Business SWOT Analysis
SWOT analysis is a business review model that allows companies to analyze their internal and external environments. SWOT stands for strengths, weaknesses, opportunities, and threats. Opportunities and threats are external factors, some of which cannot be controlled by the company. Strengths and weaknesses are part of the internal environment analysis. This means that the company has the power to change these factors. Performing a SWOT analysis can help managers and executives develop plans for growth and development.
- What is a SWOT?: This resource defines SWOT analysis and includes a SWOT worksheet to assist readers in performing this task.
- SWOT Analysis Tool for Business: This resource from New Mexico State University includes questions to ask when performing a business SWOT analysis.
- Guide to SWOT Analysis: This resource explains why people should use SWOT analysis to plan business activities.
- Instructions for Conducting a SWOT Analysis (PDF): This article outlines the steps necessary to perform a SWOT analysis.
The first item analyzed in a SWOT is a company’s strengths. Strengths are what the company does well or what the company offers that other companies in that industry do not. A small liberal arts college might list its small class size, low student-to-faculty ratio, and affordable tuition as some of its strengths. Performing this part of the analysis helps business executives determine how to better position themselves in the market. This part of the analysis may also help executives develop more effective marketing plans. If a company knows that it is strong in one particular area, executives can update brochures, television advertisements, press releases, and other marketing materials to share that information with customers.
- SWOT Analysis: Strengths: This guide gives examples of business strengths to guide users in performing a SWOT analysis.
- What Tools Are Useful in Assessing Strengths and Weaknesses?: This article discusses tools readers can use to determine the strengths and weaknesses of their businesses.
- Identifying Your Strengths (PDF): This guide explains how to complete each section of the SWOT analysis. It also contains more than a dozen questions to help business owners identify their strengths.
- Give Yourself a SWOT to Analyze Strengths, Weaknesses: This article explains the importance of assessing strengths and weaknesses when developing a business plan.
Analyzing the weaknesses of a business allows executives and managers to determine what they need to improve. Weaknesses hurt profitability and, if not controlled, may cause a company to go out of business. Weaknesses may have to do with the production process, company offerings, and quality of employees. The small liberal arts college with small classes and affordable tuition may not be able to attract top professors due to its small size. The school may use a high number of adjunct instructors instead of hiring full-time professors. These are examples of weaknesses that should be considered in the SWOT analysis. Once a group of executives develops a list of weaknesses, the entire organization should be involved in making improvements. In the case of the liberal arts college with too many adjunct instructors, the human resources department might consider increasing their efforts to find full-time professors.
- Assessing Organizational Readiness (PDF): This resource includes a blank SWOT analysis diagram and a list of action steps to take after identifying the weaknesses of a business.
- Analyzing Your Business’s Strengths, Weaknesses, Opportunities, and Threats: This article stresses the importance of objectivity when analyzing the weaknesses of a business.
- SWOT Analysis for Business: This article discusses the importance of looking at what can be improved when performing a SWOT analysis.
- Conducting Market Research: This resource explains the importance of identifying strengths and weaknesses when developing a marketing plan.
Opportunities are the possibilities a company has for increasing profit or improving performance. An opportunity could be something as simple as releasing a new product or targeting a new type of customer. Performing this step of the SWOT analysis involves analyzing external factors such as the state of the economy and any recent technological innovations. Reviewing these opportunities helps generate ideas for new products and services, which can help improve a company’s bottom line. Once a group of executives has a list of opportunities, the entire organization should be involved in taking advantage of those opportunities. Some managers even use this part of the SWOT analysis to motivate employees to submit ideas for new products or processes.
- SWOT Analysis From a Resource-Based View (PDF): This technical resource explains the importance of identifying opportunities and threats in the external environment.
- Resource Guide on Strategic Planning (PDF): This document explains the importance of environmental analysis in strategic planning.
- Strengths and Weaknesses: This article explains why examining strengths and weaknesses is important in business planning.
- SWOT Analysis Framework: This diagram shows how SWOT analysis fits in with other business activities.
Threats are the external factors that usually cannot be controlled. The economic downturn of 2008 is an external factor that most companies could not control, resulting in lower profits and reduced sales. Many companies had to close their doors because they could not compete in such a difficult economic environment. This is one good example of a threat. Political and social trends are also possible threats for a company. One example of a social trend that has hurt some companies is the push for products that are safer for the environment. Companies that produce products that produce a lot of pollution or use a lot of natural resources have found themselves scrambling to change their processes and satisfy consumers who want to protect the environment. Analyzing the threats of a company also involves looking at the strengths of competitors. If a competitor produces a better product or has a less expensive production process, these threats could hurt business. Compiling a list of threats makes it possible to develop a plan of action for remaining competitive and increasing profits.
- Environmental Factors Affecting a Firm’s Ability to Compete: This document outlines some of the external factors that affect business profitability and competitiveness.
- Strategic Planning: This article discusses the importance of considering external factors when conducting business planning activities.
- All About Strategic Planning: This resource explains how to use SWOT in examining external factors.
- Strategic Planning with SWOT Analysis: This resource contains a graphic that helps readers better understand the importance of SWOT.