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Strength, Weakness, Opportunities, and Threats analysis for a company, competitor, supplier, or customer. Used to assess an organization's characteristics and climate to determine appropriate strategies and likely actions by players in the marketplace.
What it is: The SWOT analysis characterizes a player in the marketplace by what it does best (advantages compared to competitors), what it does not do well (disadvantages), the opportunities indicated by the disruptions and changing trends in the marketplace, and the corresponding threats indicated by disruptions and changing trends for the marketplace and economy. Strengths and weaknesses are generally internal to a company while opportunities and threats are external to a company and are influenced by the forces at play in the market.
What it does: The SWOT analysis provides a high-level analysis of the marketplace or industry and the position the company holds within that environment. It can indicate potentially successful strategies the company can employ and highlight the strength to leverage and weaknesses to overcome to help the strategy succeed. It can also indicate threats to the current or proposed strategies of the organization. Because of the high-level nature of the analysis, the SWOT may identify specific topics for further research to better define the strengths, weaknesses, opportunities, and threats and what the company needs to leverage or change to be successful.
How it is used: A SWOT analysis can be used to support business strategy development, opportunity analysis of disruptions and shifting trends in the marketplace, competitive analysis, business and product development opportunities, and the development of marketing strategies and plans.
Because of the high-level nature of the SWOT analysis, it can be a great tool to help you elevate your thinking and observations. By looking across the industry and marketplace in light of your strengths and weaknesses, you can potentially uncover opportunities that you may be uniquely qualified to exploit. You may also identify threats that can put your company or product at particular risk and indicate needed changes to avoid the associated risks.
Where: The SWOT analysis can be used for many purposes including the following:
Developing business strategies by viewing the business environment and how the business stacks up against its competitors. This indicates the potential success of alternatives strategies.
Developing product strategies by comparing the strengths and weaknesses of your product, opportunities it has for growth, new applications, and the threat of new or competitive products to displace it in the market. The SWOT analysis is a quick check of the potential the new product has for success, and whether you should proceed. If the decision is to move forward, the analysis can help define the best markets, customers, and approaches and reveal other factors affecting the product launch.
Narrowing and choosing between strategic and tactical options. As you consider each option, you can see the impact of your strengths and weaknesses on the likelihood of success. You can also consider how each option leverages your opportunities for success and minimizes the potential impact of threats.
Help bring a new or existing team to a common understanding of the environment in which they operate and a common view of the strengths and weaknesses of their organization.
Analyze every player in the supply chain. You can perform a SWOT analysis of your own company, business unit, department, or product, as well as your suppliers of raw materials and services, partners, competitors, distributors, customers, etc. You can determine the strengths, weaknesses, opportunities, and threats associated with each of these players and how you might align yourself with or against each player.
Why: Business and marketing analysis, by its very nature, is specific and detailed. It is easy to get lost in the forest and not see the pattern in the trees and landscape. Our horizon becomes too short and our strategies and tactics too inwardly focused. We may see the great opportunity our tactics may create, but underestimate the ability of other competitors to not only block, but exceed our offering because of their unique strengths and opportunities.
The SWOT analysis reveals broader opportunities and strategies than the short-term tactics would indicate and avoid and eliminates hidden risks.
Where it shouldn't be used: The SWOT analysis is a high-level activity and is not normally used for detailed tactical analysis and implementation. While the analysis will indicate issues to pursue and actions needing resolution, there should be further research and data development to confirm the factors identified and actions indicated by the SWOT analysis.
Any restrictions: None
Warnings:
You can use SWOT analysisfor high-level analysis in many situations, but never forget that, the SWOT analysis is mostly subjective and open to judgement errors. You should not make critical decisions based on the analysis until you confirm the factors driving the decisions.
The SWOT analysis normally begins with brainstorming with team’s existing knowledge. The team’s knowledge may be limited, biased, incomplete, or just plain wrong. Therefore, the analysis and interpretation can lead to strategies that are doomed to fail. Be sure to identify which factors are key to any strategy, option, or planned tactic indicated by the SWOT analysis and confirm that those factors (the strength, weakness, opportunity, or threat) really exist and will have the impact indicated by the analysis.
Most organizational opinions, when compared to the actual market information, will be directionally correct, but exaggerated. For example, you may think your competitors' cost to produce the product is much lower than yours. The answer will likely be that their cost is lower than yours, but there will be less difference than you thought. A second example might be that your customers think your product is much better than your competitor, when really, the customers think your product is only marginally better. Misreading the size of the differences can be almost as bad as misreading where you are stronger and weaker. If you believe it is true strength, then you better check it in the market before you act on the assumption.
LinkedIn Learning Writing a SWOT (See Section 2)
Gather data
Identify the strategy, product, problem, opportunity, etc. you are considering and write it above the grid you will use to capture the SWOT analysis factors.
Bring together a knowledgeable group of people (or existing team) and ask them to prepare by considering the strengths, weaknesses, opportunities, or threats that are related to the problem or opportunity being considered.
Where possible, distribute research, reports, or other information that will help in the analysis, or ask participants to bring their own to the meeting.
Create a 2x2 matrix or grid on a whiteboard or flip chart for the group to see. Above the grid, write the strategy, problem, opportunity, etc. being considered during this meeting.
List one of the factors (strength, weakness, opportunity, or threat) as a heading in each of the four quadrants of the grid. A common practice is to have the internal factors (strengths and weaknesses) in the top row, and the positive factors (strengths and opportunities) in the first or left column.
As you prepare to fill in the grid, encourage participants to provide as much quantifiable data as possible to confirm the information they contribute.
Start by identifying organizational strengths (stated as titles or short bullets) that are intrinsic to your organization:
Why do customers choose your organization or your products?
Why do employees choose to work or remain at your organization?
What is unique about your offering that is an advantage over alternatives?
What services do you provide that no one else does?
What do you do best? (What are your competitors trying to match?)
What supply chain factors and logistics are you uniquely positioned to provide?
Do you have a unique market position or customer goodwill?
What unique capability or position do you hold compared to competitors?
Identify weaknesses specific to your organizations:
What do your customers complain about regarding customer service and sales?
Why do potential customers choose not to buy?
Why do existing customers discontinue their service or product purchases?
What is it hard for your organization to do?
Why do your employees leave, or why do recruits turn down offers?
Where do you lose with your customers and employees?
What strengths or advantages do competitors have that you cannot match?
List specific opportunities that are appearing in your market due to changing trends and disruptive technologies beyond your control:
What areas are we poised to take advantage of?
Where do we have unique capabilities that can be used to capture opportunities?
What trends, policies, laws, public opinion, etc. are changing where we are in a better position to take advantage of the opportunity than any other organization?
Is new growth emerging where we already have an advantageous position?
How are changing demographics creating new opportunities in the market?
What disruptive technologies are creating new opportunities?
Note specific threats beyond your control. Consider your current business, customers, products, and new strategies and opportunities you are pursuing:
Where are we particularly vulnerable to outside forces threatening our position?
What new technologies will erode our competitive advantage?
What new trends or technologies will make our product of less or no value?
Are we in a position to deal with changing laws, policies, and trends in the market?
Will foreign competition erode our market share and technological advantage?
Will competitors diminish our competitive advantage by matching our position?
What new competitors and technologies are likely to enter the market?
Analyze the data
Discuss what you have brainstormed and prioritize the factors in each quadrant as by impact. Look for strengths that align with opportunities and weaknesses that align with threats. Consider weaknesses that could undermine an opportunity and the strengths that could reduce or eliminate the impact of threats. Some examples of this type of discussion are listed below:
Do some of your strengths put you into a position to exploit an opportunity?
Are there weaknesses you could address to reduce the potential impact of threats?
Are their opportunities so valuable that it would be worth adding strength through organic development or acquisition to improve capability to capture the opportunity?
What changes in strategy could help you exploit opportunities or minimize threats?
What weaknesses need to be addressed for the company to survive or grow?
Interpret the results
The analysis should leave you with a list of potential strategies and options to answer the original problem or strategy question. You may want to consider developing criteria for which strategies and options to select. You might create a prioritization table and rate each strategy across all of the criteria, then look for the highest total scores to narrow the lists.
Present results
Show the 2x2 grid that captures all of the SWOT factors in their quadrants, prioritized by most important factors at the top of the lists.
Use the output to make recommendations.
There are many ways to present the recommendations from the SWOT Analysis. Here are two examples:
Show the prioritization table with the proposed solutions in the rows and the criteria in the columns, with scores in each box. The far left side should have a total score for each solution or recommendation. The solutions or recommendations should be listed from the highest total score to lowest.
Show a prioritized list of the recommended solutions and the factors from the SWOT analysis that support each solution or recommendation. It is also valuable if you can list projected impact from the recommendations, such as the following:
Projected new revenues
Projected new profits and NPV of the recommendation
The time frame for implementing the recommendation and the expected outcomes
Sources of unique competitive advantage and why they will be sustainable
Walmart SWOT Analysis of Strategy
*Marketing Teacher.com
A small start-up consultancy might draw up the following SWOT analysis:
*Mindtools.com
Recommendations for Small Startup Consultancy:
As a result of their analysis, the consultancy may decide to specialize in rapid response, good value services to local businesses, and local government.
Marketing would be in selected local publications to get the greatest possible market presence for a set advertising budget, and the consultancy should keep up with changes in technology where possible.
This content is provided to you freely by Ensign College.
Access it online or download it at https://ensign.edtechbooks.org/projectbased_internships/swot_analysis.
