SWOT analysis is a great business planning and analysis framework designed to help organizations analyze their strengths, weaknesses, opportunities and threats. By assessing these elements of your company, you can explain SWOT analysis to your team and, set yourself apart from your competitors and grow your business.
What Does SWOT Stand For?
The acronym “SWOT” stands for “strengths, weaknesses, opportunities and treats.” Strengths are your core competences as a business, which help set yourself apart from your competitors. Weaknesses are areas where you can improve or where your competitors outperform you. Opportunities are elements of the market that you could potentially use to your advantage, whereas threats are market elements that could cause you problems in the future.
Why Should You Do a SWOT Analysis?
The basic idea behind the analysis is to look at these four elements to see both internal and external factors that could influence your company. By separating positive and negative factors both inside and outside your business into groups and looking at each of these groups of factors separately, you can help reveal new information that you hadn’t previously thought of. This can help you conduct general market analysis, outline a business impact analysis of a new direction in your company or do a thorough customer analysis to help you see your business as your customers see it.
How Should You Do a SWOT Analysis?
SWOT analyses work best in meeting settings. If you run a large company or team, plan a meeting with key players and decision makers. If you run a small independent business, try a brainstorming meeting with your employees or even a trusted friend or mentor. Start by defining your business and setting up a profile of your business as a whole. Then, draw out a square-shaped chart with one of the SWOT groups in each square. This is the standard SWOT market analysis template. Ask for input from each person at the meeting, and add them to the appropriate category. If a suggestion overlaps, add it to the space between two categories.
What Are Questions to Ask During a SWOT Analysis?
Some good topics to bring up during a SWOT analysis are things that your business does best, the price of your products or services, customer feedback, things that help you win sales, things that make you lose sales, your company’s financial position, changes in the market, changes in government policy, local infrastructure and technology. Do as much research as possible before you start the analysis, and print off any supporting material.
How Do You Use a SWOT Analysis?
You can use a SWOT analysis for a number of things. The “Strengths and Weaknesses” sections can help you improve your human resources, customer service policies and other internal company policies so that your company runs smoother and you build a solid reputation with your customers. You can use the “Opportunities and Threats” categories to help you carve out a new marketing strategy or develop new products.
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What Is SWOT Analysis?
Understanding swot analysis, how to do a swot analysis, the bottom line.
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SWOT Analysis: How To With Table and Example
These frameworks are essential to fundamentally analyzing companies
Ariel Courage is an experienced editor, researcher, and former fact-checker. She has performed editing and fact-checking work for several leading finance publications, including The Motley Fool and Passport to Wall Street.
SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework used to evaluate a company's competitive position and to develop strategic planning. SWOT analysis assesses internal and external factors, as well as current and future potential.
A SWOT analysis is designed to facilitate a realistic, fact-based, data-driven look at the strengths and weaknesses of an organization, initiatives, or within its industry. The organization needs to keep the analysis accurate by avoiding pre-conceived beliefs or gray areas and instead focusing on real-life contexts. Companies should use it as a guide and not necessarily as a prescription.
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- SWOT analysis is a strategic planning technique that provides assessment tools.
- Identifying core strengths, weaknesses, opportunities, and threats leads to fact-based analysis, fresh perspectives, and new ideas.
- A SWOT analysis pulls information internal sources (strengths of weaknesses of the specific company) as well as external forces that may have uncontrollable impacts to decisions (opportunities and threats).
- SWOT analysis works best when diverse groups or voices within an organization are free to provide realistic data points rather than prescribed messaging.
- Findings of a SWOT analysis are often synthesized to support a single objective or decision that a company is facing.
Investopedia / Xiaojie Liu
SWOT analysis is a technique for assessing the performance, competition, risk, and potential of a business, as well as part of a business such as a product line or division, an industry, or other entity.
Using internal and external data , the technique can guide businesses toward strategies more likely to be successful, and away from those in which they have been, or are likely to be, less successful. Independent SWOT analysts, investors, or competitors can also guide them on whether a company, product line, or industry might be strong or weak and why.
SWOT analysis was first used to analyze businesses. Now, it's often used by governments, nonprofits, and individuals, including investors and entrepreneurs. There is seemingly limitless applications to the SWOT analysis.
Components of SWOT Analysis
Every SWOT analysis will include the following four categories. Though the elements and discoveries within these categories will vary from company to company, a SWOT analysis is not complete without each of these elements:
Strengths describe what an organization excels at and what separates it from the competition : a strong brand, loyal customer base, a strong balance sheet, unique technology, and so on. For example, a hedge fund may have developed a proprietary trading strategy that returns market-beating results. It must then decide how to use those results to attract new investors.
Weaknesses stop an organization from performing at its optimum level. They are areas where the business needs to improve to remain competitive: a weak brand, higher-than-average turnover, high levels of debt, an inadequate supply chain, or lack of capital.
Opportunities refer to favorable external factors that could give an organization a competitive advantage. For example, if a country cuts tariffs, a car manufacturer can export its cars into a new market, increasing sales and market share .
Threats refer to factors that have the potential to harm an organization. For example, a drought is a threat to a wheat-producing company, as it may destroy or reduce the crop yield. Other common threats include things like rising costs for materials, increasing competition, tight labor supply. and so on.
Analysts present a SWOT analysis as a square segmented into four quadrants, each dedicated to an element of SWOT. This visual arrangement provides a quick overview of the company’s position. Although all the points under a particular heading may not be of equal importance, they all should represent key insights into the balance of opportunities and threats, advantages and disadvantages, and so forth.
The SWOT table is often laid out with the internal factors on the top row and the external factors on the bottom row. In addition, the items on the left side of the table are more positive/favorable aspects, while the items on the right are more concerning/negative elements.
A SWOT analysis can be broken into several steps with actionable items before and after analyzing the four components. In general, a SWOT analysis will involve the following steps.
Step 1: Determine Your Objective
A SWOT analysis can be broad, though more value will likely be generated if the analysis is pointed directly at an objective. For example, the objective of a SWOT analysis may focused only on whether or not to perform a new product rollout . With an objective in mind, a company will have guidance on what they hope to achieve at the end of the process. In this example, the SWOT analysis should help determine whether or not the product should be introduced.
Step 2: Gather Resources
Every SWOT analysis will vary, and a company may need different data sets to support pulling together different SWOT analysis tables. A company should begin by understanding what information it has access to, what data limitations it faces, and how reliable its external data sources are.
In addition to data, a company should understand the right combination of personnel to have involved in the analysis. Some staff may be more connected with external forces, while various staff within the manufacturing or sales departments may have a better grasp of what is going on internally. Having a broad set of perspectives is also more likely to yield diverse, value-adding contributions.
Step 3: Compile Ideas
For each of the four components of the SWOT analysis, the group of people assigned to performing the analysis should begin listing ideas within each category. Examples of questions to ask or consider for each group are in the table below.
What occurs within the company serves as a great source of information for the strengths and weaknesses categories of the SWOT analysis. Examples of internal factors include financial and human resources , tangible and intangible (brand name) assets, and operational efficiencies.
Potential questions to list internal factors are:
- (Strength) What are we doing well?
- (Strength) What is our strongest asset?
- (Weakness) What are our detractors?
- (Weakness) What are our lowest-performing product lines?
What happens outside of the company is equally as important to the success of a company as internal factors. External influences, such as monetary policies , market changes, and access to suppliers, are categories to pull from to create a list of opportunities and weaknesses.
Potential questions to list external factors are:
- (Opportunity) What trends are evident in the marketplace?
- (Opportunity) What demographics are we not targeting?
- (Threat) How many competitors exist, and what is their market share?
- (Threat) Are there new regulations that potentially could harm our operations or products?
Companies may consider performing this step as a "white-boarding" or "sticky note" session. The idea is there is no right or wrong answer; all participants should be encouraged to share whatever thoughts they have. These ideas can later be discarded; in the meantime, the goal should be to come up with as many items as possible to invoke creativity and inspiration in others.
Step 4: Refine Findings
With the list of ideas within each category, it is now time to clean-up the ideas. By refining the thoughts that everyone had, a company can focus on only the best ideas or largest risks to the company. This stage may require substantial debate among analysis participants, including bringing in upper management to help rank priorities.
Step 5: Develop the Strategy
Armed with the ranked list of strengths, weaknesses, opportunities, and threats, it is time to convert the SWOT analysis into a strategic plan. Members of the analysis team take the bulleted list of items within each category and create a synthesized plan that provides guidance on the original objective.
For example, the company debating whether to release a new product may have identified that it is the market leader for its existing product and there is the opportunity to expand to new markets. However, increased material costs, strained distribution lines, the need for additional staff, and unpredictable product demand may outweigh the strengths and opportunities. The analysis team develops the strategy to revisit the decision in six months in hopes of costs declining and market demand becoming more transparent.
Use a SWOT analysis to identify challenges affecting your business and opportunities that can enhance it. However, note that it is one of many techniques, not a prescription.
Benefits of SWOT Analysis
A SWOT analysis won't solve every major question a company has. However, there's a number of benefits to a SWOT analysis that make strategic decision-making easier.
- A SWOT analysis makes complex problems more manageable. There may be an overwhelming amount of data to analyze and relevant points to consider when making a complex decision. In general, a SWOT analysis that has been prepared by paring down all ideas and ranking bullets by importance will aggregate a large, potentially overwhelming problem into a more digestible report.
- A SWOT analysis requires external consider. Too often, a company may be tempted to only consider internal factors when making decisions. However, there are often items out of the company's control that may influence the outcome of a business decision. A SWOT analysis covers both the internal factors a company can manage and the external factors that may be more difficult to control.
- A SWOT analysis can be applied to almost every business question. The analysis can relate to an organization, team, or individual. It can also analyze a full product line , changes to brand, geographical expansion, or an acquisition. The SWOT analysis is a versatile tool that has many applications.
- A SWOT analysis leverages different data sources. A company will likely use internal information for strengths and weaknesses. The company will also need to gather external information relating to broad markets, competitors, or macroeconomic forces for opportunities and threats. Instead of relying on a single, potentially biased source, a good SWOT analysis compiles various angles.
- A SWOT analysis may not be overly costly to prepare. Some SWOT reports do not need to be overly technical; therefore, many different staff members can contribute to its preparation without training or external consulting.
SWOT Analysis Example
In 2015, a Value Line SWOT analysis of The Coca-Cola Company noted strengths such as its globally famous brand name, vast distribution network, and opportunities in emerging markets. However, it also noted weaknesses and threats such as foreign currency fluctuations, growing public interest in "healthy" beverages, and competition from healthy beverage providers.
Its SWOT analysis prompted Value Line to pose some tough questions about Coca-Cola's strategy, but also to note that the company "will probably remain a top-tier beverage provider" that offered conservative investors "a reliable source of income and a bit of capital gains exposure."
Five years later, the Value Line SWOT analysis proved effective as Coca-Cola remains the 6th strongest brand in the world (as it was then). Coca-Cola's shares (traded under ticker symbol KO) have increased in value by over 60% during the five years after the analysis was completed.
To get a better picture of a SWOT analysis, consider the example of a fictitious organic smoothie company. To better understand how it competes within the smoothie market and what it can do better, it conducted a SWOT analysis. Through this analysis, it identified that its strengths were good sourcing of ingredients, personalized customer service, and a strong relationship with suppliers. Peering within its operations, it identified a few areas of weakness: little product diversification, high turnover rates, and outdated equipment.
Examining how the external environment affects its business, it identified opportunities in emerging technology, untapped demographics, and a culture shift towards healthy living. It also found threats, such as a winter freeze damaging crops, a global pandemic, and kinks in the supply chain. In conjunction with other planning techniques, the company used the SWOT analysis to leverage its strengths and external opportunities to eliminate threats and strengthen areas where it is weak.
SWOT (strengths, weaknesses, opportunities, and threats) analysis is a method for identifying and analyzing internal strengths and weaknesses and external opportunities and threats that shape current and future operations and help develop strategic goals. SWOT analyses are not limited to companies. Individuals can also use SWOT analysis to engage in constructive introspection and form personal improvement goals.
What Is an Example of SWOT Analysis?
Home Depot conducted a SWOT analysis, creating a balanced list of its internal advantages and disadvantages and external factors threatening its market position and growth strategy. High-quality customer service, strong brand recognition, and positive relationships with suppliers were some of its notable strengths; whereas, a constricted supply chain, interdependence on the U.S. market, and a replicable business model were listed as its weaknesses.
Closely related to its weaknesses, Home Depot's threats were the presence of close rivals, available substitutes, and the condition of the U.S. market. It found from this study and other analysis that expanding its supply chain and global footprint would be key to its growth.
What Are the 4 Steps of SWOT Analysis?
The four steps of SWOT analysis comprise the acronym SWOT: strengths, weaknesses, opportunities, and threats. These four aspects can be broken into two analytical steps. First, a company assesses its internal capabilities and determines its strengths and weaknesses. Then, a company looks outward and evaluates external factors that impact its business. These external factors may create opportunities or threaten existing operations.
How Do You Write a Good SWOT Analysis?
Creating a SWOT analysis involves identifying and analyzing the strengths, weaknesses, opportunities, and threats of a company. It is recommended to first create a list of questions to answer for each element. The questions serve as a guide for completing the SWOT analysis and creating a balanced list. The SWOT framework can be constructed in list format, as free text, or, most commonly, as a 4-cell table, with quadrants dedicated to each element. Strengths and weaknesses are listed first, followed by opportunities and threats.
Why Is SWOT Analysis Used?
A SWOT analysis is used to strategically identify areas of improvement or competitive advantages for a company. In addition to analyzing thing that a company does well, SWOT analysis takes a look at more detrimental, negative elements of a business. Using this information, a company can make smarter decisions to preserve what it does well, capitalize on its strengths, mitigate risk regarding weaknesses, and plan for events that may adversely affect the company in the future.
A SWOT analysis is a great way to guide business-strategy meetings. It's powerful to have everyone in the room discuss the company's core strengths and weaknesses, define the opportunities and threats, and brainstorm ideas. Oftentimes, the SWOT analysis you envision before the session changes throughout to reflect factors you were unaware of and would never have captured if not for the group’s input.
A company can use a SWOT for overall business strategy sessions or for a specific segment such as marketing, production, or sales. This way, you can see how the overall strategy developed from the SWOT analysis will filter down to the segments below before committing to it. You can also work in reverse with a segment-specific SWOT analysis that feeds into an overall SWOT analysis.
Although a useful planning tool, SWOT has limitations. It is one of several business planning techniques to consider and should not be used alone. Also, each point listed within the categories is not prioritized the same. SWOT does not account for the differences in weight. Therefore, a deeper analysis is needed, using another planning technique.
Business News Daily. " SWOT Analysis: What It Is and When to Use It ."
Seeking Alpha. " The Coca-Cola Company: A Short SWOT Analysis ."
Panmore. " Home Depot SWOT Analysis & Recommendations ."
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A SWOT analysis tool is one of the most effective business and decision-making tools. SWOT analysis can help you identify the internal and external factors affecting your business.
A SWOT analysis helps you:
- build on strengths ( S )
- minimise weakness ( W )
- seize opportunities ( O )
- counteract threats ( T ).
The results generated by a SWOT analysis makes up part of your business planning. It can also help you to:
- better understand your business
- identify areas of the business that need improving
- decide if you should introduce a new product or service
- understand your market and competitors
- predict changes you will need to deal with to ensure your business is successful.
Using SWOT analysis in your business
You should consider doing a SWOT analysis to give you a framework for understanding the state of your business and where you have opportunities for growth or fixing any faults in your operation.
To conduct a SWOT analysis, you must look at both the internally and externally focused activities of your business.
Internally focused activities are matters generally under the business's control, including:
- internal operations
- marketing and sales
- financial management
- staffing and human resources
- customer service
- quality assurance.
You can use the SWOT analysis tool (see below) to identify current strengths and weaknesses in your internally focused activities.
To assist your analysis, consider:
- conducting quarterly internal reviews
- brainstorming with your team
- checking business processes
- tracking business performance and metrics.
Externally focused activities are the activities that affect your business but are generally outside its control, including:
- supplier operations
- tenders and grants
- the social and natural environment
- global trade
- financial markets.
You can use the SWOT analysis tool (see below) to identify opportunities and threats for externally focused activities.
To assist your analysis, you might also consider:
- researching trends, reports and industry data
- reading newspapers and journals
- working with mentors and advisers
- attending business events and conferences
- meeting with suppliers and government
- attending research tours of other states and countries.
Reasons for using a SWOT
You can use a SWOT analysis to help you review your entire business, but you can conduct an analysis focussing on 1 or 2 specific issues.
SWOT analysis can:
- help you create or update your business plan
- help you decide whether to introduce a new product or service to the market
- be part of your regular strategic planning review (quarterly, half-yearly or yearly).
A SWOT analysis should generate a brief list of issues relevant to the 4 categories—strengths, weaknesses, opportunities and threats.
The analysis of these issues helps the business make meaningful changes. For example, if the SWOT analysis has indicated a staffing weakness, a more detailed human resourcing plan may be required.
Limitations of the SWOT
A SWOT analysis is not a perfect tool—it has some limitations.
A SWOT analysis:
- will not prioritise issues—it must be reviewed to produce meaningful results
- will not provide solutions or offer alternative decisions—you must look at the issues noted and work to generate solutions
- can generate too many ideas but will not help you choose which one is best—when this occurs, try to limit the scope of the analysis to only a few solutions
- can produce a lot of information, but it may not all be useful—you must review the data generated to determine what is relevant.
Tips for completing a successful SWOT analysis
A SWOT analysis helps you assess internal factors that might affect your business (strengths and weaknesses) and external factors (opportunities and threats).
You will need to review and act on the results from the SWOT analysis.
The following tips can help ensure your SWOT analysis is successful:
- Keep your SWOT analysis short and simple, but remember to include key details. For example, if you think your staff are a strength, have specific information about individual staff and their specific skills and experience, as well as why they are a strength and how they can help you meet your business goals.
- Get multiple perspectives on your business—ask for input from your employees, suppliers, customers and partners, and review online reviews and feedback.
- Make sure the focus of the SWOT analysis is not too narrow. While it can help to complete SWOT analyses on specific issues (e.g. a quarterly goal for growing your customer base), having an overall business SWOT analysis is always helpful.
- Ensure that you link the SWOT analysis back to your business plan—you should refer to the defined goals and objectives in the business plan when considering the issues identified.
- Make sure you capture and document the findings of your SWOT analysis in your business plan—use our business plan template .
Conducting a SWOT
Download the SWOT analysis template and conduct your own analysis of internal and external issues that might be affecting your business. Or you can read the example SWOT analysis below and replace the details with your own.
The SWOT analysis tool can be used to identify existing strengths and build on them.
Consider the following:
- What does the business do well?
- What is your competitive advantage ? Could it be increased or transferred to more customer types?
- What internal strengths does your business have? Consider skills, knowledge, networks and reputation.
- What external strengths does your business have? Consider customers, technology, funding and capital.
- How can the business build on its strengths?
- What skills and training do you and your staff have? Are you making the best use of them?
- Are you making the best use of your digital technology ? Could you upgrade or expand them to improve your business?
- How could you improve your financial management strengths ?
- What other strengths can you identify and use more effectively?
Record and review your business strengths
Using the questions above, complete the strengths section of the SWOT tool template or example analysis below for your own business.
Make sure you also record this information in your business plan template .
The SWOT analysis tool should be used to identify and limit weaknesses in your business.
- What are the weaknesses of your systems and processes?
- What processes, policies or procedures could be developed to minimise the effects of these weaknesses?
- Are there weaknesses in your business model? Could you change 1 or more components of your model to improve the business? Search online for business model mapping tools online to help you visualise and update your business model.
- Are there weaknesses with staff performance ? Could you improve staff selection, job descriptions, performance and mentoring?
Record and review your business weaknesses
Using the questions above, complete the weaknesses section of the SWOT tool template or example analysis below for your own business.
Make sure you capture and document this information in your business plan template .
The SWOT analysis tool can be used to identify and explore opportunities. Opportunities are the external factors that, if used effectively, can help you build your competitive advantage.
- What are the current industry trends (e.g. a new online channel to market products and services)? Can they be used to your advantage?
- Are there any upcoming changes that could positively affect your business? Consider, for example, consumers, regulation and technological advancements.
- Is the business eligible for any grants or tenders ?
- Are there any opportunities to innovate that you could implement in the business?
- Are there new market opportunities that you could consider? Learn about the basics of exporting .
Record and review your business opportunities
Using the questions above, complete the opportunities section of the SWOT tool template or example analysis below for your own business.
The SWOT analysis tool will help you to identify and counteract threats and build resilience. Threats include external factors that may be beyond your control.
- What external factors could put the business at risk?
- What political, environmental, social, and technological factors might affect the business?
- What new competitors may enter your market? How could this affect your business?
- What risk-management strategies do you have in place and could they be improved?
- What tools do you have to build resilience to manage and mitigate risks?
Record and review your business threats
Using these questions, complete the threats section of the SWOT tool template or example analysis below for your own business.
Example SWOT analysis
The following is an example of a SWOT analysis conducted by a business trying to decide if they should introduce a new product to their range.
To get the most out of a SWOT analysis, specific statements should be made in each category. For example, rather than simply list 'competitors' as a threat, specific details about how competitors are a threat have been included.
Once you have read through this example SWOT analysis, you can type your responses to build a SWOT analysis for your business.
What to do after completing a SWOT
After you've compiled your SWOT data, complete an analysis by:
- selecting a maximum of 3–5 issues from each quadrant in the SWOT tool
- prioritising the issues.
- the people responsible for solving the issue
- the necessary resources and budget
- the timeframes for completion and review.
Note that the same issues may appear in different quadrants—for example, some identified opportunities may help overcome a weakness or build on an identified strength within the business. Occasionally, a SWOT analysis may identify a threat that prompts a change in the business model.
You should regularly review the action plans you have in place to ensure that any connections between issues are handled and actions are coordinated across the business.
You must also consider the constantly changing external and internal business environments. Conduct regular SWOT analyses to ensure you are prepared for these changes and can build on your business's strengths for success.
Learn about deciding how to identify what SWOT actions to prioritise .
- Last reviewed: 8 Dec 2022
- Last updated: 8 Dec 2022
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What is a SWOT analysis?
How to conduct a swot analysis, questions to ask during a swot analysis, examples of a swot analysis, tows analysis: developing strategies from your swot analysis, how to do a swot analysis for better strategic planning.
6 min. read
Updated October 27, 2023
Conducting a SWOT analysis of your business is a lot more fun than it sounds. It won’t take much time, and doing it forces you to think about your business in a whole new way.
The point of a SWOT analysis is to help you develop a strong business strategy by making sure you’ve considered all of your business’s strengths and weaknesses, as well as the opportunities and threats it faces in the marketplace.
S.W.O.T. is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is an organized list of your business’s greatest strengths, weaknesses, opportunities, and threats.
Strengths and weaknesses are internal to the company (think: reputation, patents, location). You can change them over time but not without some work. Opportunities and threats are external (think: suppliers, competitors, prices)—they are out there in the market, happening whether you like it or not. You can’t change them.
Existing businesses can use a SWOT analysis, at any time, to assess a changing environment and respond proactively. In fact, I recommend conducting a strategy review meeting at least once a year that begins with a SWOT analysis.
New businesses should use a SWOT analysis as a part of their planning process. There is no “one size fits all” plan for your business, and thinking about your new business in terms of its unique “SWOTs” will put you on the right track right away, and save you from a lot of headaches later on.
Looking to get started right away? Download our free SWOT Analysis template.
In this article, I will cover the following:
- Example of a SWOT analysis
- TOWS analysis: Developing strategies for your SWOT analysis
To get the most complete, objective results, a SWOT analysis is best conducted by a group of people with different perspectives and stakes in your company. Management, sales, customer service, and even customers can all contribute valid insight. Moreover, the SWOT analysis process is an opportunity to bring your team together and encourage their participation in and adherence to your company’s resulting strategy.
A SWOT analysis is typically conducted using a four-square SWOT analysis template, but you could also just make lists for each category. Use the method that makes it easiest for you to organize and understand the results.
I recommend holding a brainstorming session to identify the factors in each of the four categories. Alternatively, you could ask team members to individually complete our free SWOT analysis template, and then meet to discuss and compile the results. As you work through each category, don’t be too concerned about elaborating at first; bullet points may be the best way to begin. Just capture the factors you believe are relevant in each of the four areas.
Once you are finished brainstorming, create a final, prioritized version of your SWOT analysis, listing the factors in each category in order of highest priority at the top to lowest priority at the bottom.
I’ve compiled some questions below to help you develop each section of your SWOT analysis. There are certainly other questions you could ask; these are just meant to get you started.
Strengths (internal, positive factors)
Strengths describe the positive attributes, tangible and intangible, internal to your organization. They are within your control.
- What do you do well?
- Positive attributes of people , such as knowledge, background, education, credentials, network, reputation, or skills.
- Tangible assets of the company , such as capital, credit, existing customers or distribution channels, patents, or technology.
- What advantages do you have over your competition?
- Do you have strong research and development capabilities? Manufacturing facilities?
- What other positive aspects, internal to your business, add value or offer you a competitive advantage?
Weaknesses (internal, negative factors)
Weaknesses are aspects of your business that detract from the value you offer or place you at a competitive disadvantage. You need to enhance these areas in order to compete with your best competitor.
- What factors that are within your control detract from your ability to obtain or maintain a competitive edge?
- What areas need improvement to accomplish your objectives or compete with your strongest competitor?
- What does your business lack (for example, expertise or access to skills or technology)?
- Does your business have limited resources?
- Is your business in a poor location?
Opportunities (external, positive factors)
Opportunities are external attractive factors that represent reasons your business is likely to prosper.
- What opportunities exist in your market or the environment that you can benefit from?
- Is the perception of your business positive?
- Has there been recent market growth or have there been other changes in the market the create an opportunity?
- Is the opportunity ongoing, or is there just a window for it? In other words, how critical is your timing?
Threats (external, negative factors)
Threats include external factors beyond your control that could place your strategy, or the business itself, at risk. You have no control over these, but you may benefit by having contingency plans to address them if they should occur.
- Who are your existing or potential competitors?
- What factors beyond your control could place your business at risk?
- Are there challenges created by an unfavorable trend or development that may lead to deteriorating revenues or profits?
- What situations might threaten your marketing efforts?
- Has there been a significant change in supplier prices or the availability of raw materials?
- What about shifts in consumer behavior, the economy, or government regulations that could reduce your sales?
- Has a new product or technology been introduced that makes your products, equipment, or services obsolete?
For illustration, here’s a brief SWOT example from a hypothetical, medium-sized computer store in the United States:
See our SWOT analysis examples article for in-depth examples of SWOT analyses for several different industries and business types or download our free SWOT analysis template .
Once you have identified and prioritized your SWOT results, you can use them to develop short-term and long-term strategies for your business. After all, the true value of this exercise is in using the results to maximize the positive influences on your business and minimize the negative ones.
But how do you turn your SWOT results into strategies? One way to do this is to consider how your company’s strengths, weaknesses, opportunities, and threats overlap with each other. This is sometimes called a TOWS analysis.
For example, look at the strengths you identified, and then come up with ways to use those strengths to maximize the opportunities (these are strength-opportunity strategies). Then, look at how those same strengths can be used to minimize the threats you identified (these are strength-threats strategies).
Continuing this process, use the opportunities you identified to develop strategies that will minimize the weaknesses (weakness-opportunity strategies) or avoid the threats (weakness-threats strategies).
The following table might help you organize the strategies in each area:
Once you’ve developed strategies and included them in your strategic plan, be sure to schedule regular review meetings. Use these meetings to talk about why the results of your strategies are different from what you’d planned (because they always will be) and decide what your team will do going forward.
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Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.
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SWOT Analysis: How To Do One [With Template & Examples]
Published: October 05, 2023
As your business grows, you need a roadmap to help navigate the obstacles, challenges, opportunities, and projects that come your way. Enter: the SWOT analysis.
This framework can help you develop a plan to determine your priorities, maximize opportunities, and minimize roadblocks as you scale your organization. Below, let’s go over exactly what a SWOT analysis is, a few SWOT analysis examples, and how to conduct one for your business.
When you’re done reading, you’ll have all the inspiration and tactical advice you need to tackle a SWOT analysis for your business.
What is a SWOT analysis? Importance of a SWOT Analysis How to Write a Good SWOT Analysis SWOT Analysis Examples How to Act on a SWOT Analysis
What is a SWOT analysis?
A SWOT analysis is a strategic planning technique that puts your business in perspective using the following lenses: Strengths, Weaknesses, Opportunities, and Threats. Using a SWOT analysis helps you identify ways your business can improve and maximize opportunities, while simultaneously determining negative factors that might hinder your chances of success.
While it may seem simple on the surface, a SWOT analysis allows you to make unbiased evaluations on:
- Your business or brand.
- Market positioning.
- A new project or initiative.
- A specific campaign or channel.
Practically anything that requires strategic planning, internal or external, can have the SWOT framework applied to it, helping you avoid unnecessary errors down the road from lack of insight.
Free SWOT Analysis Template
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Importance of a SWOT Analysis
You’ve noticed by now that SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. The framework seems simple enough that you’d be tempted to forgo using it at all, relying instead on your intuition to take these things into account.
But you shouldn’t. Doing a SWOT analysis is important. Here’s why.
SWOT gives you the chance to worry and to dream.
A SWOT analysis is an important step in your strategic process because it gives you the opportunity to explore both the potential risks and the exciting possibilities that lie ahead. You’re giving yourself the space to dream, evaluate, and worry before taking action. Your insights then turn into assets as you create the roadmap for your initiative.
For instance, when you consider the weaknesses and threats that your business may face, you can address any concerns or challenges and strategize on how to mitigate those risks. At the same time, you can identify strengths and opportunities, which can inspire innovative ideas and help you dream big. Both are equally important.
SWOT forces you to define your variables.
Instead of diving head first into planning and execution, you’re taking inventory of all your assets and roadblocks. This process will help you develop strategies that leverage your strengths and opportunities while addressing and mitigating the impact of weaknesses and threats.
As a result, you'll gain a comprehensive understanding of your current situation and create a more specific and effective roadmap. Plus, a SWOT analysis is inherently proactive. That means you'll be better equipped to make informed decisions, allocate resources effectively, and set realistic goals.
SWOT allows you to account for mitigating factors.
As you identify weaknesses and threats, you’re better able to account for them in your roadmap, improving your chances of success.
Moreover, accounting for mitigating factors allows you to allocate your resources wisely and make informed decisions that lead to sustainable growth. With a SWOT analysis as a guide, you can confidently face challenges and seize opportunities.
SWOT helps you keep a written record.
As your organization grows and changes, you’ll be able to strike things off your old SWOTs and make additions. You can look back at where you came from and look ahead at what’s to come.
In other words, SWOT analyses serve as a tangible history of your progress and provide a reference point for future decision-making. With each update, your SWOT analysis becomes a living document that guides your strategic thinking and helps you stay agile and adaptable in an ever-changing business landscape.
By maintaining this written record, you foster a culture of continuous improvement and empower your team to make data-driven decisions and stay aligned with your long-term vision.
Parts of a SWOT Analysis
Conducting a SWOT analysis will help you strategize effectively, unlock valuable insights, and make informed decisions. But what exactly does a SWOT analysis include?
Let’s explore each component: Strengths, Weaknesses, Opportunities, and Threats.
Your strengths are the unique advantages and internal capabilities that give your company a competitive edge in the market. A strong brand reputation, innovative products or services, or exceptional customer service are just a few examples. By identifying and capitalizing on your strengths, you can foster customer loyalty and build a solid foundation for growth.
No business is flawless. Weaknesses are areas where you may face challenges or fall short of your potential. It could be outdated processes, skill gaps within the team, or inadequate resources. By acknowledging these weaknesses, you can establish targeted initiatives for improvement, upskill your team, adopt new technologies, and enhance your overall operational efficiency.
Opportunities are external factors that can contribute to your company's progress. These may include emerging markets, technological advancements, changes in consumer behavior, or gaps in the market that your company can fill. By seizing these opportunities, you can expand your market reach, diversify your product offerings, forge strategic partnerships, or even venture into untapped territories.
Threats are external factors that are beyond your control and pose challenges to your business. Increased competition, economic volatility, evolving regulatory landscapes, or even changing market trends are examples of threats. By proactively assessing and addressing them, you can develop contingency plans, adjust your strategies, and minimize their impact on your operations.
In a SWOT analysis, you’ll have to take both internal and external factors into account. We’ll cover those next.
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SWOT Analysis Internal and External Factors
A SWOT analysis typically has internal (i.e., within your organization) and external (i.e., outside your organization) factors at play. Here's a breakdown of each.
Internal factors refer to the characteristics and resources within your organization that directly influence its operations and performance. These factors are completely within your organization's control, so they can be modified, improved, or capitalized upon.
In a SWOT analysis, strengths and weaknesses are categorized as internal factors. Let’s look at a few examples.
- Brand reputation
- Unique expertise
- Loyal customer base
- Talented workforce
- Efficient processes
- Proprietary technology
- Outdated technology
- Inadequate resources
- Poor financial health
- Inefficient processes
- Skill gaps within the team
External factors are elements outside the organization's control that have an impact on its operations, market position, and success. These factors arise from the industry climate and the broader business environment. You typically have no control over external factors, but you can respond to them.
In a SWOT analysis, opportunities and threats are categorized as external factors. Let’s look at a few examples.
- Emerging markets
- Changing consumer trends
- Technological advancements
- Positive shifts in regulations
- New gaps in the market you could fill
- Intense competition
- Economic downturns
- Disruptive technologies
- Changing regulations
- Negative shifts in consumer behavior
Remember, a well-rounded SWOT analysis empowers you to capitalize on strengths, address weaknesses, seize opportunities, and navigate threats — all while making informed decisions for the future.
Now, let’s take a look at how you can write a good SWOT analysis for yourself or for stakeholders.
How do you write a good SWOT analysis?
There are several steps you’ll want to take when evaluating your business and conducting a strategic SWOT analysis.
1. Download HubSpot's SWOT Analysis Template.
There’s no need to start from scratch for your analysis. Instead, start by downloading a free, editable template from HubSpot. Feel free to use the model yourself, or create your own as it suits your needs.
3. Identify your objective.
Before you start writing things down, you’ll need to figure out what you’re evaluating with your SWOT analysis.
Be specific about what you want to analyze. Otherwise, your SWOT analysis may end up being too broad, and you’ll get analysis paralysis as you are making your evaluations.
If you’re creating a new social media program, you’ll want to conduct an analysis to inform your content creation strategy. If you’re launching a new product, you’ll want to understand its potential positioning in the space. If you’re considering a brand redesign, you’ll want to consider existing and future brand conceptions.
All of these are examples of good reasons to conduct a SWOT analysis. By identifying your objective, you’ll be able to tailor your evaluation to get more actionable insights.
4. Identify your strengths.
“Strengths” refers to what you are currently doing well. Think about the factors that are going in your favor as well as the things you offer that your competitors just can’t beat.
For example, let’s say you want to use a SWOT analysis to evaluate your new social media strategy.
If you’re looking at a new social media program, perhaps you want to evaluate how your brand is perceived by the public. Is it easily recognizable and well-known? Even if it’s not popular with a widespread group, is it well-received by a specific audience?
Next, think about your process: Is it effective or innovative? Is there good communication between marketing and sales?
Finally, evaluate your social media message, and in particular, how it differs from the rest of the industry. I’m willing to bet you can make a lengthy list of some major strengths of your social media strategy over your competitors, so try to dive into your strengths from there.
5. Identify your weaknesses.
In contrast to your strengths, what are the roadblocks hindering you from reaching your goals? What do your competitors offer that continues to be a thorn in your side?
This section isn’t about dwelling on negative aspects. Rather, it’s critical to foresee any potential obstacles that could mitigate your success.
When identifying weaknesses, consider what areas of your business are the least profitable, where you lack certain resources, or what costs you the most time and money. Take input from employees in different departments, as they’ll likely see weaknesses you hadn’t considered.
If you’re examining a new social media strategy, you might start by asking yourself these questions: First, if I were a consumer, what would prevent me from buying this product, or engaging with this business? What would make me click away from the screen?
Second, what do I foresee as the biggest hindrance to my employees’ productivity, or their ability to get the job done efficiently? What derails their social media efforts?
6. Consider your opportunities.
This is your chance to dream big. What are some opportunities for your social media strategy you hope, but don’t necessarily expect, to reach?
For instance, maybe you’re hoping your Facebook ads will attract a new, larger demographic. Maybe you’re hoping your YouTube video gets 10,000 views and increases sales by 10%.
Whatever the case, it’s important to include potential opportunities in your SWOT analysis. Ask yourself these questions:
- What technologies do I want my business to use to make it more effective?
- What new target audience do I want to reach?
- How can the business stand out more in the current industry?
- Is there something our customers complain about that we could fix?
The opportunities category goes hand-in-hand with the weaknesses category. Once you’ve made a list of weaknesses, it should be easy to create a list of potential opportunities that could arise if you eliminate your weaknesses.
7. Contemplate your threats.
It’s likely, especially if you’re prone to worry, you already have a good list of threats in your head.
If not, gather your employees and brainstorm. Start with these questions:
- What obstacles might prevent us from reaching our goals?
- What’s going on in the industry, or with our competitors, that might mitigate our success?
- Is there new technology out there that could conflict with our product?
Writing down your threats helps you evaluate them objectively.
For instance, maybe you list your threats in terms of least and most likely to occur and divide and conquer each. If one of your biggest threats is your competitor’s popular Instagram account, you could work with your marketing department to create content that showcases your product’s unique features.
SWOT Analysis Chart
Download a free SWOT analysis chart included in HubSpot’s free market research kit .
A SWOT analysis doesn’t have to be fancy. Our SWOT analysis chart provides a clear and structured framework for capturing and organizing your internal strengths and weaknesses, and external opportunities and threats. It's the perfect visual aid to make sense of the wealth of information gathered during your analysis.
(Plus, you can always customize and paste it into a document you plan to share with stakeholders.)
But remember: Filling out the SWOT chart is just one step in the process. Combine it with our entire market research kit , and you'll have all the tools necessary to help your organization navigate new opportunities and threats.
SWOT Analysis Examples
The template above helps get you started on your own SWOT analysis.
But, if you’re anything like me, it’s not enough to see a template. To fully understand a concept, you need to see how it plays out in the real world.
These SWOT examples are not exhaustive. However, they are a great starting point to inspire you as you do your own SWOT analysis.
Apple’s SWOT analysis
Here’s how we’d conduct a SWOT analysis on Apple.
First off, strengths. While Apple has many strengths, let’s identify the top three:
- Brand recognition.
- Innovative products.
- Ease of use.
Apple’s brand is undeniably strong, and its business is considered the most valuable in the world . Since it’s easily recognized, Apple can produce new products and almost ensure a certain degree of success by virtue of the brand name itself.
Apple’s highly innovative products are often at the forefront of the industry. One thing that sets Apple apart from the competition is its product inter-connectivity.
For instance, an Apple user can easily sync their iPhone and iPad together. They can access all of their photos, contacts, apps, and more no matter which device they are using.
Lastly, customers enjoy how easy it is to use Apple’s products. With a sleek and simple design, each product is developed so that most people can quickly learn how to use them.
Next, let’s look at three of Apple’s weaknesses.
- High prices
- Closed ecosystem
- Lack of experimentation
While the high prices don’t deter Apple’s middle- and upper-class customer base, they do hinder Apple’s ability to reach a lower-class demographic.
Apple also suffers from its own exclusivity. Apple controls all its services and products in-house, and while many customers become loyal brand advocates for this reason, it means all burdens fall on Apple employees.
Ultimately, Apple’s tight control over who distributes its products limits its market reach.
Lastly, Apple is held to a high standard when it comes to creating and distributing products. Apple’s brand carries a high level of prestige. That level of recognition inhibits Apple from taking risks and experimenting freely with new products that could fail.
Now, let’s take a look at opportunities for Apple.
It’s easy to recognize opportunities for improvement, once you consider Apple’s weaknesses. Here’s a list of three we came up with:
- Expand distribution options.
- Create new product lines.
- Technological advancement.
One of Apple’s biggest weaknesses is its distribution network, which, in the name of exclusivity, remains relatively small. If Apple expanded its network and enabled third-party businesses to sell its products, it could reach more people globally, while alleviating some of the stress currently put on in-house employees.
There are also plenty of opportunities for Apple to create new products. Apple could consider creating more affordable products to reach a larger demographic, or spreading out into new industries — Apple self-driving cars, perhaps?
Finally, Apple could continue advancing its products’ technology. Apple can take existing products and refine them, ensuring each product offers as many unique features as possible.
Finally, let’s look at threats to Apple.
Believe it or not, they do exist.
Here are three of Apple’s biggest threats:
- Tough competition.
- International issues.
Apple isn’t the only innovative tech company out there, and it continues to face tough competition from Samsung, Google, and other major forces. In fact, Samsung sold more smartphones than Apple did in Q1 of 2022 , shipping 17 million more units than Apple and holding 24% of the market share.
Many of Apple’s weaknesses hinder Apple’s ability to compete with the tech corporations that have more freedom to experiment, or that don’t operate in a closed ecosystem.
A second threat to Apple is lawsuits. Apple has faced plenty of lawsuits, particularly between Apple and Samsung . These lawsuits interfere with Apple’s reputable image and could steer some customers to purchase elsewhere.
Finally, Apple needs to improve its reach internationally. The company isn’t number one in China and doesn’t have a very positive relationship with the Chinese government. In India, which has one of the largest consumer markets in the world, Apple’s market share is low , and the company has trouble bringing stores to India’s market.
If Apple can’t compete globally the way Samsung or Google can, it risks falling behind in the industry.
Starbucks SWOT Analysis
Now that we’ve explored the nuances involved with a SWOT analysis, let’s fill out a SWOT template using Starbucks as an example.
Here’s how we’d fill out a SWOT template if we were Starbucks:
Download this Template for Free
Restaurant Small Business SWOT Analysis
Some small business marketers may have difficulty relating to the SWOTs of big brands like Apple and Starbucks. Here’s an example of how a dine-in Thai restaurant might visualize each element.
Small restaurants can lean into their culinary expertise and service skills to find opportunities for growth and brand awareness. A SWOT analysis can also help identify weaknesses that can be improved, such as menu variation and pricing.
While a restaurant might not be as worried about high-level lawsuits, a small business might be more concerned about competitors or disruptors that might enter the playing field.
Local Boutique SWOT Analysis
In another small business example, let’s take a look at a SWOT analysis for a local boutique.
This shop might be well known in its neighborhood, but it also might take time to build an online presence or get its products in an online store.
Because of this, some of its strengths and opportunities might relate to physical factors while weaknesses and threats might relate to online situations.
How to Act on a SWOT Analysis
After conducting a SWOT analysis, you may be asking yourself: What’s next?
Putting together a SWOT analysis is only one step. Executing the findings identified by the analysis is just as important — if not more.
Put your insights into action using the following steps.
Take advantage of your strengths.
Use your strengths to pursue opportunities from your analysis.
For example, if we look at the local boutique example above, the strength of having affordable prices can be a value proposition. You can emphasize your affordable prices on social media or launch an online store.
Address your weaknesses.
Back to the boutique example, one of its weaknesses is having a poor social media presence. To mitigate this, the boutique could hire a social media consultant to improve its strategy. They may even tap into the expertise of a social-savvy employee.
Make note of the threats.
Threats are often external factors that can’t be controlled, so it’s best to monitor the threats outlined in your SWOT analysis to be aware of their impacts on your business.
When to Use a SWOT Analysis
While the examples above focus on business strategy in general, you can also use a SWOT analysis to evaluate and predict how a singular product will play out in the market.
Ultimately, a SWOT analysis can measure and tackle both big and small challenges, from deciding whether or not to launch a new product to refining your social media strategy.
Editor's note: This post was originally published in May 2018 and has been updated for comprehensiveness.
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What Is a SWOT Analysis and How to Do It Right (With Examples)
Posted february 2, 2021 by noah parsons.
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.
What is a SWOT Analysis?
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
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.
A SWOT analysis organizes your top strengths, weaknesses, opportunities, and threats into an organized list and is usually presented in a simple two-by-two grid. Go ahead and download our free template if you just want to dive right in and get started.
Why do a SWOT Analysis?
When you take the time to do a SWOT analysis, you’ll be armed with a solid strategy for prioritizing the work that you need to do to grow your business.
You may think that you already know everything that you need to do to succeed, but a SWOT analysis will force you to look at your business in new ways and from new directions. You’ll look at your strengths and weaknesses, and how you can leverage those to take advantage of the opportunities and threats that exist in your market.
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 to go.
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.
1. Gather the right people
Gather people from different parts of your company and make sure that you have representatives from every department and team. You’ll find that different groups within your company will have entirely different perspectives that will be critical to making your SWOT analysis successful.
2. Throw your ideas at the wall
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.
3. Rank the ideas
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 are internal, positive attributes of your company. These are things that are within your control.
- What business processes are successful?
- What assets do you have in your teams? (ie. knowledge, education, network, skills, and reputation)
- What physical assets do you have, such as customers, equipment, technology, cash, and patents?
- What competitive advantages do you have over your competition?
Weaknesses are negative factors that detract from your strengths. These are things that you might need to improve on to be competitive.
- Are there things that your business needs to be competitive?
- What business processes need improvement?
- Are there tangible assets that your company needs, such as money or equipment?
- Are there gaps on your team?
- Is your location ideal for your success?
Opportunities are external factors in your business environment that are likely to contribute to your success.
- Is your market growing and are there trends that will encourage people to buy more of what you are selling?
- Are there upcoming events that your company may be able to take advantage of to grow the business?
- Are there upcoming changes to regulations that might impact your company positively?
- If your business is up and running, do customers think highly of you?
Threats are external factors that you have no control over. You may want to consider putting in place contingency plans for dealing with them if they occur.
- Do you have potential competitors who may enter your market?
- Will suppliers always be able to supply the raw materials you need at the prices you need?
- Could future developments in technology change how you do business?
- Is consumer behavior changing in a way that could negatively impact your business?
- Are there market trend s that could become a threat?
SWOT Analysis example
To help you get a better sense of what at SWOT example actually looks like, we’re going to look at UPer Crust Pies, a specialty meat and fruit pie cafe in Michigan’s Upper Peninsula. They sell hot, ready-to-go pies and frozen take-home options, as well as an assortment of fresh salads and beverages.
The company is planning to open its first location in downtown Yubetchatown and is very focused on developing a business model that will make it easy to expand quickly and that opens up the possibility of franchising. Here’s what their SWOT analysis might look like:
SWOT analysis for UPer Crust Pies
How to use your SWOT Analysis
With your SWOT analysis complete, you’re ready to convert it into a 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.
UPer Crust Pies — Potential strategies for growth
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.
- Investigate investors. UPer Crust Pies might investigate its options for obtaining capital.
- Create a marketing plan. Because UPer Crust Pies wants to execute a specific marketing strategy—targeting working families by emphasizing that their dinner option is both healthy and convenient—the company should develop a marketing plan.
- Plan a grand opening. A key piece of that marketing plan will be the store’s grand opening, and the promotional strategies necessary to get UPer Crust Pies’ target market in the door.
Next steps with your SWOT Analysis
With your goals and actions in hand, you’ll be a long way toward completing a strategic plan for your business. I like to use the Lean Planning methodology for strategic plans as well as regular business planning. The actions that you generate from your SWOT analysis will fit right into the milestones portion of your Lean Plan and will give you a concrete foundation that you can grow your business from. You can download our free Lean Plan template to help you get started.
If you have additional ideas for how a SWOT analysis can help your business and how it fits into your regular business planning, I’d love to hear from you. You can find me on Twitter @noahparsons .
Editor’s note: This article was originally published in 2018 and updated for 2021.
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How to SWOT and PESTLE Analyse a Business Plan
Article by Eshani Jain .
Got a business idea? Great. But, that’s just the first part of the puzzle of going forward with your startup. If you do not want your startup to blow up in a smoke, you need a real business plan – one that has been vetted by SWOT and PESTLE analysis.
A plan will guide the way forward for your company, how you’ll conduct the varied activities of your organization, how you’ll put your finances to use and the way will you outrun your competitors to realize your pre-determined goals. But creating the plan is not enough. You also need to put it to the test. You need to see if your plan can actually survive in the real world before you jump in with your business. And for that we use the-
- SWOT Analysis
- PESTLE Analysis
These analysis may seem like a bother, but they are key for any business looking to make an impact. While SWOT test is a much broader test, which predominantly analyses the internals of a business plan, the PESTLE test analyses whether the plan is sufficient in the environment where you want to create your startup.
And so, let’s get started!
What is SWOT Analysis?
SWOT stands for the four parameters that the technique examines: Strengths, Weakness, Opportunities, and Threats. It’s an analysis technique that permits you to develop a business strategy that helps you to stand out from your competitors and become a successful venture. It is pretty much used everywhere, including startups, companies that have been around for a long time, non-profit organizations, government units, and individuals.
The tool assesses the four aspects of the business and helps in identifying the key parts of your business that require improvements in order to survive in a competitive market. It specifies the objectives of the business and identifies the interior and external factors that pose favorable or unfavorable to the business.
How to Do a SWOT Analysis?
A SWOT analysis is conducted by organizing a brainstorming session of varied members of a corporation who hold different stakes within the business and have different stands and perspectives.
Representatives from different departments of the corporate like management, sales, customer service, production, etc. should all be a part of the meeting so that they can contribute their ideas, making the SWOT analysis successful. All the contributed ideas are categorized under strengths, weaknesses, opportunities, and threats.
To efficiently categorize each characteristic of the corporate and therefore the factor affecting it we need to know each element of the analysis individually.
Strengths of a business include the factors that set the business aside from its competitors and provides it an upper hand within the market.
The strength of a business is often within the sort of its property, human resources, technology, physical resources, etc. It is often its USP (unique selling proposition) but it is not limited to it and may even be any aspect of your organization that gives you an advantage.
It is simply the things that your business does the best and the qualities or characteristics that set it aside from the others. They’re the attributes that enhance the competitiveness of a business in its marketplace.
To identify your strengths, you need to ask yourself the following questions:
- Do you have enough financial resources that allow you to conduct your operations at ease?
- What advantages do you have over your market rivals?
- What sets you apart?
- What helps you attract your customers?
- How competent is your human capital / employees?
- What’s your unique selling proposition?
- What makes your product different from similar products within the market?
- How many vast geographical areas does your product cover?
- How strong is your public image / branding?
- Do you have any cost advantage over your customers?
Like strengths, weaknesses also are an inherent feature of companies.
Weakness is something a corporation lacks which puts it at a disadvantage in the market against its competitors.
Weaknesses are often in the form of lack of resources, untrained human capital, inferior intellectual capital, an unclear unique selling proposition, an unorganised communication system within a startup , and inferior skills and capabilities of the corporate in its key areas.
Understanding your weakness allows you to take the necessary measures to overcome them and strive towards becoming a better organisation otherwise your weaknesses make you vulnerable within the marketplace.
To identify your weaknesses, you need to ask yourself and / or your team the following questions:
- Is your business financially stable? Is its working capital strategy sound?
- Is your customer base sufficient?
- Are your company’s human resources working in harmony?
- Are your customers being offered better services by your rivals than you?
- Is your USP (unique selling proposition) unique?
- Are you making a profit using your current business practices?
- Is there enough coordination between various departments of your organisation?
- Is your product range versatile enough?
- What’s your brand’s public image?
- What features of your product are inferior to those of your competitors’?
Opportunities are positive externalities within the marketplace which will end up being highly lucrative and beneficial for your business if grabbed at the right time.
Identifying opportunities within the marketplace may be a difficult task and requires tons of alertness and understanding of the business environment. A business before grabbing a chance that the market presents thereto must make certain whether it has the required financial capital, human capital, technology, and other resources at its disposal.
Opportunities allow your business to compete successfully and lead within the marketplace. For example, most businesses believe cashing in on Augmented Reality and Data analytics can be vastly helpful for them to boost their business growth.
To identify opportunities for your business within the marketplace, you need to ask yourself, your business partners and/or your employees the following questions:
- Do you think it’s the proper time to expand your business in an alternative territory?
- Is your business versatile enough to launch new product lines?
- Can your business cash in on the new technological developments emerging in marketplaces?
- Are you able to take over your rival companies if they’re becoming weak?
- Are the features of your product unique enough to draw in a bigger customer base?
- Are you in a position to take advantage of falling export barriers?
- Are you on an edge to make alliances to expand your business?
- Are you able to meet the rising product demands within the marketplace?
These are the factors in a corporation’s external environment that make a detrimental effect on the profitability and well-being of a company.
A firm has no control over these negative external factors, it can just take as many measures as possible to safeguard its business from suffering high losses.
Threats can appear in the form of emerging competitors, negative public image, negative customer feedback, shifts in market requirements, changing market trends, etc.
A company’s management must identify the threats to the company’s prospects and take necessary strategic actions to reduce the impact of such threats.
For example, prototyping is a great way to identify threats when a business is framing a business model .
To identify threats for your business within the marketplace, you need to ponder over the subsequent questions:
- What impact will slowdown in market growth have on your business?
- How can technological advancements affect your venture?
- What impact will low entry barriers into the marketplace wear your business?
- Will your company lose some of its profit if foreign trade policies are made more restrictive?
- Will an increase within the price of any key input of your business impact your revenue?
- How badly will a shift in consumer tastes and expectations affect your business?
- How can increased competition affect your business?
- Are your business strategies competent enough to adapt to the changing business environment?
External and Internal Factors
Strength, weakness, opportunity, and threats can further be classified into two groups: Internal and External factors.
Internal factors comprise things that structure the strength and weaknesses of a corporation.
These factors are within the control of a business and it has the power to alter them, for instance, a corporation falling short with its financial capital is categorized as a weakness but it’s still within the control of the organisation to extend and try to get more funding , making it an indoor factor to the organisation. Similarly, a great revenue model may be an internal strength factor of a company while a bad one will be an internal weakness.
External factors are the factors beyond the control of a corporation. They include macroeconomic matters, socio-cultural changes, technological changes, legislative changes, policy alterations, etc.
Opportunities and threats occur because of the external factors to a business over which the business has little or no or no control. You can only attempt to lessen the impact of a threat on your business and if it is an opportunity, you can try to grab it. Take for instance, emerging competitors within the market. Categorising the 4 elements into internal and external factors allows a corporation to differentiate between the factors on which it has a control and on which it doesn’t.
When can SWOT Analysis be used for Your Business Plan
- It is often used to explore new solutions for problems.
- Decide on strategies that can be easily pursued to achieve the objectives of the business, in view of the prevailing business environment
- To brainstorm and analyze the prevailing plans to get any fallout if present.
- It is often used for pre-crisis planning and preventive management.
- It can be used to develop a recommendation during a viability study.
What does SWOT Analysis Reveal in a Business Plan?
After finishing your SWOT analysis, a corporation identifies its weaknesses and helps in risk mitigration as well as provides for a detailed analysis of the opportunities it may have and the strengths using which it may capture certain opportunities.
This process helps your startup to formulate strategies keeping in mind the internal strengths that will help you seize opportunities as and when presented by the market. Using these strategies the business can make the best use of its competitive assets and efficiently compete against the threats posed by the marketplace and its competitors.
It also helps the business to understand how vulnerable its key aspects are and in what way they have to be rectified; for instance, high operational costs of a corporation make it competitively vulnerable in the marketplace which may pose to be a big pitfall for the business , therefore, the management needs to pay a lot of attention on that.
What is PESTLE Analysis?
It is a strategic analysis and management tool that identifies, analyzes, organizes, and keeps a track of key macro-environmental factors that have an impact on the working and financial soundness of an organization.
PESTLE is an acronym for Political, Economic, Social, Technological, Legal and Environmental. This framework examines opportunities and threats caused by political, economic, social, technological, legal, and environmental forces.
There are many adaptations / variations of the original framework which examine different combinations of external factors specifically to cater to the needs of different industries.
Few variations are STEPE, STEEPLE, DESTEP, SPLIT, etc.
PESTLE and its variations are mostly used by businesses, researchers, government organizations, and non-profit organizations.
Startups tend to use this tool to analyze the environment and examine if any of these factors affect the performance of the business.
Government organizations use it to understand the effects, the environmental factors may have on their introduction of new laws, policies or funding regulations and lastly non-profit organizations use the tool to analyze the effect of changes in macro-economic factors upon their cause.
The six factors that the acronym PESTLE stands for are:
Political factors relate to the actions of the government. Political factors include tax policy, fiscal policy, foreign trade policies, trade restrictions, consumer laws, political climate, and political stability.
It can also include certain goods and services that the government wants to provide or does not want to provide or imposition of import tariffs by the Government.
Political policies have an impact on all sectors of business.
It may be health, education, or infrastructure though the magnitude of the impact may vary from industry to industry. For example, a change in foreign trade policy will have a higher impact on export-oriented business rather than a local business.
Some questions you may need to ponder about so as to understand how political factors affect your business are:
- Will a change in political power have an impact on your business?
- Will political instability in the country affect your organization?
- Will the introduction of new tax policies have an impact on your revenue generation?
- Do trade restrictions limit the scope of your business?
- Does a change in labour laws have a favourable or detrimental effect for your business?
- Is a change in the Consumer Protection statute beneficial or problematic for your business?
- Is your business practice in tune with the data privacy laws?
Economic factors include economic growth, inflation rates, interest rates, exchange rates, unemployment rates, trade deficit and surplus, per-capita domestic product, etc.
These factors have an impact on operational and financial activities of almost every business that exists. However, it is possible that an economic change that may affect one industry negatively but simultaneously have a positive outcome for another.
A change in exchange rates has a significant impact on the cost of exporting goods and the price of supplying imported goods. Similarly, a change in market interest rates impacts a firm’s decisions regarding expansion and development.
Think about these questions to understand how economic factors affect your business:
- How does the unemployment rate in the country affect your labour costs?
- Will an increase in interest rates affect the growth of your organization?
- How will a spike in prices in the economy affect the demand for your goods and services?
- Are consumers saving or spending too much on similar products or services?
Socio-cultural factors are the forces within cultures and societies that have an impact on the behavior and feelings of humans.
The factors include attitudes, societal values, cultural influences, ethnic values, population size and growth rate, age distribution, and lifestyles that impact the demand for goods and services. Sociological forces vary from place to place and from time to time.
High trends in social factors have a huge influence on the working and popularity of businesses.
For example, a trend towards healthier lifestyles leads to a shift in customer base from alcohol and fast food towards organic vegetables, gyms, and healthier food options. Similarly, various factors of the socio-cultural environment have an immense influence on healthcare, entertainment, travel, and hospitality industries.
An interesting case study is the “Go Vegan” movement , which was just a fringe movement that now has far-reaching effects all over the world.
Some questions you may ask to understand what affects socio-cultural factors have on your business:
- Does a change in the attitude of customers towards saving and investment influence your business?
- Do the changing fashion trends affect your sales?
- Do people’s lifestyle changes have an impact on the sales of your product or service?
- Does the inclination of people towards green products have an ascendancy on your product sales?
Technological factors include research & development activity, technological change, automation, and technological development. These factors can have a plethora of effects on your startup.
Due to rapidly changing technology, there is a transformation in the quality and innovation of products.
These technological factors also have an influence on the costs and prices of products in the market. The factors also encourage the birth of new industries by ongoing innovations such as connected wearable devices however they can also be the reason for the death of various industries that become outdated or obsolete.
They also influence the outsourcing and production level decisions of a firm. Moore’s law which had predicted the doubling of semiconductors in transistors every year, is now being used to predict the compounded growth of technology in all sectors.
In fact, most investors try to jump on the trend to capitulate on interesting and innovative businesses.
Some questions you may ask to understand what technological factors affect your business:
- Does the introduction of automation by your competitors affect your business?
- Can further advancement in the technological environment make you go out of business?
- Does growing e-commerce have an impact on your business?
- Does constant innovation of new products make your product obsolete?
- Is the technology sector ripe for disruption?
- Has any platform democratised the participation of the masses in any field of tech?
- Can you open-source an important source code or program so as to boost innovation in your startup?
Legal and Regulatory Factors
Legal and Regulatory factors include rules, regulations, and laws with which companies must comply such as labour laws, consumer laws, employment laws, antitrust laws, discrimination law, financial service regulations, and health and safety regulations.
Some regulations and laws are industry-specific whereas others affect all businesses. These factors influence the company’s operations, costs, and other key elements. Ponder over these questions to help gain an understanding of what legal and regulatory factors affect your business:
- Will a change in consumer law have an impact on your business practices?
- Can labour laws influence your company’s wage rates and tie down your competitiveness?
- Does your business fall under the purview of a specific regulation governing the industry? For example, real estate regulations and insurance laws.
- Is the Government planning for any disruption in any sector anytime soon?
Environmental factors include ecological and environmental forces such as climate, weather, climate change, and water shortages.
These factors have a direct impact on certain industries like farming, tourism, energy production, and insurance and an indirect impact on various others like transportation and utilities.
Moreover, the rising awareness of climate change and global warming is affecting the way companies operate and lead to a shift in the demands of customers.
Some questions you may need to ask yourself to understand what environmental factors affect your business:
- Will the limited availability of non-renewable goods have an impact on your business?
- Can a change in the climate of your place influence your business?
- Will water shortage in your industrial area have an impact on your business?
- Can you use an exponential technology in the present environmental conditions?
The Porter’s Five Forces analysis is a great tool for analyzing environmental factors.
Benefits of using PESTLE Analysis on your Business Plan
- It is an extremely cost-effective technique, the only thing it costs is time.
- PESTLE analysis helps you in evaluating your business plan from every angle, highlighting every way in which an environmental factor can have a direct or indirect impact on your business.
- PESTLE analysis helps you in examining every environmental change and thus making you prepared to sustain any negative changes by formulating strategies in advance.
- The Analysis keeps you updated with all social trends enabling you to seize any opportunity that the market presents.
- PESTLE Analysis helps you to assess and analyze the implications of entering a new market.
- It is an extremely easy and efficient framework-tool to use.
When can PESTLE Analysis be used on a Business Plan?
- It can be used before launching a business as certain businesses require you to adhere to strict rules and regulations.
- It can be used when an organization faces a problem. An organization should conduct a PESTLE Analysis to discover if the cause of the problem it is facing is only one or there might be more associated causes or problems.
- To identify the driving forces in the market.
What does the PESTLE Analysis reveal in a Business Plan?
A PESTLE Analysis helps you in understanding your organization’s market and business position a lot better.
It gives you an overview of the various external factors that might influence your business. It helps you to conduct full market research of your existing market or the market you wish to enter in the near future.
It allows you to reevaluate and reconsider your business strategies in light of the external factors which might have an indirect or direct impact on your organization. It enables startup executives to make more knowledgeable and informed decisions and plan more strategically.
Wrapping up on the Business Plan SWOT and PESTLE Test
That’s all. As you can see, these analysis are complementary to each other and are not two ways to do the same thing. These analysis should be used if you want to develop a solid business that blows its competitors out of the water!
And once it you do the analysis, you can go in to develop the product or service that you wish to sell. But before you go all in, it’s important that you follow the tried and tested principles of business development – that is, conduct a competitor research and use design thinking principles to your product/ business development processes.
First, create a proof of concept , then an MVP and then, and then only create the full and final product / service.
I hope you liked this article. If you did, let me know your thoughts in the comments and do share the article with your startup co-founders and management team.
Read Next: How You Can Use Digital Marketing for Your Business
Author Bio: Eshani Jain , the author of this article is a student of Bachelor of Commerce (Hons) at Kamala Nehru College, DU.
About The Author
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