How To Do A SWOT Analysis

Conducting SWOT analysis is a very effective way to assess your business or company’s situation. Whether it is a big company, a new start up or a running business, this article will help you in learning, what is a SWOT analysis? How to do a SWOT analysis? Its importance and its benefits.

Here we are going to discuss how to do a SWOT analysis, but before that;

What is a SWOT analysis?

A SWOT (strengths, weaknesses, opportunities and threats) analysis is a tool and technique for determining your company’s internal strengths and weaknesses.

At the same time, it determines your company’s external opportunities and threats.

It helps the company in using this information in business planning, developing and achieving goals, more commonly used at organizational level. It is a grid like matrix, a four distinct quadrants.

How to do a SWOT analysis?

Let’s take a look at each element of it,

Strengths

The first element in SWOT analysis is the strengths. This element addresses the things your business is doing better than other competitors. It can be something tangible, intangible, people, product, marketing or anything.

It means what an organization is doing something different from its competitors like having;

• Anything your company is doing well
• competitive advantage of your business
• strong brand base
• loyal customers
• innovative technologies
• skilled and  knowledgeable staff

Weaknesses

The second element in SWOT analysis is the weaknesses. When you have gone through your strengths, it’s time for have a critical analysis of your weaknesses. Weaknesses create hurdles in the way of a company from performing at its maximum level.
Weaknesses are the areas where a company needs to make improvements to remain in the competition. It can be like;

• Anything your company lacks
• weak brand base
• higher turnover rate
• higher level of debts
• lack of resources
• lack of budget
• disruption in supply chain

Opportunities

The third element in SWOT analysis is the opportunities. Opportunities are the favorable external conditions or factors that can provide your organization, a competitive advantage. Different opportunities provide your company various spaces to grow and generate profits.

Opportunities can be like;

• having fewer competitors
• untapped market for a specific product or service
• market having demand for your product or service
• sales and marketing coverage or your company

Threats

The fourth element in SWOT analysis is the threats. Threats are the factors that can potentially harm the organization itself or harm the success or growth of the organization.

Threats can be like;

• new emerging direct competitor
• new emerging indirect competitor
• rising cost of raw material
• changes in rules and regulations
• tight labor supply
• rising labor rates
• changing customer shopping trends

How to use a SWOT analysis?

These above mentioned four elements can be further classified into two subgroups, internal and external factors.

Internal Factors

Internal factors are those factors that happen within a company. Strengths and weaknesses are considered as the internal factors of an organization. They are usually the result of the company’s decisions that are taken internally. 

For example internal factors involves, tangible and intangible assets, financial and human resources.

How our business is different from our competitors? (Strengths)

What is our lowest performing product? (Weakness)

External Factors

External factors are those factors that happen outside of your company. They are of equal importance in the success of your company as internal factors. Opportunities and threats are considered as the external factor of an organization. 

For example, fluctuation in exchange rates, changes in monetary policy, rise in cost of raw material, changes in any rules and regulations.

What segments are we not targeting? (Opportunity)

How many direct and indirect competitors and what is their share in the market? (Threat)

	Opportunities (External, Positive)	Threats (External, Negative)
Strengths (Internal, Positive)	Strengths – Opportunities Strategies Which of the organization’s strength can be used to maximize the opportunities you have identified?	Strengths – Threats Strategies How can you use organization’s strengths to minimize the threats you have identified?
Weaknesses (Internal, Negative)	Weaknesses – Opportunities Strategies What actions can you take to minimize the organization’s weaknesses using the opportunities you have identified?	Weakness – Threats Strategies How can you minimize the organization’s weaknesses to avoid the threats you have identified?

Subcategorization of SWOT analysis as internal or external can help you determining your next strategy and assessing how much control you have over a problem.

How to conduct a SWOT analysis?

There are 7 simple steps to conduct a SWOT analysis.

1. Set the objective of SWOT analysis

Before SWOT analysis, you should have some objectives and questions in your mind. Why are you going to conduct SWOT analysis. For example, you can conduct SWOT analysis, whether the company should launch a new product or service in a new market.

2. Conduct research

Before SWOT analysis, you should do some research about your market, business and industry. For that purpose you can conduct market research to find out about your market, business and industry conditions.

3. Identify and list company’s strengths

The first step will be to identify and list your company’s strengths. For example, it can be financial resources, business location, strong brand base, loyal customers, innovative technologies, skilled and knowledgeable staff. List all the strengths of your business.

4. Identify and list company’s weaknesses

The second step will be to identify and list all the company’s weaknesses. For example, it can be weak brand base, higher turnover rate, higher level of debts, lack of resources, lack of budget, and disruption in supply chain and decline in market share. List all the weaknesses of your business.

5. Identify and list company’s potential opportunities

The third step will be to identify and list all the company’s potential opportunities. For example, it can be having fewer competitors, untapped market for a specific product or service, market having demand for your product or service, sales and marketing coverage or your company, new technology or new training programs.

List all the potential external opportunities of your business.

6. Identify and list company’s potential threats

The fourth step will be to identify and list all the company’s current and potential threats. These threats can cause problems for your business. For example, new emerging direct competitor, new emerging indirect competitor, rising cost of raw material, changes in rules and regulations, tight labor supply, rising labor rates, or changing customer shopping trends.

List all the potential threats of your business.

7. Set priorities and develop strategies

After completing above steps, you will have the four quadrants. This four quadrant picture will clearly explain your strengths, weaknesses, opportunities and threats. This will clearly show how your business is going on and what issues that are needed to be addressed.

You can work on the threats and opportunities identified from these sections to convert opportunities into strengths and minimize threats and weaknesses.

Why SWOT analysis is important?

SWOT analysis helps you in having a clear visibility of your performance. It will also help you in identifying your business areas that are performing well. It helps you in identifying your strengths that will help you in performing better in the market.

It will help you in identifying your weaknesses that can be attacked by your competitor. So you can minimize them as much as you can.

SWOT analysis will also help you in identifying the opportunities of the market which you can grab timely and turn them into your strengths.

It will help you in determining your company’s threats. So that you know them, defend your business against them.

Conclusion

It is important to conduct SWOT analysis of your business. So that you know your strengths, weaknesses, opportunities and threats. The main objective of SWOT analysis is to identifying and taking advantage of your strengths identify weaknesses, capitalize on opportunities, and beat your threats.

SWOT analysis will provide you a bird eye view of your business, and will help you improve your projects and campaigns, and it will help you in developing strategy and a clear road map for the future.

How To Do A SWOT Analysis FAQ

1. What is SWOT analysis and examples?

A SWOT (strengths, weaknesses, opportunities and threats) analysis is a tool and technique to for determining your company’s internal strengths and weaknesses. At the same time, determining your company’s external opportunities and threats.

Coca Cola conducted a SWOT analysis, creating a balance between internal and external factors. They identified its strengths are, variety of products across different categories, 43% market share in soft drinks market, powerful brand recognition on global scale, and secret recipes for their drink products.

Coca Cola identified their weaknesses are, difficulty to keep up with the health industry, unable to find a better substitute for sugar, difficulty to change current positioning and customer attitude towards company.

Then, Coca Cola identified their opportunities are, the company can increase their market share if they listen and adapt to current health standards, relatively few competitors on the market.

Coca Cola identified their threats are, companies that are offering healthy alternatives to Coca Cola and other soft drinks, negative press and media coverage can harm the brand in the long run.

2. What are 4 terms in SWOT analysis?

SWOT stands for strengths, weaknesses, opportunities and threats. It is a technique for evaluating these four aspects of a business.

3. What are 3 steps in SWOT analysis?

The three steps in SWOT analysis are;

1. Analyze the internal factors (Strengths and weaknesses)
2. Analyze the external factors (Opportunities and threats)
3. Evaluate the business situation and conclude any needed action

4. How do you write a good SWOT analysis?

In SWOT analysis, it involves identifying the strengths, weaknesses, opportunities and threats of the business. It is recommended to set the objective first, what is the objective of conducting SWOT analysis. Then make a list of questions to answer against each element. It can be formed in list format, as a free text. Most commonly used is four quadrant dedicated for each element.