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What is a SWOT Analysis? [Business Strategy 101]

Analysis of a SWOT Analysis

A Swot Analysis is a powerful technique for understanding a businesses Strengths, Weaknesses, Opportunities and Threats.

A SWOT analysis can quickly bring to light a company’s strengths and weaknesses in a visual way, but where a SWOT really shines is that it can uncover opportunities that have yet been unexplored. Once a company sees and understands it’s weaknesses, it can take action to mitigate the threats that are present.

A SWOT is a perfect tool for an informal kickoff meeting, as well as the tip of an iceberg for a deep dive into company strategy. The strengths and weakness sections are often factors that come from within a company, while opportunities and threats are most often from an external source. Another name for SWOT is internal-External analysis.

Defining the Strengths of an Organization

It is best, when it comes to strengths to look at both sides of the coin, so to speak. You have to look at strengths from the company’s perspective, and that of the customer or client’s within the market segment.

Strengths should align with some of the company’s characteristics, and it is also best to think about strengths in relation to competition. One example would be if all a company’s competitors offered a “high quality, lower priced store brand”, this would not be a strength unique to the company you’re working with.

Some questions to ask might be:

  • What are some clear advantages your company has over the competition? (Location, unique products/services, etc…)
  • What are you doing that’s better than anyone else?
  • What do clients and customers see as your strengths?
  • What is your organization’s unique selling proposition?

Defining the Weaknesses

As with the strengths, it’s important to consider the company weaknesses from both internal and external perspectives. As an unattached third party, it should be easier for you as the business strategist to see the company weaknesses than it is for anyone from the company itself.

  • What processes can be improved?
  • What is the company doing now that should be avoided?
  • What are reasons that the company misses or loses sales?

Uncovering Opportunities

One of the best strategies for finding opportunities is to look at the company strengths and look for ways those strengths could open up the doors to opportunities.

Also, look at the weaknesses and consider what opportunities could arise if you were to eliminate any of the weaknesses.

What are the Threats

One of the easiest ways to define threats to a company is to uncover limiting factors that cap the operation’s growth in any capacity. Whether it’s regulations, distribution channels, employees even, threats are often created from things that limit a company. There are also the obvious external threats, like powerful competition in the same market, price wars, etc.