SWOT Analysis – What is it and How to do it

Who is this article for?

• Businesses of all sizes, from startups to large corporations, in any industry
• Non-profit organizations and government agencies
• Entrepreneurs and solopreneurs
• Marketing managers and strategists
• Product managers
• Business development professionals
• Executive leadership teams
• Strategic planning committees

SWOT analysis is a versatile tool that can benefit any individual or group involved in strategic planning, business development, marketing strategy, or product management. It provides a structured way to assess an organization’s current position and develop strategies for improvement and growth.

What is SWOT Analysis?

SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis examines these four elements of your business or organization to gain insights that can guide your strategy and decision making.

The goal is to leverage your internal strengths to capitalize on external opportunities, while being aware of your weaknesses and threats in the environment that could adversely impact you (Dyson, 2004). SWOT analysis is intended to spark strategic insights and ideas, not to generate a laundry list in each category.

SWOT analysis is traditionally conducted as a brainstorming exercise with key stakeholders. The process invites different perspectives by including people from various functional areas and levels in the organization.

To get started, create a four-quadrant SWOT template or matrix. Brainstorm and capture ideas in each area, being as specific as possible. Let’s take a closer look at what each category entails:

Strengths

Strengths are internal, positive attributes of your organization that are within your control. These are areas where you excel and have a competitive advantage. Examples include:

• Strong brand recognition
• Loyal customer base
• Unique technology or intellectual property
• Experienced leadership team
• Healthy profit margins

Consider your strengths from an internal perspective and from the viewpoint of your customers and competitors. If you’re having difficulty identifying strengths, try answering these questions:

• What do we do better than anyone else?
• What unique or lowest-cost resources do we have access to?
• What do our customers view as our strengths?
• What factors enable us to get the sale?

Weaknesses

Weaknesses are negative factors that detract from your strengths. These are areas you need to improve to remain competitive. Examples include:

• Outdated technology
• Insufficient funding
• Lack of management depth and expertise
• Undifferentiated products or services
• Poor location

Weaknesses are issues that you have some control over and need to plan to mitigate. If you’re struggling to identify weaknesses, ask:

• What areas do we need to improve?
• What resources are we lacking?
• What parts of our business are not profitable?
• What do customers complain about?
• What factors result in lost sales?

Opportunities

Opportunities are external factors in your business environment that are likely to contribute to your success. These are attractive areas for growth and profit potential. Examples include:

• New market segments to target
• Emerging need for your products or services
• Improving economic conditions
• Positive press/media coverage
• Loosening of regulations

Opportunities are external to your business. If you have difficulty identifying opportunities, ask yourself:

• What trends or conditions may positively impact us?
• What opportunities exist for us to further delight our customers?
• What related products/services could we offer?
• How can we leverage technology to enhance our business?

Threats

Threats are external factors beyond your control that could negatively impact your business. You have no control over these, but you may benefit by having contingency plans in place to address them. Examples include:

• New competitors entering the market
• Changing customer preferences
• Tightening regulations
• Negative press/media coverage
• Economic downturn

If you’re unsure about what threats may be lurking, consider:

• What are our competitors doing that could negatively impact us?
• Are there any negative consumer trends that could impact demand?
• Do we have cash flow issues that leave us vulnerable?
• What impact would an economic downturn have?

How to Conduct a SWOT Analysis

While the SWOT analysis template is simple, the process involves more than just filling in the boxes. Here are some tips for conducting a valuable SWOT analysis:

1. Assemble a diverse, representative team

Include key people from various functional areas within your organization. Diverse perspectives will help you get a more complete, 360-degree view (Phadermrod et al., 2019). External people like customers can also provide valuable insights.

2. Brainstorm ideas for each area

Give everyone a chance to provide input. Capture ideas without judgment or editing, aiming for quantity over quality at this stage. “The aim in applying the hybrid method is to improve the quantitative information basis of strategic planning processes” (Kurttila et al., 2000).

3. Consolidate and prioritize ideas

Group similar ideas together and rank the ideas in each quadrant based on relevance and importance to your organization. Focus on your top 3-5 ideas in each area.

4. Develop an action plan

For each of the top ideas, identify specific actions you can take to leverage strengths, correct weaknesses, capitalize on opportunities, and mitigate threats. “As shown in this article, more penetrating strategic insights can be gained by following SWOT analysis guidelines derived from contemporary strategic management theory, especially the resource-based view of the firm” (Valentin, 2001).

5. Incorporate into strategy

Incorporate the learnings and associated actions into your strategic plans. Communicate the results throughout the organization so everyone understands the strategic direction.

SWOT Analysis Example

Let’s look at a simplified SWOT analysis example for an AI writing assistant company:

Strengths

• Patented AI technology
• First mover advantage
• Experienced data science team

Weaknesses

• High customer acquisition costs
• Lack of long-term contracts
• Vulnerable to competition from big tech companies

Opportunities

• Growing market demand for AI-powered writing tools
• Expand into new verticals beyond current focus
• Partner with universities on AI research

Threats

• Open-source AI reducing barriers to entry
• New AI regulations impacting technology development
• Economic recession reducing customer spending

Based on this example SWOT analysis, the AI writing assistant company might devise the following strategies:

• Invest in marketing to build awareness and reduce customer acquisition costs
• Develop new product features to stay ahead of new and existing competitors
• Explore partnerships with universities to collaborate on leading-edge AI research
• Expand into new industries to diversify revenue streams and reduce exposure to economic downturns

Risks and Limitations of SWOT Analysis

• SWOT analysis is subjective and qualitative by nature. It relies on opinions that may be biased and lack quantitative data to validate them.
• The simplicity of a 2×2 grid can lead to overgeneralization. The real world is more complex than four quadrants.
• SWOT tends to oversimplify the situation by classifying things as strengths, weaknesses, opportunities or threats, when in reality it’s not so black and white.
• It presents a static snapshot in time. The market environment is constantly changing so SWOT analysis can quickly become outdated.
• It fosters long lists of ideas without prioritizing the most important ones. Everything can’t be a priority.
• SWOT analysis by itself does not provide strategic direction. Further analysis and discussion are needed to translate insights into strategies and plans.

How Tallyfy Can Help with SWOT Analysis

While SWOT analysis is a useful strategic planning tool, it’s important not to stop there. The key is translating insights into actions. That’s where workflow management software like Tallyfy can help.

Capture action items and next steps

Use Tallyfy to document the strategies and initiatives coming out of your SWOT analysis. Capture the who, what, when and why so everyone has clarity and accountability.

Assign tasks and deadlines

Assign action items to owners with clear due dates. Automate reminders and notifications so nothing falls through the cracks.

Track progress

Use real-time dashboards to monitor progress and identify potential roadblocks. Intervene early if initiatives are at risk of getting off track.

Improve and optimize

As you execute on your strategic initiatives, collect data and learnings. Feed these insights into your next round of strategic planning and SWOT analysis for continuous improvement.

By leveraging Tallyfy to translate insights into action, you can ensure your SWOT analysis doesn’t just end up as a theoretical exercise. You’ll be well on your way to developing and executing a winning strategy to take your business to the next level.

Another way AI is enhancing SWOT is by incorporating fuzzy logic to better handle the ambiguity and uncertainty inherent in strategic decision making. Fuzzy ANP-based SWOT models have been used to analyze complex systems like the airline industry, allowing for a more nuanced and realistic assessment (Ervural et al., 2018; Şevkli et al., 2012).

What Does the Future Hold for SWOT Analysis?

Looking ahead, we can expect AI to further augment and optimize the SWOT process. Advances in natural language processing will allow AI to “read” and interpret strategy documents, automatically extracting SWOT-relevant information. Machine learning algorithms will continuously monitor the competitive landscape, flagging important developments in real-time.

AI-powered simulation and scenario planning tools will let strategists interactively explore different combinationsof strengths, weaknesses, opportunities and threats, and visualize probable outcomes. Virtual strategic planning assistants will guide and facilitate SWOT workshops, ensuring a more structured and productive experience.

At the same time, the core principles of SWOT – systematically assessing internal capabilities and external conditions to inform strategy – will likely endure. AI should be seen as a complement to human strategic thinking, not a replacement for it. The most effective SWOT analyses of the future will combine the data processing power and analytical rigor of AI with the intuition, creativity and judgment of experienced strategists and decision makers.

Tallyfy Tango – A cheerful and alternative take

Meet Sal and Wanda, two quirky business consultants who specialize in helping companies get their strategies in order. Today, they’re diving into the wild and wacky world of SWOT analysis.

Sal: Alright Wanda, we’ve got a real doozy of a client today. They want us to help them with a SWOT analysis. You ready to tackle this beast?

Wanda: You betcha, Sal! SWOT analysis – the ultimate corporate buzzword bingo term. Strengths, Weaknesses, Opportunities, and Threats. It’s like a personality test for businesses!

Sal: Haha, so true! Okay, let’s start with Strengths. What do you think our client is really good at?

Wanda: Well, they make a mean cup of coffee in the breakroom. And their office plants are always impeccably watered. Those could be strengths, right?

Sal: Uh, I think we need to dig a little deeper than that, Wanda. How about their strong market position and loyal customer base?

Wanda: Fine, if you want to be all serious about it. Moving on to Weaknesses then. I’d say their weakness is definitely their fashion sense. Have you seen the CEO’s tie collection? Yikes!

Sal: Wanda, focus! Real weaknesses, like their aging technology infrastructure or high employee turnover rate.

Wanda: Okay, okay. Opportunities then. I see an opportunity for them to start Casual Friday! It would do wonders for morale.

Sal: Or how about expanding into new markets or developing innovative products? You know, actual business opportunities.

Wanda: Spoilsport. Lastly, Threats. I’d say their biggest threat is that new competitor down the street with the flashy billboard ads.

Sal: Good point, Wanda. External threats like new competitors, changing regulations, or economic downturns are all important to consider.

Wanda: Well, there you have it folks – SWOT analysis in a nutshell! Identify your Strengths, admit your Weaknesses, seize your Opportunities, and watch out for those pesky Threats. Piece of cake, right Sal?

Sal: Sure Wanda, piece of cake. Just like navigating a minefield while blindfolded. But that’s why our clients love us – we make strategic planning fun!

Related Questions

What is SWOT analysis and examples?

SWOT analysis is a simple but powerful tool for analyzing an organization’s strengths, weaknesses, opportunities, and threats. It helps companies understand both their internal capabilities and the external factors that could impact their success. Some examples of each category: a strength could be a strong brand name, a weakness could be high employee turnover, an opportunity could be expanding into a new market, and a threat could be increased competition.

What are the 4 areas of SWOT analysis?

The four key areas examined in a SWOT analysis are Strengths (internal, positive factors), Weaknesses (internal, negative factors), Opportunities (external, positive factors), and Threats (external, negative factors). By carefully considering each area, organizations can develop strategies that capitalize on their strengths, shore up weaknesses, pursue opportunities, and protect against threats.

What are the 5 points of SWOT analysis?

While SWOT contains four main categories, the analysis can be expanded to include a fifth element: Aspirations. After examining strengths, weaknesses, opportunities and threats, companies should also define their aspirations – their vision for the future. This provides direction and purpose to the insights uncovered in the SWOT. The five points together – Strengths, Weaknesses, Opportunities, Threats, and Aspirations – create a roadmap for where the company is, where it could go, and what it will take to get there.

How do I write a SWOT analysis?

To write a SWOT analysis, start by creating a grid or table with four quadrants, one for each category. Then, brainstorm and fill in the most significant factors for each area. Be specific and realistic in your assessments. Once complete, analyze how strengths can be leveraged, weaknesses improved, opportunities pursued, and threats mitigated. The key is to be honest and comprehensive in your evaluation in order to create actionable strategies.

How do companies perform a SWOT analysis?

Companies typically assign a cross-functional team to perform a SWOT analysis, including representatives from different departments like sales, marketing, operations, and finance. This diverse perspective helps ensure a comprehensive evaluation. The team gathers input through surveys, interviews, market research, and financial analysis. They then categorize this information into the four areas, discuss implications and interrelationships, and distill the findings into key strategic themes to present to leadership.

What is the purpose of a SWOT analysis?

The fundamental purpose of a SWOT analysis is to drive better decision-making. By methodically examining internal and external factors, companies gain valuable insight into their current position and future prospects. This awareness informs strategic planning, resource allocation, and risk management. A SWOT can be used to evaluate a specific project, a business unit, or the entire enterprise. Ultimately, it provides a foundation of knowledge from which to build successful strategies.

References and Editorial Perspectives

Arslan, Ö., & Er, I., D. (2008). SWOT Analysis for Safer Carriage of Bulk Liquid Chemicals in Tankers. Journal of hazardous materials, 154, 901 – 913. https://doi.org/10.1016/j.jhazmat.2007.10.113

Summary of this study

This study applies SWOT analysis to develop strategies for the safe transportation of bulk liquid chemicals on maritime tankers. It uses SWOT as a management tool to help ship management companies, ship masters and officers formulate action plans to convert threats into opportunities and weaknesses into strengths when carrying dangerous goods in bulk by tanker.

Editor perspectives

While not directly related to workflow software, this study demonstrates the versatility of SWOT analysis as a strategic planning tool that can be applied to optimize processes and mitigate risks in a variety of operational contexts. As a workflow platform, we’re always interested in techniques that can help organizations critically evaluate and improve their processes.

Dyson, R., G. (2004). Strategic Development and SWOT Analysis at the University of Warwick. European journal of operational research, 152, 631 – 640. https://doi.org/10.1016/s0377-2217(03)00062-6

Summary of this study

This paper describes how SWOT analysis was applied to assist strategy formulation and incorporated into the strategic development process at the University of Warwick. It demonstrates SWOT as an iterative rather than linear process, linking it to resource-based planning and embedding it within the university’s overall planning framework.

Editor perspectives

We find this case study compelling as it showcases how SWOT analysis can be integrated into an organization’s broader strategic workflow in a continuous, cyclical manner. At Tallyfy, we believe the most effective processes are those that enable ongoing iteration and improvement rather than being performed in a rigid, linear fashion.

Ervural, B., Ç., Zaim, S., Demirel, O., F., Aydın, Z., G., G., & Delen, D. (2018). An ANP and Fuzzy TOPSIS-Based SWOT Analysis for Turkey’s Energy Planning. Renewable & sustainable energy reviews, 82, 1538 – 1550. https://doi.org/10.1016/j.rser.2017.06.095

Summary of this study

This study proposes an integrated methodology combining SWOT analysis, Analytic Network Process (ANP), and fuzzy Technique for Order Performance by Similarity to Ideal Solution (TOPSIS) to analyze energy strategy alternatives and priorities in Turkey. SWOT identifies relevant criteria, ANP determines factor weights, and fuzzy TOPSIS prioritizes the alternative strategies.

Editor perspectives

The multi-method approach presented here is intriguing from a workflow perspective. By linking several analytical techniques together in a hybrid methodology, the researchers demonstrate how distinct tools can work in concert as part of a cohesive strategic planning workflow to enable more holistic, data-driven decision making.

Gürel, E. (2017). SWOT Analysis: A Theoretical Review. Uluslararası sosyal araştırmalar dergisi, 10, 994 – 1006. https://doi.org/10.17719/jisr.2017.1832

Summary of this study

This literature review examines SWOT analysis from historical, theoretical, and practical perspectives. It explains SWOT’s role in the strategic management process, examines its components, reviews its origins and evolution, and discusses its advantages, disadvantages and limitations. An example SWOT analysis of an international sportswear brand is provided.

Editor perspectives

As a workflow software provider, we appreciate this comprehensive overview of SWOT analysis. Understanding the theoretical underpinnings, strengths and weaknesses of the tools and methodologies we use is crucial for applying them effectively. This type of critical evaluation is a key part of optimizing any process.

Kurttila, M., Pesonen, M., Kangas, J., & Kajanus, M. (2000). Utilizing the Analytic Hierarchy Process (AHP) in SWOT Analysis — a Hybrid Method and Its Application to a Forest-Certification Case. Forest policy and economics, 1, 41 – 52. https://doi.org/10.1016/s1389-9341(99)00004-0

Summary of this study

This study proposes a hybrid method integrating the Analytic Hierarchy Process (AHP) with SWOT analysis to improve the usability of SWOT. AHP’s pairwise comparisons and eigenvalue calculations are used to determine priorities for SWOT factors and make them commensurable. The method is tested in a case study on forest certification in Finland.

Editor perspectives

We’re fascinated by the potential of hybrid methods like the AHP-SWOT approach outlined here to enhance strategic planning workflows. By quantifying the SWOT factors, this technique allows for more objective, analytically rigorous assessments to inform decision making. As a data-driven workflow platform, Tallyfy is always seeking ways to bring more measurable insights into process management.

Phadermrod, B., Crowder, R., & Wills, G. (2019). Importance-Performance Analysis Based SWOT Analysis. International journal of information management, 44, 194 – 203. https://doi.org/10.1016/j.ijinfomgt.2016.03.009

Summary of this study

This study proposes applying Importance-Performance Analysis (IPA) to SWOT analysis based on customer satisfaction surveys. This approach identifies and prioritizes SWOT factors according to customers’ perceptions, allowing organizations to clearly determine which factors to maintain or improve. The method is demonstrated and validated through a case study of higher education institutions in Thailand.

Editor perspectives

Incorporating the voice of the customer into strategic planning is a powerful concept. As a workflow management platform, we strive to help organizations design processes that deliver maximum value to their customers. This IPA-based SWOT technique provides a practical way to align internal strategic assessments with external stakeholder priorities.

Şevkli, M., Oztekin, A., Uysal, Ö., Torlak, N., G., Türkyılmaz, A., & Delen, D. (2012). Development of a Fuzzy ANP Based SWOT Analysis for the Airline Industry in Turkey. Expert systems with applications, 39, 14 – 24. https://doi.org/10.1016/j.eswa.2011.06.047

Summary of this study

This study develops a SWOT analysis methodology using fuzzy Analytic Network Process (ANP) and applies it to the Turkish airline industry. ANP models the dependencies among SWOT factors, while fuzzy logic incorporates the inherent uncertainty in human decision making. The approach provides a quantitative basis for ranking SWOT factors and determining the best strategy.

Editor perspectives

The fuzzy ANP SWOT method introduced here impresses us as a highly sophisticated approach to strategic analysis. By accounting for both factor interdependencies and decision-making uncertainties, it enables a more realistic and nuanced assessment of strategic priorities. As a workflow platform focused on process optimization, Tallyfy values tools that provide such in-depth, quantitative insights.

Srivastava, P., Kulshreshtha, K., Mohanty, C., Pushpangadan, P., & Singh, A., S. (2005). Stakeholder-Based SWOT Analysis for Successful Municipal Solid Waste Management in Lucknow, India. Waste management, 25, 531 – 537. https://doi.org/10.1016/j.wasman.2004.08.010

Summary of this study

This case study applies a stakeholder-based SWOT analysis to municipal solid waste management (MSWM) in Lucknow, India. It emphasizes the need for community participation to supplement limited municipal resources. The SWOT analysis develops strategic action plans to mobilize both community and municipal corporation resources for improved MSWM.

Editor perspectives

We’re drawn to the participatory approach to SWOT analysis and strategic planning exemplified in this study. Engaging stakeholders in the process helps ensure buy-in and shared ownership of the resulting strategies. As a collaborative workflow management tool, Tallyfy is designed to facilitate exactly this kind of inclusive, cross-functional process improvement.

Valentin, E., K. (2001). Swot Analysis from a Resource-Based View. Journal of marketing theory and practice, 9, 54 – 69. https://doi.org/10.1080/10696679.2001.11501891

Summary of this study

This article proposes an approach to SWOT analysis based on the resource-based view (RBV) of the firm. It argues that deriving SWOT analysis guidelines from contemporary strategic management theory, especially RBV, can yield more penetrating strategic insights compared to typical, theory-agnostic SWOT procedures that often produce shallow or misleading results.

Editor perspectives

We believe grounding SWOT analysis in established strategic frameworks like RBV is crucial for extracting meaningful, actionable insights from the process. At Tallyfy, we always strive to underpin our workflow methodologies with proven principles and best practices to maximize their value and impact for the organizations we serve.

Yüksel, İ., & Dagˇdeviren, M. (2007). Using the Analytic Network Process (ANP) in a SWOT Analysis – A Case Study for a Textile Firm. Information sciences, 177, 3364 – 3382. https://doi.org/10.1016/j.ins.2007.01.001

Summary of this study

This paper demonstrates a quantitative SWOT analysis process using the Analytic Network Process (ANP) to measure and account for dependencies among strategic factors. Unlike the Analytic Hierarchy Process (AHP) which assumes factor independence, ANP allows for modeling factor interactions. The proposed ANP SWOT method is applied to a case study of a textile firm.

Editor perspectives

The capability to map and quantify interrelationships among strategic variables is a major advantage of the ANP-based SWOT approach put forth here. Understanding these dependencies is often critical for developing sound, realistic strategies. As a workflow software focused on process orchestration, Tallyfy appreciates tools that enable this systems-level thinking.

Glossary of terms

SWOT analysis

SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is a strategic planning and management technique used to identify and categorize significant internal and external factors facing an organization or project. It provides a structured approach to evaluate an entity’s competitive position and develop strategic planning options.

Analytic Hierarchy Process (AHP)

The Analytic Hierarchy Process (AHP) is a structured multi-criteria decision making method that uses pairwise comparisons and expert judgments to determine the relative importance and priorities of a set of alternatives. It organizes the decision criteria into a hierarchical structure and calculates weights for each element.

Analytic Network Process (ANP)

The Analytic Network Process (ANP) is a generalization of AHP that allows for modeling dependencies and feedback among decision elements. Unlike AHP’s strict hierarchical structure, ANP uses a network representation that captures the interrelationships among criteria. It is often used in complex decision problems with interdependent factors.

Fuzzy logic

Fuzzy logic is a form of many-valued logic that deals with approximate, rather than precise, reasoning. It allows for partial truth values between 0 and 1, as opposed to Boolean logic which operates on discrete true/false values. Fuzzy logic is used to handle the concept of partial truth and linguistic variables in decision making models.

Resource-based view (RBV)

The resource-based view (RBV) is a framework in strategic management that views an organization’s internal resources and capabilities as the key drivers of competitive advantage and performance. RBV emphasizes the importance of valuable, rare, inimitable, and non-substitutable (VRIN) resources in enabling firms to achieve and sustain superior returns.