The SWOT analysis is an extremely effective business tool that is commonly used for its productive outcomes.
A SWOT analysis is a simple strategic tool for identifying and documenting internal strengths , weakness of the organization and external opportunities and threats.
SWOT stands for S-strength, W-weakness, O-opportunities, T-threats
The output of SWOT analysis will support the organization in strategic planning and risk management.
A SWOT analyses also helps organizations in identifying immediate goals / objectives and assist in achieving them
Questions to ask during a SWOT analysis
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?
- What internal resources do you have? Think about the following:
- 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 organization that detract from an effective ISO management system.
You need to enhance these areas in order to achieve your objectives.
- 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?
Steps to creating your best SWOT
Step 1: Know your organization and the environment(s) it operates ( Context of the organization )
The first step, before SWOT analysis, is to understand and know your organization and the environment it operates in.
SWOT analyses can be performed with a little research about the industry, core organization activities, market and competitors.
It is recommended to also consult with other staff, clients and third parties
Step 2: List your strengths
Step 2 is probably the easiest step of all.
You need to list the strengths of your organization which could be related to core competencies, business model, financial resource, business location, culture of the organization and competitiveness.
- What advantages does your organization have?
- What is your business good in?
- What is the value proposition of your business?
- What is your Unique Selling Proposition?
- Why does customer buy from you?
Strengths are ideally a reflection of the characteristics of your organization.
The above list need not be definite at this stage.
Step 3: List your weaknesses
Weaknesses to your business are the ones that put your business at a disadvantage to others. In this step, you need to list all such weakness to your business.
Weakness can be related to the absence of new technology, high employee turnover, lack of innovation, declining market share, small financial support, change management and culture of the organization.
- What advantages does your organization have?
- What areas do you lack expertise?
- What are the reasons for failure in your bid/proposal?
- What does your competitor do better than you?
- What are people in your market likely to see as a weakness?
- Why does customer buy from your competitors?
The weaknesses in the business indicate the growth of your business, and it is essential that you take appropriate actions to address the shortcomings.
The weaknesses of the company shall be considered as the risk factors for your business. Weaknesses change over time and have to be removed from this list when the SWOT document is reviewed.
Note: Strengths and weaknesses reflect the internal factors of the business.
Step 4: List your potential opportunities
All organizations have a broad range of potential external opportunities to improve management system performance .
For the growth and sustainability of your organization, It is important for you to identify those potential opportunities.
Opportunities are potentials factors that your organization can invest upon and grow.
Failure to recognize and take action on an opportunity can become a threat to your organization.
- What are potential new markets for your business?
- Any news technologies on the market in your area of business?
- Any changes in the government policy related to your business?
- Trends in the market?
Opportunities could include new technology, training programs, new markets, partnerships, and a favorable change of legal requirement.
Step 5: List your threats
Threats are external issues which can affect your objectives & you may have no control over them. These threats may disable your organization’s ability to achieve its objectives over time.
Threats can be related to employment, increasing competition, higher interest rates and the uncertainty of global markets.
- What does hurdles your organization face?
- Any changes in the regulatory, statutory or legal requirement?
- Is changing technology posing a threat?
- Change in customer perception?
- Any Political changes affecting your market?
Step 6: Prioritize your SWOT
Before you develop the strategies for the SWOT list, you need to prioritize them. The list can show you an overall picture of your business and helps you to understand the context in which your business operates (a requirement of ISO 9001:2015 quality management system standard). You need to consider the current business need and objective to prioritize the SWOT list. It is recommended you take actions on items that require immediate care. This allows you to refine and prioritize your SWOT list.
Step 7: Develop strategies and risk mitigations
Failure to develop necessary strategies for the SWOT shall make the entire exercise go in vain. Appropriate strategies are drawn up and identified to ensure growth and success of the business. Weakness, opportunities and threats in your SWOT list can be managed through your risk management process. Answer the below question to determine and develop appropriate strategic direction
- How can you use your strengths to take advantage of the potential opportunities?
- How can you use your strengths to overcome the threats identified?
- What do you need to do to overcome the identified weaknesses to take advantage of the opportunities?
- How will you minimize your weaknesses to overcome the identified threats?
Examples of a SWOT analysis
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.
Developing strategies from your SWOT analysis
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.