What is a SWOT analysis?

At a glance

• SWOT stands for “strengths, weaknesses, opportunities and threats.”
• Organizations use a SWOT analysis when they are looking to plan and optimize their business models.
• Performing an analysis involves creating a timeline, tracking and collecting data, and then sharing the findings with key decision-makers.
• University of Phoenix offers online business degrees and programs that can enhance your knowledge and skill set in business operations.

Mapping a path to success in any business or organization calls for effective strategies across all departments, from marketing and public relations to human resources and product development. Conducting a SWOT analysis is a common way to evaluate and implement those strategies.

What does SWOT stand for?

SWOT is an acronym for strengths, weaknesses, opportunities and threats. A SWOT analysis assesses a company or organization’s current business model, identifies areas for improvement and evaluates potential opportunities or threats (both internal and external). SWOT analyses are especially important in today’s ever-changing business landscape.

Strengths

The first step in a SWOT analysis is identifying a company’s strengths. These are the things that a company does well or that give it an advantage over other companies.

Examples of strengths might include:

• A strong brand name or reputation
• A loyal customer base
• A talented and experienced team
• A unique product or service

Take time to consider what makes your company unique and what sets it apart from the competition. Then, look at your company from outsiders’ perspective and consider what they might see as strengths.

A few crucial questions you might ask are:

• What do we do better than anyone else?
• What sets us apart from our competition?
• How do our customers see us?

Weaknesses

The next step is identifying your organization’s weaknesses. These qualities or actions put your company at a competitive disadvantage or highlight an area in need of improvement. As with strengths, weaknesses can include processes, people or products.

This step may also involve looking at your competitors. Investigate what your competitors do well, how they differ and what their specific weaknesses are. From here, you can compare your organization’s weaknesses and how your different approaches may impact consumer behavior.

Opportunities

In this step, you’ll identify areas for potential growth or improvement. This could include anything from a change in the market to a new technology that might impact your industry. Therefore, it’s essential to consider both long-term and short-term opportunities when conducting a SWOT analysis.

Examples of opportunities might include:

• A new trend in your industry
• An untapped market or customer base
• A change in regulation

The key to opportunity analysis is to be proactive and think about ways you can take advantage of them. Just because an opportunity exists doesn’t mean your company will automatically benefit from it since your competitors will be evaluating the same opportunities. Instead, target specific opportunities that align with your strategic business goals and establish key performance indicators (KPIs), project plans and timelines that will help you promote a tangible business advantage.

Of course, it’s best to seize these opportunities wisely. When in doubt, lean toward evergreen tactics that will benefit your company for years to come instead of trends that have a limited time for the payoff.

Threats

The final step in a SWOT analysis is identifying external threats that could hurt your business. As with opportunities, you’ll want to consider long-term and short-term threats when brainstorming. These can be things like a new competitor entering the market, changes in consumer behavior or even an economic recession.

Use this information to create a proactive plan to improve your organization and combat potential threats. This might involve developing new products, expanding into new markets or increasing your marketing efforts. Whatever direction you decide to go, ensure that it aligns with your company’s strengths and that it will help reduce any weaknesses.

When is a SWOT analysis used?

A SWOT analysis is typically performed when an organization is seeking to optimize its overall business model. It can be performed by an internal management team or outsourced to a consultancy firm.

Once a comprehensive analysis is mapped out, it’s presented to the organization’s senior management or board of directors. However, it can also be shared with other key stakeholders such as employees, suppliers and partners. Each stakeholder group will likely have different interests and needs, so it’s important to tailor the SWOT analysis presentation accordingly.

Setting up a SWOT analysis

There is no single way to set up a SWOT analysis, and a variety of SWOT analysis templates can be found online. The important thing is to ensure that all the relevant information is included and presented in a way that’s easy to understand.

Creating a timeline

The first step is to decide on a time frame for the analysis. This can be short term (one or two years) or long term (three to five years) and will depend on the organization’s specific goals. Next, create a physical or digital timeline of your chosen time frame’s start and end date.

This timeline will help determine what data needs to be gathered and who needs to be involved. For example, a long-term analysis will require more data and input from a broader range of people within the organization than a short-term analysis.

Analyze collected data

Once you have relevant data, start analyzing it. The data you’ve gathered should help you answer each of the four pillars of a SWOT analysis.

For instance, your surveys might reveal that your customers are unhappy with your product quality, which would be a weakness. From there, you could work to find other threats (such as a competitor that creates better products) or opportunities (perhaps a new manufacturer who could produce higher-quality items).

After you’ve identified the key elements of your company’s SWOT, start developing strategies for improvement. This is where you will take the information from your SWOT analysis and use it to create a plan for moving forward. This might mean updating your marketing strategies, improving manufacturing processes or doing something else altogether, depending on your industry and SWOT analysis.

With its targeted mission and step-by-step execution, a SWOT analysis is an effective tool for optimizing business strategy and performance, no matter the industry.

Earn a business degree from University of Phoenix

University of Phoenix offers several online business degrees that prepare students with skills necessary for a variety of career paths. These include:

Associate of Arts with a concentration in Business Fundamentals — From management to accounting, the skills learned in this program are essential for anyone looking to advance their business education. 

Bachelor of Science in Business — Knowledge of the ins and outs of running a business can spell the difference between success and failure in a competitive world.

Bachelor of Science in Management — This program covers management, operations and strategic planning skills.

Bachelor of Science in Data Science — Discover techniques to transform structured and unstructured data sets into meaningful information that can be used to identify data patterns and trends and drive strategic decision-making.