Conducting a SWOT analysis: Step-by-step guide with table and sample.

What Is SWOT Analysis?

SWOT analysis is a strategic framework used to evaluate a company’s competitive position and aid in strategic planning. By examining strengths, weaknesses, opportunities, and threats, businesses can gain valuable insights into their internal and external factors, as well as current and future potential.

This framework helps companies take a realistic, data-driven approach to assessing their strengths and weaknesses, both internally and within their industry. It is crucial to maintain accuracy by focusing on real-life contexts rather than pre-conceived beliefs. SWOT analysis is a guide, not a strict rule.

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Investopedia / Xiaojie Liu

Understanding SWOT Analysis

SWOT analysis is a technique for evaluating a business’s performance, competition, risks, and potential across various aspects such as product lines, divisions, industries, or entities.

By utilizing internal and external data, this technique guides businesses in identifying successful strategies and avoiding less favorable ones. It also helps stakeholders, including investors and competitors, in assessing the strengths and weaknesses of a company, product line, or industry.

SWOT analysis, initially used for business analysis, is now widely applied by governments, nonprofits, investors, and entrepreneurs, showcasing its versatility.

Components of SWOT Analysis

Investopedia / Julie Bang

Every SWOT analysis comprises four fundamental categories that are essential for a comprehensive evaluation:

Strengths

Strengths highlight what an organization excels at and what sets it apart from competitors, such as a strong brand, loyal customer base, or unique technology.

Weaknesses

Weaknesses are areas where an organization needs improvement to maintain competitiveness, like instances of weak branding or high turnover rates.

Opportunities

Opportunities are external factors that can provide a competitive advantage, such as tariff cuts enabling market expansion.

Threats

Threats are external factors that pose risks to an organization’s success, like droughts affecting crop yields or rising material costs.

SWOT Table

A SWOT analysis is often visually represented as a four-quadrant table, each quadrant devoted to a specific element of SWOT. This graphical layout offers a snapshot of the company’s position, providing insights into opportunities, threats, strengths, and weaknesses.

Typically, the table presents internal factors at the top row and external factors at the bottom row, with positive aspects on the left and negative aspects on the right.

How to Do a SWOT Analysis

Conducting a SWOT analysis involves several steps with actionable items before and after examining each component, aiming to enhance strategic decision-making:

Step 1: Determine Your Objective

Define a clear objective for the SWOT analysis to ensure focused outcomes, such as evaluating the viability of a new product launch.

Step 2: Gather Resources

Collect relevant data sets internally and externally and engage diverse perspectives within the organization to ensure a comprehensive analysis.

Involving staff from various departments can provide nuanced insights and different viewpoints.