SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors. A strength is a positive internal factor. A weakness is a negative internal factor. An opportunity is a positive external factor. A threat is a negative external factor.
We should aim to turn our weaknesses into strengths, and our threats into opportunities. Then finally, SWOT will give managers options to match internal strengths with external opportunities. The outcome should be an increase in ‘value’ for customers – which hopefully will improve our competitive advantage.
The main purpose of the analysis has to be to add value to our products and services so that we can recruit new customers, retain loyal customers, and extend products and services to customer segments over the long-term. If undertaken successfully, we can then increase our Return On Investment (ROI).
- Be realistic about the strengths and weaknesses of your organization.
- It should distinguish between where your organization is today, and where it could be in the future.
- It should always be specific. Avoid grey areas.
- Always apply the tool in relation to your competition i.e. better than or worse than your competition.
- Keep your audit short and simple. Avoid complexity and over analysis
- It is subjective.
Once key issues have been identified with your SWOT analysis, they feed into marketing objectives. The tool can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porter’s Five-Forces analysis. So SWOT is a very popular tool with marketing students because it is quick and easy to learn. During the SWOT exercise, list factors in the relevant boxes. It’s that simple. Below are some FREE examples of SWOT analysis – click to go straight to them.
Strengths and weaknesses are internal factors.
A strength could be:
- Your specialist marketing expertise.
- A new, innovative product or service.
- Location of your business.
- Quality processes and procedures.
- Any other aspect of your business that adds value to your product or service.
A weakness could be:
- Lack of marketing expertise.
- Undifferentiated products or services (i.e. in relation to your competitors).
- Location of your business.
- Poor quality goods or services.
- Damaged reputation.
Opportunities and threats are external factors.
An opportunity could be:
- A developing market such as the Internet.
- Mergers, joint ventures or strategic alliances.
- Moving into new market segments that offer improved profits.
- A new international market.
- A market vacated by an ineffective competitor.
A threat could be:
- A new competitor in your home market.
- Price wars with competitors.
- A competitor has a new, innovative product or service.
- Competitors have superior access to channels of distribution.
- Taxation is introduced on your product or service.
A word of caution – it can be very subjective. Do not rely on SWOT too much. Two people rarely come-up with the same final version of SWOT. TOWS analysis is extremely similar.
Do you need a more advanced SWOT Analysis?
Some of the problems that you may encounter with SWOT are as a result of one of its key benefits i.e. its flexibility. Since SWOT analysis can be used in a variety of scenarios, it has to be flexible. However this can lead to a number of anomalies. Problems with basic SWOT analysis can be addressed using a more critical POWER SWOT.
History of SWOT Analysis
Having arrived on this page you have probably surfed the Internet and scoured books and journals in search of the history of SWOT Analysis. The simple answer to the question What is SWOT? is that there is no simple answer, and one needs to demonstrate a little academic wisdom in that nobody took the trouble to write the first definitive journal paper or book that announced the birth of SWOT Analysis. There are a number of contrasting, if not contradictory views on the origin of SWOT. Here are a few of the leading thinkers on the topic (and if you have more please let us know so that we can add them). More . . .
SWOT Analysis Applications
SWOT analysis is a versatile tool that can be applied in various business contexts, including strategic planning, market research, product development, and project management. It can help businesses to identify their strengths and weaknesses, evaluate market opportunities, and mitigate potential risks.
In strategic planning, SWOT analysis is used to assess the internal and external factors that can influence the success of a business. It can help businesses to identify their competitive advantage, prioritize investment, and develop a strategic roadmap.
In market research, SWOT analysis is used to evaluate the market environment and competition. It can help businesses to identify market opportunities, understand customer needs and preferences, and develop effective marketing strategies.
In product development, SWOT analysis is used to evaluate the strengths and weaknesses of a product, as well as the opportunities and threats of the market. It can help businesses to develop new products that meet customer needs and are competitive in the market.
In project management, SWOT analysis is used to evaluate the internal and external factors that can impact the success of a project. It can help project managers to identify potential risks, allocate resources, and develop effective project plans.
SWOT Analysis Limitations
While SWOT analysis is a useful tool for business analysis, it has several limitations. One of the main limitations is that it is subjective and dependent on the expertise and experience of the team members conducting the analysis. This can lead to bias and inconsistency in the analysis.
Another limitation of SWOT analysis is that it does not prioritize the identified factors or provide guidance on how to address them. It only provides a framework for identifying and categorizing the factors that can influence the success or failure of a project or business.
Lastly, SWOT analysis does not consider the dynamic and complex nature of the business environment. The factors that are identified in the SWOT analysis can change rapidly, making the analysis outdated and irrelevant.
FREE SWOT Analysis Examples
A summary of FREE SWOT analyses case studies are outlined in our Lesson Store.
- Humphrey, A. S. (1960). SWOT analysis for management consulting. SRI Consulting Business Intelligence.
- Weihrich, H. (1982). The TOWS matrix—A tool for situational analysis. Long range planning, 15(2), 54-66.
- Ahmed, S., & Rafiq, M. (1995). SWOT analysis: a tool for auditing the organisation and its environment. Journal of General Management, 21(2), 49-64.
- Helms, M. M., & Nixon, J. (2010). Exploring SWOT analysis–where are we now? A review of academic research from the last decade. Journal of strategy and management, 3(3), 215-251.
- Grant, R. M. (2019). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
- Thompson Jr, A. A., Gamble, J. E., & Strickland III, A. J. (2018). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases. McGraw-Hill Education.
- Lynch, R. (2015). Strategic management. Pearson Education.
- Tavitiyaman, P., & Qu, H. (2012). The SWOT analysis of tourism development in Khon Kaen, Thailand. International Journal of Hospitality and Tourism Systems, 5(1), 1-14.
- Marinova, D., & Marinov, M. (2018). SWOT analysis: the ultimate tool for strategic planning. In Innovative Approaches to Tourism and Leisure (pp. 13-28). Springer, Cham.