A SWOT analysis is a strategic planning and management tool that business leaders, business owners, and organizations can use to understand their company’s strengths and weaknesses, and optimize their position against competitors in the marketplace. SWOT stands for Strengths (competitive advantages that differentiate your business from others), Weaknesses (areas for improvement that otherwise weaken your company’s competitive advantage), Opportunities (external factors that promote business growth), and Threats (external factors that undermine business growth). SWOT analyses can inform broad company and industry decisions, or direct decisions around a specific product, department, technology, or initiative.
The advantages of a SWOT analysis are plentiful: determine the internal factors within your company’s control (strengths and weaknesses), understand and prepare for the external factors that could impact your business or the decisions you face (opportunities and threats), collect data and diverse perspectives from key players in your organization, create simple plans from complex problems, take advantage of potential business opportunities, and empower your people with insights about how the company plans to achieve a goal or pivot in the face of external conditions. A SWOT analysis can be simple, inexpensive, and collaborative; use the how-to steps below as a framework, but do not hesitate to exercise creativity as you gather and assess the data.
A SWOT analysis is often presented as a square with four quadrants, and each quadrant is dedicated to one aspect of the analysis. The top two quadrants will often be dedicated to internal factors (strengths, weaknesses), the bottom two quadrants to external factors (opportunities, threats), and the two quadrants on the left side to the advantageous factors (strengths, opportunities). With that said, a SWOT analysis can be completed in the framework of your choice.
Identify the objective, the question you want to answer, the problem you want to solve, or the area of business you want to clarify. Consider what resources (internal and external) and personnel you need to gather the data, with emphasis on a diverse range of perspectives.
Consider these questions: What resources do we need to gather the relevant ideas, data, and perspectives? How will we collect this data? Whose perspective has been shared and whose perspective are we missing?
Collect ideas, data, and perspectives from your resources and personnel. This step can be completed using any formal, informal, or collaborative method that you see fit. Get creative! Consider a brainstorming session or share an editable document to with the team. Encourage honesty and imagination; all input should be celebrated.
Consider these questions: What method(s) of data collection will inspire the most helpful insights? How will we encourage honesty and creativity in the data collection process? How will we ensure all voices are heard during the process?
Fill out the four quadrants or the preferred framework of the SWOT analysis:
List your company strengths and consider these questions:
List your company weaknesses and consider these questions:
List your company opportunities and consider these questions:
List your company threats and consider these questions:
Clarify and refine the ideas collected. This step may require healthy discussion to narrow down the data to what is most important or impactful.
Consider these questions: What data is most timely? What data will have the biggest impact on the original objective? What data is relevant given the current trends, technology, legal changes, environmental events, or social movements?
Finally, use the SWOT analysis to create a strategic plan. The strengths, weaknesses, opportunities, and threats can guide a business decision or inform a strategic plan that delivers on the initial reason you conducted the analysis.
