A SWOT analysis is a useful technique for thinking about strategy and making decisions.
Teams and organizations use this strategic planning tool to decide on a course of action. It is a way to assess current and future potential.
SWOT is a classic tool for any strategist. On its own, however, it may not meet the needs of a complex organization in a rapidly changing world. That doesn't mean it isn't useful, though.
A SWOT analysis is a useful way to look at your team. When combined with an outside-in look at broader trends and where markets are moving, it can help you define and prioritize initiatives.
But how do you use a SWOT analysis? And what are some SWOT analysis examples?
Here’s how to use this popular framework to make an informed decision. We’ve also included a SWOT analysis template for you to jumpstart your next collaboration session.
What is SWOT analysis?
A SWOT analysis is a method used to assess a company’s internal and external environments. It involves identifying your company’s strengths, weaknesses, opportunities, and threats. Its effectiveness relies on an assumption that the company can adequately assess its external environment. This assumption doesn't hold when competitors emerge from unexpected and adjacent domains.
The SWOT assessment technique helps measure a business’ competitive advantage. Competitive advantage is essentially what makes your business special compared to other businesses in your field. It’s why your customers choose you.
By doing a SWOT analysis, you can gain insights into where your business is, where it could be, and what you can do to get there. This important information helps you with the decision-making process and strategic planning.
What are the 4 factors of a SWOT analysis?
To understand the SWOT framework, you need to know what SWOT stands for. Let's break down the acronym:
Strengths
Weaknesses
Opportunities
Threats
These four areas can be categorized into internal factors (strengths and weaknesses) and external factors (opportunities and threats). You should consider each one when creating your business strategy.
Below are some examples of what could fall under each of the four fields:
Strengths
Strengths are advantages your business holds, such as:
Weaknesses
Internal weaknesses are what might be holding your business back. They could include the following:
- Poor management
- Not handling complaints in the best way
- Unnecessary overhead costs
Opportunities
Look for opportunities to build on your internal strengths and eliminate or reduce your weaknesses. Opportunities may include:
- Employees who are willing to take on training to expand their skill set
- New technology to streamline your business processes
- Any opportunity to collaborate with other businesses in parallel fields
Threats
A threat could be something that hinders you in the long run or ruins a good opportunity for expansion. Here are a few external threats that could harm your business:
The benefits of a SWOT analysis
Here are some ways a SWOT analysis can benefit your business.
- It gives direction. A SWOT analysis is like a GPS. It tells you where you are, where you could be, and how to get there. It also allows you to take stock of your inventory, your immediate and distant surroundings, and any shortcuts that you might not have spotted before.
- It helps set objectives. Having concrete business objectives is important, but finding those objectives can be difficult. Using a SWOT analysis, you can set better team goals. It can help you clearly see the steps that need to be taken to build on strengths and shore up weaknesses.
- It is an effective decision-making tool. A SWOT analysis allows you to gather the information necessary to make a well-informed decision and set priorities. There’s no way of learning from past mistakes or successes if there’s no period of reflection before moving forward. A SWOT analysis forces you to pause and analyze past decisions to plan your next steps.
- It promotes collaboration. A SWOT analysis encourages collaborative teamwork. It makes your team feel heard and understood before moving forward together.
Allowing your team to be present while making important decisions is important to building mutual trust. Use this as an opportunity to allow your team members to speak up and voice their opinions, ideas, and concerns.
As you go through this process with your employees, note the qualities that make this team valuable. Showing appreciation for the people you work with builds a positive company culture. Recognizing your employees’ competencies is a brilliant way to raise morale.
- It helps you identify areas of improvement. If you conduct a SWOT analysis on a semi-regular basis, you’ll begin to identify areas where you’ve improved, both externally and in your relationships as a team. Use this time to discuss whether previous threats or weaknesses have been properly addressed.
- It helps you capitalize on opportunities. A SWOT analysis is a great tool for finding opportunities and coming up with ways you can capitalize on them. If an opportunity has presented itself in the months or weeks leading up to the meeting, you’ll have a concrete set of objectives that’ll help you achieve your goals. Be sure to search for these opportunities both internally and externally.
Opportunity doesn’t just have to be about profit. It can also relate to a better management structure, a valuable new employee, or even a way of handling a difficult interpersonal situation.
- It can be used to deter threats. A SWOT analysis can be used to identify any potential threats on the horizon. Is a new business trying to steal your clients or headhunt your employees? Identifying threats before they pose a serious risk to your business is vital.
- It gives the team better insight. With a SWOT analysis, your team gains better insight into the company’s current situation. Your team should walk away with a good understanding of the business, its objectives, and how they’re going to be achieved.
If everyone knows what’s happening, miscommunication is less likely to occur.
- It promotes strategic alignment. When management and employees work together, better systems are built.
Employees might have knowledge of a weakness that management isn’t aware of. Once management knows more, measures can be put into place to improve workflow and reduce any issues or unnecessary expenditure.
- It helps you assess whether your team is on the right path. A SWOT analysis helps you see if you’re moving in the right direction.
How have things progressed since your last analysis? Is everything that was discussed still on track? Using this tool will help you and your team gain a bird’s-eye view of the company’s trajectory.
SWOT analysis example
To see this method in action, let’s look at a SWOT analysis example of a small business.
After operating for five years, Suzanne wants to see if her online fitness coaching business is performing well as a business. She employs a team of five people, which includes three online trainers, a digital marketing specialist, and herself. Because of the small team, she is in charge of all admin duties and human resources management.
The market when she started the business was rather different from the market today. She decides it’s time to do a SWOT analysis.
By using a SWOT matrix, she breaks down the organization’s strengths, weaknesses, opportunities, and threats into four quadrants:
|
Strengths
|
Weaknesses
|
- Established customer base
- Close-knit team
- Good knowledge of the industry
- Well-liked by customers, with yields referrals
|
- Small team
- Too much admin for one staff member to keep track of
- Social media presence is lacking
- The website is not SEO-optimized
|
|
Opportunities
|
Threats
|
|
|
- Many emerging competitors
- Increasingly competitive market
- Classes are reliant on a few trainers, so if they leave or get sick, the business struggles
|
You can use this example as a template for doing your own SWOT analysis.
How to do a SWOT analysis
Let’s walk through a step-by-step guide on how to do a SWOT analysis for the very first time:
1. Designate a leader or facilitator
Having one person lead the session will keep things on track. They should have good communication skills and be able to manage productive conflict.
This doesn’t necessarily have to be a manager, but rather someone you know is good at group coordination and setting boundaries.
2. Introduce the SWOT method to the team
Once you’ve assembled the team, introduce the concept of a SWOT analysis. This way, everyone can know what to expect from the session and what is expected of them.
To help speed this process up, consider forwarding this article to your team so that everyone is somewhat familiar with the process.
3. Determine the objective
Once everyone knows what’s going on, tell them why you’re all there.
Is this just an exercise to make sure the business is on track? Is there a potential threat or opportunity that needs to be discussed?
Once you have a clear objective, the meeting will have a natural direction.
4. Brainstorm
Having a brainstorming session with your team will make everyone feel heard and valued. This way, you can get different perspectives and ideas you may not have thought of yourself. It might also be a good opportunity to see where everyone's strengths lie.
Take some time (but keep a limit on it) to get everyone’s creative juices flowing. Use a time blocking strategy, such as the Pomodoro technique, to ensure you don’t go over time. By the end of your timed session, you should have an extensive list of strengths, weaknesses, opportunities, and threats.
5. Analyze the internal and external environment
After the brainstorming session, take time to discuss internal and external affairs through the lens of the SWOT analysis.
Why did certain ideas come up? Where do we think the next threat could come from? How are employees feeling in their roles? Conduct a thorough analysis of these ideas.
6. Record all ideas and thoughts
Having everything on record is the best way to get the most out of a SWOT session. Make sure someone is taking minutes that you can relay to everyone after the meeting so that no valuable information is lost.
7. Be selective
Once everything has been laid out on the table, discuss the validity of what’s there. Make sure this is a democratic process and that you have conclusive discussions before ignoring a suggestion or concern. The selection process should also be recorded for future sessions.
8. Create a safe environment so that everyone can contribute
It’s vital that all are made to feel safe, seen, heard, and supported during these sessions. If only a handful of people are contributing, the exercise bears limited fruit.
If there are certain people who are staying silent, ask them why they don’t feel comfortable taking part. This should be a safe space for all.
How to use a SWOT analysis
You’ve conducted your SWOT analysis. Now what? Here are what actions to take to make the most out of your SWOT analysis.
1. Assess the possible strategic options
Using the data you’ve gathered, begin to assess what the best steps could be moving forward.
For example, could one of your company’s strengths help you take advantage of a possible opportunity? Start to link the ideas discussed in the meeting to see what outcomes could be beneficial.
2. Prepare an action plan/strategy
Now that you have your bearings, examine these options and see if they’re feasible. Your strengths and weaknesses should provide a foundation as to how you can tackle possible threats and opportunities.
Compile a list of short and long-term goals that’ll steer your business in the right direction. Be sure to understand the difference between tactics and strategy while going through this phase of the planning process.
3. Decide how to measure success
Not setting metrics is a crucial mistake in strategic management. Without metrics, it is easy to go off-track and lose sight of long-term objectives.
Measuring success depends on what your goals are. If the goal is concrete (secure 50 new clients, for example), success will be easier to measure. If your goal is less tangible, such as building a sense of belonging at work, it might be wise to conduct research to see how far you’ve come.
4. Prioritize next steps
Decide which goals need to be tackled when. An opportunity may be missed if you’re focusing on something less important, so it’s vital to put the steps into a sensible, workable order. Using the Pareto principle can help you prioritize the activities that really matter.
5. Be open to change
As your business grows and situations change, it’s important to be flexible with your goals. If an opportunity falls through, make sure that plans are still being made and work is still being done. This will help avoid delays and confusion.
6. Review progress, and refresh the plan
A SWOT analysis is something that you need to carry out regularly. Track how your business performs between these meetings so that you can keep tabs on your growth, goals, and accomplishments.
Drive growth with a SWOT analysis
If you want to plan, execute, and succeed in your business, using a SWOT analysis is going to be an important tool. The SWOT method lets you get the most out of your team and offers you the perspective on your business that you need.
A SWOT analysis isn’t just your roadmap to success. It’ll begin to form a clear record of your history as well. Analyzing past accomplishments and failures is the best way to grow, both as an individual and a business.
With the SWOT method, you’ll create a close-knit team, a comprehensive list of goals, and a full picture of your company’s identity.
If this sounds like something you need in your business, talk to BetterUp to see how we can help.
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