What is a Swot Analysis? A Complete Guide

(Last Updated On: November 29, 2022)

SWOT analysis was a method that Stanford developed during the 70s. It is often employed to aid in the area of strategic planning.

SWOT is an abbreviation for SWOT, which stands for strengths, weaknesses, opportunities, threats, and threats.

It is a well-organized strategy for planning that analyses the four components of an organization, project, or business venture.

A SWOT analysis is a basic but effective method of leveraging an organization’s strengths, strengthening its weaknesses, minimizing threats, and taking full advantage of opportunities.

SWOT analysis is the process that helps the management team identify the external and internal influences that could impact the future performance of the company.

It assists us in identifying the current state of affairs in the external and internal worlds to help you organize and manage your business efficiently.

Why Is SWOT Analysis Important?

What is a Swot Analysis? A Complete Guide

SWOT Analysis can assist in questioning your assumptions and expose potential blind spots in your company’s performance.


If you conduct it with care and in a team, it will give you new insight into your company’s current situation and assist you in designing the perfect plan for your specific situation.

For instance, you might be aware of your organization’s strengths and weaknesses, but you may not know how unreliable these strengths are until you list them in conjunction with weaknesses and threats.

In addition, you might have legitimate concerns regarding some areas of your business’s weaknesses.

Still, when you systematically conduct your analysis, you might uncover an opportunity you had not previously considered and that you can more than makeup for.

How to Write a SWOT Analysis

The SWOT analysis process involves creating lists, but there’s more! As you write one list (say, strengths), your thought process and research will spark suggestions for other lists (weaknesses, threats, opportunities, or weaknesses).


If you look at these lists side-by-side, you’ll likely find connections and inconsistencies to which you’ll need to investigate and draw attention.

You’ll find yourself hopping back and forth across your lists often. Make the process simpler and more efficient by arranging your lists in one place.

Make the SWOT Analysis matrix or download our free template.

The SWOT matrix can be described as a two-by-two grid with one square representing all four components of SWOT. (Figure 1 illustrates what it ought to appear as.) A set of questions accompanies each section to help you start your thinking process.

How to Do a SWOT Analysis?

How to Do a SWOT Analysis?

Don’t rely on your personal or limited understanding of your company.

Your assumptions may be incorrect. Instead, you should gather a group comprising people from various roles and levels to develop a broad and thoughtful list of observations.


When you spot the strength, weakness, or opportunity, note it in the appropriate section in the analysis grid for everyone to see.

Let’s examine each area more in-depth and then consider which areas are appropriate and what questions you can ask during your data collection.


The strengths are the things your company excels at or in a manner that sets you apart from your competition.

This could be the motivation for your employee’s access to certain materials or a solid system of manufacturing procedures.

Your strengths are a vital part of your business, So think about the things that make your strengths “tick.” What are you doing better than everyone else?

What is the underlying principle that drives your company? What are the most unique or low-cost resources you can draw on that others aren’t able to?

Find and evaluate your company’s USP or Unique Selling Proposition (USP), then add it to the Strengths category.

You can then change your perspective and consider what your competition might perceive as your advantages. What are the factors that help you be ahead of your competitors?

Be aware that every aspect of your company is an advantage if it gives you an advantage.

For instance, when all of your competitors offer top-quality products of high quality, then a special production process isn’t a benefit for your business; it’s a necessity.


Strengths and weaknesses are part of your company, so you should focus on your resources and people, as well as your systems and procedures. Look at what you can enhance and the kinds of practices you need to avoid.

Imagine (or discover) how others in your market consider your business. Are they able to spot weaknesses you’re prone to not paying attention to?

Consider what your competitors are doing and why they perform better than you. What are you missing?

Be honest! A SWOT analysis can only be useful if you collect all the necessary information. Therefore, it’s better, to be honest now and confront any uncomfortable facts as soon as possible.


Opportunities are opportunities or chances to make something occur, but you’ll have to be able to claim them!

They typically arise from events outside your business. They are usually triggered by events outside your organization and require attention to what could occur shortly.

They could arise from developments in your industry or the technology you employ.

Recognizing and capitalizing on opportunities can make an enormous difference in your company’s capability to compete and gain the lead in your industry.

Consider opportunities you can take advantage of immediately.

These do not have to be revolutionary: even minor advantages can boost the competitiveness of your business.

What are the most interesting trends in the market that you are aware of? Big or small, that may influence your business?

Be on the lookout for any government policy changes that affect your area of expertise.

Also, changes in social patterns, population profiles, and lifestyles could all provide intriguing opportunities.


They include any event that could adversely affect your business from the outside, like supply chain issues, changes in market demands, or a lack of recruits. Be aware of dangers and take steps against them before they become allies and your growth slows.

Look at the obstacles you face in bringing your product to market and selling it.

You may notice that your product’s standards for quality and specifications are changing, and you’ll need to alter the products you sell to be competitive.

The ever-changing technology is a constant danger, but also a chance!

Consider what your competitors are doing and whether you need to change your company’s focus to compete.

However, keep in mind it is possible that the actions they’ve taken may not be the best option for you. Don’t copy their actions without understanding what they can do to enhance your standing.

You should determine if your business is more vulnerable to external threats. Are you a victim of cash flow or debt issues like this one that can make you vulnerable to even tiny fluctuations in your market? This is a danger that can severely harm any business. So you must be vigilant.

Read More: What is the primary function of a technology transfer agency

What is the best time and reason to conduct the SWOT analysis?

SWOT analysis is usually employed at the start or even as a component of a strategic planning process.

The SWOT framework is considered an effective tool in decision-making since it allows organizations to identify possibilities for success previously not outlined. It also helps identify risks before they become serious.


SWOT analysis helps identify an area of the market where a company has an advantage.

It also helps people plan a career that makes the most of their strengths and warns them of dangers that could hinder their success.

This analysis is the most efficient way to identify business and business issues.

Thus, SWOT usually involves a cross-functional group capable of sharing ideas and ideas in a free and open manner.

The most efficient teams use experience and data like cost or revenue figures to construct a SWOT assessment.

The SWOT analysis consists of elements.

According to its name, the word “SWOT analysis” SWOT analysis focuses on four components:

  • Internal assets and resources can help achieve a positive outcome, like a broad product range, loyal customers, or strong customer service.
  • External elements and resources make it more difficult to achieve, such as an unprofessional brand, excessive debt, or insufficient staffing or education.
  • An organization’s external factors can profit from favorable export taxes, tax incentives, or the latest technology that can help.
  • Factors outside the company that may undermine the company’s performance include increased competition, a decrease in demand, or a lack of confidence in the supply chain.

A SWOT matrix is typically utilized to categorize the things that are classified within each of the four elements. The typical matrix is an oval divided into four quadrants, each representing one of the elements.

The decision-makers will identify particular strengths in the first quadrant and weaknesses in the following: opportunities and threats.

People or companies conducting a SWOT analysis may choose to employ a variety of SWOT analysis templates. They are typically variations of the traditional four-quadrant SWOT matrix.

How can you use SWOT analysis?

An analysis of SWOT should be employed to help an organization gain insight into its present and future standing on the market or about an established goal.


Individuals or organizations that use this analysis can see opportunities for competitive advantage, positive prospects, and current and potential issues.

Armed with this information, they can formulate plans for business, personal, or corporate goals to take advantage of positive aspects and fix any weaknesses.

After identifying SWOT aspects, the decision makers can determine whether an idea, project, product, or idea merits further consideration and what’s needed to succeed.

The analysis will aid an organization in matching its resources with its competitive environment.

A SWOT analysis is a way to analyze and evaluate the various objectives and plans for action like the following:

  • Development and creation of products or services for business;
  • Taking hiring, promotion, or any other human resource decisions. ;
  • assessing and improving customer service potential and performance.
  • It is improving business strategies that improve competitiveness or boost business performance.
  • Investing in technology and markets, investing in geographical locations, or

SWOT analysis is similar to PEST analysis, which refers to economic, political, and technological factors.

A PEST analysis allows organizations to examine external influences impacting their operations and competitiveness.

SWOT analysis, pros, and cons

The benefits of using the SWOT method are:

  • The analysis provides an image of the aspects that will affect whether the project, business or initiative, project, or individual can achieve an end goal.
  • Through the involvement of experienced cross-disciplinary team members, SWOT analysis can stimulate various approaches and perspectives.
  • The diversity of the field can enable a SWOT analysis to clarify every aspect and reveal innovative concepts and undiscovered problems that could otherwise be overlooked.
  • While a SWOT analysis is essential for understanding the various variables that influence the success of a business, it has limitations like the following:
  • The report may not be able to include all relevant aspects because some strengths or weaknesses, opportunities, and threats are easily ignored or not understood.
  • The information used for each component is often subjective or based on empirical data and can give the perspective of a biased one.

Since it only records the factors at a specific time and doesn’t permit how these variables can alter in the future, the information SWOT may have a short duration of use.

What is a SWOT Analysis Used For?

A SWOT analysis is utilized in different ways by various stakeholders.

For instance, a management team might employ the framework to assist with strategy-driven planning and risk control.

SWOT assists them in understanding the business’s strengths and drawbacks to understand the best place and how an organization can allocate resources, whether for the growth of the business or to reduce risk.

The analysts’ community, on the contrary, could seek to comprehend (and measure) strengths as well as weaknesses, opportunities, and threats to evaluate the company more thoroughly.

The SWOT analysis results could help inform the model assumptions made by analysts.

This could include an equity analyst trying to calculate how much fair value is worth of shares owned by a company and a financial analyst trying to determine a borrower’s creditworthiness.

In a general sense, the SWOT framework is generally considered to be The SWOT framework is thought of by many as one of the most effective tools to help with strategic planning and business analysis.


An analysis of SWOT is the ideal way to steer business strategy meetings. It’s a powerful idea to let all participants discuss the strengths and weaknesses of the business, determine the risks and opportunities, and come up with ideas.

Sometimes, the SWOT analysis that you visualize before the session shifts throughout to include factors that you weren’t aware of and could not have uncovered without your group’s input.

A business may use SWOT analysis for its overall business strategy meetings or to focus on one specific area, such as production, marketing, or sales.

This way, you’ll be able to examine how the overall strategy developed through your SWOT analysis will be filtered down to the specific segments below before you commit to the plan.

You could also do the reverse by using a segment-specific SWOT analysis that integrates into the overall SWOT analysis.

While it is a valuable tool for planning, however, SWOT does have its drawbacks. It is just one of the methods of business planning to be considered and shouldn’t be used on its own.

Furthermore, every point in those categories cannot be prioritized similarly. SWOT doesn’t reflect the variations in weight. Thus, a more detailed analysis is needed using another method of planning.