The SWOT analysis, explained
As you take on more strategic responsibilities in your career, you'll need tools to help you make smart, informed decisions. And one of the most useful frameworks is the SWOT analysis. But what exactly is it, and how can it benefit you? Read on to discover more, and find some SWOT analysis templates you can put to use.
What is a SWOT analysis?
A SWOT analysis is a strategic planning technique that helps organizations identify their Strengths, Weaknesses, Opportunities, and Threats. (That’s what SWOT analysis stands for!) By examining these four elements, you gain valuable insights into your company's current position – and future potential.
Think of it as a health check-up for an organisation. And like any health check-up, it can reveal important factors that inform your decision-making going forward. It’s not a strategy in and of itself, but it provides a shared understanding that can serve as a foundation for your future plans.
The origins of SWOT analysis can be traced back to the 1960s, when management consultants at the Stanford Research Institute developed it as a tool for corporate planning. Since then, it has become a staple in business schools and boardrooms around the world.
So, how do you conduct a SWOT analysis? It’s all about asking the right questions.
The components of a SWOT analysis
The classic SWOT analysis template has four sections, illustrated in a matrix diagram:
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For more SWOT analysis templates, scroll down.
Laid out in this format, you can see that the strengths and weaknesses on the top level, are both ‘internal factors’ within the organisation, while below, opportunities and threats represent ‘external factors’ that can influence the future. Similarly, ‘strengths’ and ‘opportunities’ are both in the positive left hemisphere, while ‘weaknesses’ and ‘threats’ represent the negative forces at play. Next, let’s take a quick look at the four quadrants.
Strengths
What does your company do better than anyone else? What unique resources or capabilities do you have? This could be a strong brand, proprietary technology, or a talented team. It might be experience you’ve built up over the years. (Conversely, for disruptive challengers, being unencumbered with overheads, lacking a hard-to-change brand perception, and having ‘nothing to lose’ can all be genuine strengths!)
Weaknesses
Where does your company struggle? What areas need improvement? Be honest with yourself. Maybe you have high employee turnover, or outdated systems holding you back. As you’ll see later, these aren’t all necessary ‘fatal flaws’ – they might be a natural part of how your do business. But candour is important while you’re taking stock.
Opportunities
What external factors could help your company grow? Is there an untapped market segment or emerging technology you could leverage? Here, you might want to keep an eye on industry trends and consumer behavior.
Threats
What external factors could harm your company? Is there new competition entering the market or regulatory changes on the horizon? Don't stick your head in the sand – face these threats head-on.
How to do a SWOT analysis
A SWOT analysis is a powerful tool for uncovering the key factors that influence your business. At its simplest, it could simply be a brainstorming exercise: gather a few key team members in a room, and collectively fill out the four quadrants of the SWOT matrix, as you understand it.
But you might not want to stop there. The real value of a SWOT analysis will depend entirely in the depth and rigor of your research – and your willingness to take an unsparing self-inventory of where you’re really at.
Take the "Strengths" quadrant, for example. You might be tempted to jot down "strong brand recognition" and "high customer satisfaction" based on your general sense of the business. But have you really dug into the data?
A more thorough approach could involve analyzing customer surveys, interviewing clients, and carrying out research. You might discover that while customers do recognize your brand, they associate it more with ‘affordability’ than quality. Or that while satisfaction remains high, customer retention rates are slowly eroding.
Or perhaps a previously ‘unthreatening’ challenger is starting to eat into your share of voice.
The point is, the more effort you put into your SWOT analysis, the more valuable the insights you'll glean. Of course, the depth will depend on your available time and resources. But even a small business with limited means stands to benefit from moving beyond surface-level observations, to taking a deeper look at what’s really going on.
So, how do you actually conduct a robust SWOT analysis? Here's a step-by-step guide:
Step 1: Assemble your team
SWOT analysis is a collaborative process.
Bring together a cross-functional team with representatives from different departments and levels of your organization. This diversity of perspectives will help you paint a comprehensive picture. Don’t forget to have people feed in from all levels – often, people at the front line will have valuable early insights into emerging patterns.
Step 2: Define your scope
Are you conducting a SWOT analysis for your entire organization, a specific department, or a particular product line? Clarity on your scope will keep your analysis focused and manageable.
Step 3: Brainstorm strengths
Ask your team: What do we do well? What resources or capabilities give us an edge? Consider your brand reputation, intellectual property, employee skills, and unique offerings. Be specific and honest.
Step 4: Identify weaknesses
Now, take a hard look in the mirror. Where do you struggle? What do customers complain about? Are there skills or resources you lack? Again, specificity is key. "Weak marketing" is less helpful than "Lack of social media engagement”, which is in turn still less tangible than “Our social media engagement is in the bottom-quartile for our competitor set.”
Step 5: Spot opportunities
Turn your gaze outward. What trends or changes in your market could you leverage? Are there new customer segments, geographic markets, or partnership opportunities to explore? Brainstorm freely, then prioritize based on potential impact and feasibility.
Step 6: Pinpoint threats
What external factors could derail your plans?
Consider everything from technological disruption to regulatory changes to shifting consumer preferences. Rank threats based on likelihood and potential impact.
Step 7: Synthesize and strategize
Now that you've filled out your SWOT matrix, it's time to connect the dots.
How can you use your strengths to seize opportunities and counter threats? How can you shore up weaknesses or turn them into strengths? Look for patterns and priorities.
Step 8: Communicate and implement
A SWOT analysis is only valuable if it's acted upon. Share your findings with your wider organization and use them to inform your strategic planning. Assign owners to key actions and set timelines for implementation.
Step 9: Rinse and repeat
Markets change, competitors emerge, and your own capabilities evolve. Treat your SWOT analysis as a living document. Revisit and update it regularly – quarterly or annually – to ensure your strategy stays relevant.
Tips for an effective SWOT analysis
Be realistic: It's tempting to gloss over weaknesses or exaggerate strengths. Resist this urge. An honest assessment is essential.
Be specific: Vague statements like "good customer service" or "tough competition" are less useful than specific observations like "24/7 customer support" or "Competitor X's new product launch."
Involve multiple stakeholders: Don't rely solely on the leadership team's perspective. Solicit input from frontline employees, customers, and even external partners for a 360-degree view.
Prioritize: Not all strengths, weaknesses, opportunities, and threats are created equal. Focus on the most impactful and urgent items.
Pair with other tools: SWOT analysis pairs well with other strategic frameworks like PESTEL analysis, Porter's Five Forces, or the Business Model Canvas. Use them together for a robust strategy toolkit.
Move towards action: SWOT analysis is just that – an analysis. You need to take the momentum from this process and develop a coherent strategy that plays to your strengths, motivates others, and provides a clear vision for the future – even if it means taking some dificult decisions.
Remember, a SWOT analysis is not an end in itself – it's a means to an end. The real value lies in the strategic decisions and actions it informs. So roll up your sleeves, gather your team, and get SWOTting! Your future self (and bottom line) will thank you.
SWOT analysis example
Imagine a small video production company that specialises in creating content for SMEs. Their senior team might get together and fill out a SWOT analysis matrix like this:
| Strengths | Weaknesses |
|
|
| Opportunities | Threats |
|
|
Armed with this analysis, the leadership can start to craft a strategy that plays to their strengths (niche expertise, agility), addresses their weaknesses (diversifying client base, investing in marketing), seizes opportunities (partnerships, new markets), and mitigates threats (differentiating from competition, offering value-add services).
Of course, a SWOT analysis is not a silver bullet.
It has its limitations and disadvantages.
Some argue that it oversimplifies complex issues or encourages a formulaic approach to strategy, while others point out that it's a static snapshot in time that may quickly become outdated.
But despite these drawbacks, a SWOT analysis remains a fundamental concept in the strategic thinking arsenal – after all, it’s difficult to get to grips with strategy without understanding one’s own strengths and so on. When used in conjunction with other frameworks like PESTEL analysis or Porter's Five Forces, it can provide a comprehensive understanding of your business environment.
So next time you're tasked with developing a strategy, don't overlook the humble SWOT analysis. It might just be the key to unlocking your company's full potential.
This related framework helps you turn your SWOT analysis (of ‘where you are’) into strategy (‘where you’ll go next.’)
SWOT analysis templates
There’s no right or wrong way to put together a SWOT analysis. For a major organisation, the full analysis could run to the size of a seriously-sized novel!
But here are a few example templates to get you started.
SWOT analysis template: PowerPoint / PPT
In this SWOT analysis template, we feature the classic 2x2 matrix early in the deck. Then, we devote slides to each section, as well as ‘spotlight’ slides that illustrate key factors (such as priority threats or consumer trends) to provoke further discussion. Download it as a Powerpoint .ppt file.
SWOT analysis template: Miro
The collaborative decision-making tool Miro offers a great pre-built SWOT analysis tempate, great for both real-time brainstorming as well as visual decision-making and asynchrous collaboration for remote workers. Check it out.
SWOT analysis template: spreadsheet for Excel or Google Sheets
This simply SWOT analysis template for Microsoft Excel or Google Sheets also comes with a section that allows you to start brainstorming strategic responses. Click here to view it as a Google Sheet or download the Excel SWOT analysis template as an .xls file.
Dealing with weaknesses in a SWOT analysis
You've identified your company's ‘weaknesses’ through your SWOT analysis. Now what? It's tempting to sweep them under the rug and hope no one notices. But that's a recipe for stagnation, not success.
At the same time, thougth, it’s not always the case that your weaknesses need to be ‘fixed.’ Sometimes, it’s all about crafting a strategy that makes them less relevant – or even turns them into strengths!
A few perspectives on dealing with weaknesses are:
Fix them: The most direct approach is to meet your weaknesses head-on and work to correct them. Is your weakness a lack of social media presence? Hire a social media manager or upskill your marketing team. Struggling with slow product development? Invest in agile methodologies and streamline your processes. This approach requires honest self-reflection, resources, and commitment to change. It's not easy, but it's necessary for growth.
Delegate them: Sometimes, the best way to address a weakness is to acknowledge that others can do it better. If your weakness is a lack of IT expertise, consider outsourcing to a specialist firm rather than trying to build that capability in-house. If you struggle with distribution, look for a logistics partner with an established network. By leveraging others' strengths, you can focus on what you do best.
Reframe them: Your weaknesses are only weaknesses in certain contexts. Can you reframe them as strengths in a different light? For example, if your weakness is a narrow product line, you could reframe it as specialization and use it to differentiate yourself as the go-to expert in your niche. If your small size makes you less competitive on price, emphasize your agility and personalized service instead. By changing the narrative, you can turn perceived weaknesses into unique selling points.
Make them irrelevant: Sometimes, a weakness is a sign that you're playing the wrong game. If your weakness is a lack of brick-and-mortar stores in an increasingly online world, it might be time to pivot your strategy towards e-commerce. If your manual processes can't keep up with demand, it's a signal to adapt and automate. By being willing to pivot and adapt your strategy, you can turn weaknesses into catalysts for transformation.
Compensate with strengths: Every weakness is an opportunity to lean into your strengths. If your weakness is limited brand recognition, double down on your strength in customer service to generate word-of-mouth buzz. If you struggle with cash flow, leverage your strong relationships with suppliers to negotiate better payment terms. By playing to your strengths, you can often compensate for or overshadow your weaknesses.
Accept them: Some weaknesses are inherent to your business model or industry. A luxury brand will always struggle with affordability; a highly regulated industry will always face compliance burdens. In these cases, the best approach is often acceptance and mitigation. Accept that these weaknesses `are merely the flip-side to your strengths, then focus on mitigating their impact. A luxury brand can offer financing options; a regulated company can invest in compliance automation. By accepting and mitigating inevitable weaknesses, you can minimize their drag on your success.
Remember, weaknesses are not permanent states. They are temporary challenges to be met with strategy, creativity, and resilience. By confronting them, reframing them, or using them as springboards for change, you can turn your SWOT weaknesses into sources of strength and opportunity.
Confronting the threats in your SWOT analysis
From aggressive competitors to economic downturns to disruptive technologies, the landscape is fraught with potential perils. But as the old saying goes, "forewarned is forearmed." By identifying and categorizing the threats revealed by your SWOT analysis, you can develop strategies to navigate, mitigate, or even transform them.
Understanding the nature of a threat is the first step in addressing it effectively. Consider this framework of threat-areas and potential responses in your strategy:
Competitor Threats: these are threats posed by the intentional actions of your rivals. A competitor launching a new product, undercutting your prices, or poaching your key staff are all examples. Competitor threats are often targeted and tactical.
Differentiate: Emphasize your unique value proposition. If a competitor copies your product, highlight your superior service.
Innovate: Stay one step ahead with continuous innovation in products, services, and customer experience.
Collaborate: Consider strategic alliances or co-opetition with rivals in non-core areas to pool resources and mitigate risks.
Economic Threats: these are threats arising from macroeconomic factors like recessions, inflation, exchange rate fluctuations, or shifts in consumer spending. Economic threats are often broad and systemic, affecting entire industries.
Diversify: Spread your risk across multiple customer segments, geographies, or product lines.
Build resilience: Strengthen your balance sheet, manage cash flow carefully, and create contingency plans.
Adapt pricing: Consider value-based pricing or dynamic pricing to maintain margins in tough times.
Technological Threats: These are threats posed by technological changes that could disrupt your business model. The rise of streaming was a technological threat to video rental stores; the advent of smartphones was a threat to digital camera makers. Technological threats are often transformative and can render entire products or services obsolete.
Embrace disruption: Don't fight the tide; find ways to integrate new technologies into your offerings.
Invest in R&D: Dedicate resources to staying at the forefront of technological change in your industry.
Partner strategically: Work with tech firms or start-ups to leverage their expertise and stay agile.
Societal Threats: these are threats stemming from changes in society, culture, or consumer behavior. Shifting attitudes towards sustainability pose a threat to plastics manufacturers; aging populations are a threat to the youth-oriented fashion industry. Societal threats are often gradual but profound.
Stay attuned: Invest in trend spotting and consumer research to anticipate shifts in preferences.
Align with values: Ensure your brand and offerings align with evolving societal values around issues like sustainability, diversity, and wellness.
Educate and influence: Take a proactive role in shaping the conversation and educating stakeholders about your industry.
Regulatory Threats: These are threats posed by changes in laws, regulations, or government policies. New data privacy regulations are a threat to data-driven businesses; changes in tax policy can threaten entire sectors. Regulatory threats are often politically driven and can emerge swiftly.
Engage proactively: Build relationships with policymakers and participate in industry advocacy efforts.
Plan ahead: Monitor the regulatory landscape and develop contingency plans for potential changes.
Turn compliance into advantage: Go beyond mere compliance and make regulatory excellence a differentiator.
Remember, the most effective threat mitigation strategies are proactive, not reactive. By scanning the horizon for potential threats and developing contingency plans, you can respond swiftly and decisively when challenges arise.
Another powerful tool is scenario planning. By envisioning different future scenarios based on different combinations of threats, you can stress-test your strategies and build resilience. What if a key competitor merges with a tech giant? What if a pandemic reshapes consumer behaviour? By gaming out these scenarios, you can identify vulnerabilities and opportunities ahead of time.
Ultimately, the key to navigating threats is a combination of vigilance, agility, and adaptability. Monitor your environment, categorize threats, develop proactive strategies, and be ready to pivot as conditions change. No business can eliminate threats entirely, but by incorporating threat analysis into your SWOT and strategic planning processes, you can build the resilience to weather any storm.
