SWOT Analysis

A SWOT analysis is a tool, used in management and strategy formulation. It can help to identify the Strengths, Weaknesses, Opportunities and Threats of a particular company.

Strengths and weaknesses are internal factors that create value or destroy value. They can include assets, skills, or resources that a company has at its disposal, compared to its competitors. They can be measured using internal assessments or external benchmarking.

Opportunities and threats are external factors that create value or destroy value. A company cannot control them. But they emerge from either the competitive dynamics of the industry/market or from demographic, economic, political, technical, social, legal or cultural factors (PEST).

Strengths

Specialist marketing expertise
Exclusive access to natural resources
Patents
New, innovative product or service
Location of your business
Cost advantage through proprietary know-how
Quality processes and procedures
Strong brand or reputation

Weaknesses

Lack of marketing expertise
Undifferentiated products and service (i.e. in relation to your competitors)
Location of your company
Competitors have superior access to distribution channels
Poor quality of goods or services
Damaged reputation

Opportunities

Developing market (China, the Internet)
Mergers, joint ventures or strategic alliances
Moving into new attractive market segments
A new international market
Loosening of regulations
Removal of international trade barriers
A market that is led by a weak competitor

Threats

A new competitor in your own home market
Price war
Competitor has a new, innovative substitute product or service
New regulations
Increased trade barriers
A potential new taxation on your product or service

Any organization must try to create a fit with its external environment. The SWOT diagram is a very good tool for analyzing the (internal) strengths and weaknesses of a corporation and the (external) opportunities and threats. However, this analysis is just the first step. To really create the fit with the external environment is often the most difficult work.

Confrontation Matrix

A tool to combine the internal factors with the external factors is the Confrontation Matrix.

Opportunities

Threats

Strengths

Offensive

make the most of these

Defensive

restore strengths

Weaknesses

Strenghten

watch competition closely

Survive

turn around

Often in reality the two columns of the SWOT diagram are pointing in opposite directions. Strategists must still deal with the paradox of creating alignment. This can be done via Outside-in strategy formulation (market-driven strategy) or Inside-out strategy formulation (resource-driven).

Note: you can also apply a SWOT analysis to competitors, often providing interesting new perspectives.

SWOT Analysis Forum (26)

How to Proceed after the SWOT Analysis to the Strategy?
"What should we do after the SWOT analysis. In other words, depending on the SWOT outcomes, what strategy can we use?"

Brainstorming a SWOT Analysis
"SWOT analysis can be used in each organization. It can be used as brainstorming technique where individuals come up with distinctive ideas about the strengths, weaknesses, opportunities and threats of the business......"

WHEN to do a SWOT Analysis?
"At what stage should an organization develop a SWOT analysis?
At the inception or developing stage?"

Internal Opportunities and Threats
"What about the opportunities and threats that exist within the organization and we are not aware about them? How we will evaluate them through SWOT framework?"

SWOT Analysis Strength
"I think companies strategies on which company is working and that is giving positive response from a long time is its strength.
Therefore
"strategies giving positive response is the strength"."

SWOT Analysis for British Airways and Ryan Air
"Would anybody be able to suggest some key points to include under SWOT for the above firms.
I'm having problems keeping it short and succinct as well as assessing what are actually relative strengths and weaknesses."

Combine SWOT Analysis with 5 Ps
"I always do a SWOT analysis against the 5 Ps. People, Product, Promotion, Place and last of all Price."

Design Shool Theory vs. SWOT
"Whats the difference between a SWOT analysis and the Design School Theory?"

Turning Competitor's Weakanesses Into Opportunities
"How can I turn my rival's internal weaknesses into my opportunities since some companies succeed in keeping their internal weaknesses as a secret to themselves?"

SWOT and Strategic Marketing Process
"How does the SWOT analysis relate to the strategic marketing process (SMP)?"

Swot Analysis + Weightage
"SWOT analysis is a basic tool for any marketing manager to determine their future strategies. But just listing the strengths, weaknesses, opportunities and threats are not adequate especially for the challenging business environment. Sometimes managers might find tremendous elements in the SWOT analysis and could not decide to take advantage of which element. Therefore, adding weightage to each element in each s, w, o and t quadrant will help distinguish which element possess a better advantage over the other. Then only the manager can decide to execute their strategies by first considering the elements of highest weightage. By adding weightage to the elements, managers can also determine how well-built is their company. For example, by adding the weightages of the strengths and opportunities and weaknesses and threats respectively, one can compare their value and analyze whether their company's underlying business is more towards positive or negative changes."

Well suited for Crisis too
"In this moment of crisis, I never see a better tool for help us in our decisions. This analysis model gives the necessary matrix for fast and proper action."

Swot Analysis Well Suited as First Step
"Swot becomes an effective tool for analysing competitiveness only when it is used as first step. Other frame work such as Porters' five forces, benchmarking and pest need to come into play before final analysis, decisions and strategy is formulated."

SWOC Analysis instead of SWOT Analysis
"The "T" in SWOT can be changed to "C" for Challenge to create a more positive attitude."

Competetive Analysis with SWOT
"Is only a SWOT Analysis enough for competitive analysis or should it be combined with other techniques?"

SWOT - Absolutely essential
"This is the most important tool companies around the globe will need to survive and grow in our current uncertain economic climate!"

Ranking model for the Opportunities and Threats
"In order to remove subjectivity in ranking Opportunities and Threats I am looking for a ranking model/theory/approach which could be used to rank the Opportunities and Threats. Does anyone have experience in using a ranking model, other than using the outcome of a brainstorm session. When working in a small team or as an individual this would be too subjective for my use. Thanks in advance for any thoughts on this matter. Duncan"

Significance of SWOT Analysis
"I have been given an assignment on SWOT Analysis and had no clue of what SWOT Analysis is, but in my research I became aware of what is it all about. I have noticed its significance and seen that realy all organizations are using it. It is realy confirmed to me that if it is used to the best it yields good results."

Confrontation Matrix
"I am using the SWOT analysis with my research and find it really helpfull. This site however displays a wrong confrontation matrix. The T/S cell must be Defending and the O/W cell must be Improvement. So or change this or put the SWOT in right order by putting Strengths and Weaknesses horizontal and Opportunities and Threats vertical."

What is SWOT analysis?
"A SWOT analysis is like showing a mirror to oneself. It tells where the person stands. Strength: gives power. One should analyse his Weakness. Opportunities should be grabbed and one should overcome his Threats."

Combining SWOT with other Strategy Tools
"It is my experience that the SWOT analysis as a standalone tool is not better than a simple brainstorming process focused on the four different issues. In order to make it work, it is necessary to work several other analysis e.g. value chain analysis, competitor analysis, PEST analysis, Porters five forces, financial analysis etc before you can determine if you have a solid case. Otherwise you don't have any kind of proof to support why you think that your technology for instance is superior to your competitors, or that lack of size is a threat in the global competition.
Only after you have done the initial work, you will be able to harvest the real value of the SWOT and if you decide to go a step further the TOWS matrix (=confrontation matrix)."

SWOT Analysis is Simple and Easy
"As an MBA student, when we started to learn SWOT analysis it was difficult for us to understand, but once I found that it is so simple to learn, once we learnt it properly, it became very easy to use and interpret.
SWOT analysis is simple and easy way to judge any organization or you can say any brand.
It's simply a balance card of positive and negative sides of an organization or brand.
If there is an imbalance in that balance card, the whole organization or brand has to pay for that. The SWOT analysis highlights the reasons for the losses of the firm."

SWOT - research is important
"A swot analysis can only be effectively executed if detailed and proper research work has been carried out. With detailed research you won't be groping in the dark, you have a comprehensive concept of both the internal and external factors and how to creatively and innovatively develop a strategy that is directional, cost effective and of course executable."

SWOT or (maybe better) TOWS?
"While I was teaching Business Policy, I noted the limitation of the SWOT analysis because students did not take the next step in developing alternative strategies based on the internal strengths and weaknesses and the external opportunities and threats. Consequently, I developed the TOWS Matrix. The original article "The TOWS Matrix--A Tool for Situational Analysis" was published in LONG RANGE PLANNING, Vol. 15, No. 2, 1982, pp. 54-66. This model has been used for research and strategy formulation around the globe. In the meantime, I applied the concept to career strategy as well as for analyzing the competitive advantages of nations. More information can be found on my website shown below. I trust that I shed some light at the origin and further development of the TOWS Matrix concept. usfca.edu/fac_staff/weihrichh/docs/tows.pdf"

Uses of SWOT analysis
"A SWOT analysis is frequently used in an early stage of strategic or marketing planning for decision-making, problem solving, and as a tool to increase the awareness of certain people about the situation the firm is in. But you can also use SWOT as a personal career planning tool to assess and reflect upon your own personal Strenghts, Weakenesses, Opportunites and Threats. Likewise, within the personnel department we can use SWOT to assess candidates for a function. You can even perform a SWOT on your football or hockey team..."

Opportunity or Threat?
"There can be considerable debate about what is a threat and what is an opportunity. When a company spots a new trend early and acts upon it well, then it has an opportunity. If another company does not see the same trend coming, or fails to act upon it well, then it is facing a threat. Furthermore, people with an entrepreneurial or can-do mentality view almost anything as an opportunity, while pessimistic, bureaucratic people view almost anything as a threat."

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