In this article we show you how to use the SWOT analysis correctly using a simple explanation and example.
The SWOT analysis is a strategic planning tool for identifying and understanding the strengths, weaknesses, opportunities, and threats affecting a business, project or situation.
In fact, this tool is extremely flexible ― when used right ― and can help decision making in all sorts of circumstances.
But first, let’s start with a definition before moving onto the SWOT analysis example.
If you want to read more high quality articles please sign up for email updates and never miss another post.
Table of Contents
What is a SWOT Analysis?
You’re probably familiar with the SWOT (sometimes called the TOWS) analysis matrix or grid.
Let’s be clear, this is not the analysis!
It’s simply a means to capture information so you can do the analysis later.
Yes, that’s right. The SWOT analysis begins by collecting information about the organisation or project and ends with decisions based on an interpretation of the information summarised in the matrix.
What’s more, the SWOT analysis is a useful way of drawing together analyses of an organisation’s external environment ― for example, using PEST and Porter’s Five Forces ― and the internal environment ― Porter’s Value Chain, resource analysis and so on.
How to Use a SWOT Analysis
Since the SWOT analysis is unique to each business we can only give some general pointers. However, there are a number of things that can be done to enhance the quality of your SWOT.
Follow these tips and use them in the following example SWOT analysis.
Effective SWOT Analysis
Here are our tips for a perfect SWOT analysis:
- use a SWOT analysis to distinguish between where you are now and where you wish to be,
- be realistic about your strengths and weaknesses,
- be specific ― only include key points and issues,
- relate strengths and weaknesses to critical success factors,
- always aim to state strengths and weaknesses in competitive terms,
- rank points in order of importance, and
- finally, keep it brief ― never more than a page.
Strengths, Weaknesses, Opportunities and Threats
Strengths and weaknesses are internal to the business and are controllable. Conversely, opportunities and threats are uncontrollable external forces that act upon the situation.
We often find that this part of the exercise is often done wrong. To be clear:
- Strengths – are positive attributes internal to the organisation or situation that are within your control.
- Weaknesses – are also internal factors within your control that may impede your ability to meet your objectives.
- Opportunities – are external factors that the organisation or project should (or could) develop.
- Threats – are external factors beyond your control that could place the project or organisation at risk.
Conducting the SWOT Analysis
Ideally, in a group or workshop, brainstorm each category and capture the strengths, weaknesses, opportunities, and threats pertinent to the situation, context, strategy or project. Aim to only include key points and make sure these are backed up with evidence ― but don’t be too rigid.
Also, don’t spend too much time capturing this information and don’t over analyse. As with all brainstorming exercises the aim is to capture ideas pertinent to the current business situation.
Finally, highlight the most important issues and then rank them in order of importance before using our SWOT analysis example as a checklist for your own SWOT.
Checklist of Possible SWOT Factors ― SWOT Analysis Example
Developing a Strategic Plan
The next stage of the analysis is to take the highest ranking strengths,weaknesses, opportunities and threats and answer the following questions:
- How do you use your strengths to take advantage of opportunities?
- How do you overcome weaknesses preventing you from taking advantage of opportunities?
- How can your strengths reduce the probability of threats?
- What can you do about your weaknesses to make the threats less likely?
As you answer these questions you will begin to understand the external forces you contend with and how to tackle them. Use your understanding of the implications to develop a plan of action.
The SWOT analysis is about capitalising your strengths, overcoming weaknesses, exploiting opportunities, and countering threats.
Moreover, it is about identifying the most important issues, setting priorities, appraising the options, and taking action.
This should all be done in the context of the organisation, project or situation and customer.
So you see, the output of the SWOT analysis is not simply a matrix or grid but rather a concise report containing clear goals and activities that should be communicated to your stakeholders.
Creative Commons image courtesy Erik Holsvik.