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The SWOT analysis is an extremely useful tool for understandingand decision-making for all sorts of situations in business andorganizations. SWOT is an acronym for Strengths, Weaknesses,Opportunities, Threats. Information about the originsand inventors of SWOT analysis is below. The SWOT analysis headingsprovide a good framework for reviewing strategy, position anddirection of a company or business proposition, or anyother idea.
Completing a SWOT analysis is very simple, and is a good subjectfor workshop sessions. SWOT analysis also works well inbrainstorming meetings.
Use SWOT analysis for business planning, strategic planning,competitor evaluation, marketing, business and product developmentand research reports. You can also use SWOT analysis exercises forteam building games.
Note that SWOT analysis is often interpreted and used as a SWOTAnalysis 2x2 Matrix, especially in business and marketingplanning.
In addition to this 2x2 matrix method, SWOT analysis is also awidely recognized method for gathering, structuring, presenting andreviewing extensive planning data within a larger business orproject planning process.
See also PEST analysis, which measures a business's market andpotential according to external factors; Political, Economic,Social and Technological. It is often helpful to complete a PESTanalysis prior to a SWOT analysis. In other situations it may bemore useful to complete a PEST analysis as part of, or after, aSWOT analysis. See also Porter's Five Forces model, which is usedto analyse competitive position.
Please note: If you use SWOT Analysis as a 2x2matrix method, then technically Strengths andWeaknesses are internal factors(generally the case anyway), whereas Opportunitiesand Threats are external factors(this can be more difficult, since it requires you to ignoreinternal threats and opportunities). The SWOT 2x2'internal/external' matrixmethod thus only considersexternal threats and opportunities.
As a more general guide, here is a free SWOT analysis templateworksheet (doc file), and the same free SWOT analysistool (pdf format).
If you have difficulty opening the above doc file here are twoother formats:
- SWOT Analysis Template doc file using table format instead oftext-boxes
- SWOT Analysis Template doc for Apple Mac
A SWOT analysis measures a business unit, a proposition or idea;a PEST analysis measures a market.
A SWOT analysis is a subjective assessment of data which isorganized by the SWOT format into a logical order that helpsunderstanding, presentation, discussion, and decision-making. Thefour dimensions are a useful extension of a basic two heading listof pro's and con's (free pro's and con's template here).
A SWOT analysis can be used for all sorts of decision-making, andthe SWOT template enables proactive thinking, rather than relyingon habitual or instinctive reactions.
The SWOT analysis template is normally presented as a grid,comprising four sections, one for each of the SWOT headings:Strengths, Weaknesses, Opportunities, and Threats. The free SWOTtemplate below includes sample questions, whose answers areinserted into the relevant section of the SWOT grid. The questionsare examples, or discussion points, and obviously can be altereddepending on the subject of the SWOT analysis. Note that many ofthe SWOT questions are also talking points for other headings - usethem as you find most helpful, and make up your own to suit theissue being analysed. It is important to clearly identify thesubject of a SWOT analysis, because a SWOT analysis is aperspective of one thing, be it a company, a product, aproposition, an idea, a method, or option, etc.
A SWOT analysis is commonly presented and developed into a 2x2matrix, which is shown and explained within the SWOT analysismatrix section.
Internal vs. External Factors
Modern SWOT analysis in business and marketing situations isnormally structured so that a 2x2 matrix grid can be produced,according to two pairs of dimensions.
Strengths and Weaknesses, are 'mapped' or'graphed' against Opportunities and Threats.
To enable this to happen cleanly and clearly, and from a logicalpoint of view anyway when completing a SWOT analysis in mostbusiness and marketing situations, Strengths andWeaknesses are regarded distinctly as internalfactors, whereas Opportunities andThreats are regarded distinctly as externalfactors.
Here is the explanation in more detail:
Strengths and Weaknesses | The internal environment - the situationinside the company or organization | For example: factors relating to products, pricing, costs,profitability, performance, quality, people, skills, adaptability,brands, services, reputation, processes, infrastructure, etc. | Factors tend to be in the present |
Opportunities and Threats | The external environment - the situationoutside the company or organization | For example: factors relating to markets, sectors, audience,fashion, seasonality, trends, competition, economics, politics,society, culture, technology, environmental, media, law, etc. | Factors tend to be in the future |
Swot Matrix (2x2 matrix: internal/external categories)
Here is a typical extension of the basic SWOT analysis grid into auseful 'action-based' 2x2 SWOT matrix.
The SWOT analysis in this format acts as a quick decision-makingtool, quite aside from the more detailed data that would typicallybe fed into business planning process for each of the SWOTfactors.
Here the 2x2 matrix model automatically suggests actions for issuesarising from the SWOT analysis, according to four differentcategories:
| Strengths (internal) | Weaknesses (internal) |
Opportunities
(external) | Strengths/Opportunities Obvious natural priorities Likely to produce greatest ROI (Return On Investment) Likely to be quickest and easiest to implement. Probably justifying immediate action-planning or feasibilitystudy. Executive question: "If we are not already looking at theseareas and prioritising them, then why not?" | Weaknesses/Opportunities
potentially attractive options Likely to produce good returns if capability and implementationare viable. Potentially more exciting and stimulating and rewarding than S/Odue to change, challenge, surprise tactics, and benefits fromaddressing and achieving improvements. Executive questions: "What's actually stopping us doing thesethings, provided they truly fit strategically and are realistic andsubstantial?" |
Threats
(external) | Strengths/Threats Easy to defend and counter Only basic awareness, planning, and implementation required tomeet these challenges. Investment in these issues is generally safe and necessary. Executive question: "Are we properly informed and organized todeal with these issues, and are we certain there are no hiddensurprises?" - and - "Since we are strong here, can any of thesethreats be turned into opportunities?" | Weaknesses/Threats Potentially high risk Assessment of risk crucial. Where risk is low then we must ignore these issues and not bedistracted by them. Where risk is high we must assess capability gaps and plan todefend/avert in very specific controlled ways. Executive question: "Have we accurately assessed the risks ofthese issues, and where the risks are high do we have specificcontrolled reliable plans to avoid/avert/defend?" |
Different applications
SWOT analysis is a powerful model for many different situations.The SWOT tool is not just for business and marketing. Here are someexamples of what a SWOT analysis can be used to assess:
- a company (its position in the market, commercial viability,etc)
- a method of sales distribution
- a strategic option, such as entering a new market or launchinga new product
- an opportunity to make an acquisition
- outsourcing a service, activity or resource
- project planning and project management
- an investment opportunity
- personal financial planning
- personal career development - direction, choice, change,etc.
- education and qualifications planning and decision-making
- life-change - downshifting, relocation,
- relationships, perhaps even family planning?..
Whatever the application, be sure to describe the subject (orpurpose or question) for the SWOT analysis clearly so you remainfocused on the central issue. This is especially crucial whenothers are involved in the process. People contributing to theanalysis and seeing the finished SWOT analysis must be able tounderstand properly the purpose of the SWOT assessment and theimplications arising.
