SWOT Analysis: Basics, Examples, and How To Perform One

SWOT Analysis: Basics, Examples, and How To Perform One

A SWOT analysis is a strategic planning tool used to assess a project or organization’s strengths, weaknesses, opportunities, and threats. The SWOT framework is designed to provide helpful insights into the internal and external factors affecting the competitive positioning of an organization or business venture.

Throughout this article, you’ll learn about the SWOT analysis as a strategic management tool for businesses, startups, nonprofits, and even individuals like solo entrepreneurs and investors. We’ll also offer real-world examples and a SWOT analysis template you can use to conduct your assessments.

Table of contents:

What is a SWOT analysis?

SWOT stands for strengths, weaknesses, opportunities, and threats. While it’s widely believed that businessman Albert Humphrey created the acronym in the 1960s, SWOT’s origins are still debated.

Regardless, countless organizations use SWOT analysis to gain a holistic perspective on factors that could affect their success. These include internal factors expressed as a company’s strengths and weaknesses, and external factors, specifically opportunities and threats.

Components of a SWOT analysis

The key to conducting a successful SWOT analysis is sticking to the facts. Wishful thinking or blind optimism will only skew your results and could result in a missed opportunity to take action.

A SWOT’s four quadrants address favorable and unfavorable factors from an internal and external viewpoint. Each quadrant is equally important when it comes to building the foundations of a strong brand.

Internal factors

A SWOT analysis begins with an honest look at your company’s internal strengths and weaknesses. Internal strengths could include anything from a great customer service team or human resources department to an exceptional company culture.

Internal weaknesses might highlight internal processes that could be improved or financial resources that could be used more efficiently. Admittedly, breaking down your company’s weaknesses alongside its strengths may not be the most fun exercise.

But it can be a great opportunity for growth. The best part about internal facts is that they tend to be much easier to recognize and control than external threats.

External factors

After you’ve done a thorough internal assessment, it’s time to look at external opportunities and threats. External opportunities could include leveraging current marketing trends, incorporating new technology, or targeting additional demographics.

External threats might include things like the actions of your competitors or even political or economic factors that could impact sales. While you may not always have complete control over your external environment, you can always control how your company responds to it. The better and earlier you anticipate these threats, the more effectively you can act.

Quadrants

As you work through these four quadrants of a SWOT matrix, you’ll examine the internal and external factors discussed above. Here are a few questions you might ask as you work through each section.

Strengths

  • What does our organization do well?
  • What unique characteristics set us apart from the competition?
  • In which areas do we earn the most positive customer feedback?
  • What other assets (superior technology, financial resources, intellectual property rights, etc.) do we have in our favor?

Weaknesses

  • Which internal weaknesses could we improve by addressing?
  • What does the competition have that we don’t?
  • What do we get the most customer complaints about?
  • Are there any resources we’re lacking that are holding us back?

Opportunities

  • What market gaps or emerging market trends could we tap into?
  • What potential partnerships or collaborations could help strengthen our brand?
  • What new technological advancements could help us or our team members be more efficient?
  • Could expanding our marketing efforts help us tap into a new customer base?

Threats

  • What is our competition doing that threatens our competitive advantage?
  • How will any impending regulatory changes impact our business?
  • How should we respond to negative press or online customer complaints?
  • How can we offset recurring supply chain issues?

Customize the questions in each quadrant to reflect your organization’s needs. For example, a small business might approach each section very differently than a large e-commerce retailer. The important thing is to make sure you cover all of your internal and external factors.

How to conduct a SWOT analysis

Before beginning a SWOT analysis, make sure you clarify what it is that you hope to achieve. A new startup might use the SWOT framework to arrive at foundational decisions like which customer base they want to target. A more established business might use SWOT analysis to debate launching a new product line.

Regardless of your goal, certain steps can help ensure your SWOT analysis runs smoothly. Here are some tips on how to use the SWOT framework to create a well-structured action plan.

1. Prepare

The larger your company, the more stakeholders you may want to consider inviting to participate. Including key personnel from multiple departments can help ensure that your group brainstorming efforts reflect the viewpoints of the entire company.

For example, team members in customer-facing positions may have more insights into external factors. Those in human resources, meanwhile, may be better informed about internal factors. Just be sure that your list of attendees doesn’t get too large to make open brainstorming difficult.

Brainstorming groups should be no larger than eight to ten people. If you feel it’s important to gain input from others, you may want to set up review sessions of the draft analysis created and look for major issues, overlooked elements, or minor tweaks.

If you suspect that open discussion of your company’s weaknesses could lead to inter-departmental discord, you might suggest having everyone fill out an anonymous SWOT analysis template before the meeting begins. This will give the facilitator an opportunity to bring up various concerns without putting anyone on the spot.

2. Analyze

Use a brainstorming session to highlight the most important factors contributing to each SWOT framework quadrant. Remind your attendees to stick to facts rather than opinions. Be careful to articulate each element separately. For example, if a competitor has a certain capability that you don’t, the item should not be stated as both an external threat and an internal weakness.

During this stage, some organizations find it useful to incorporate complementary tools, such as PEST analysis.

PEST (Political, Economic, Social, and Technological) can help encourage brainstorming of external factors related to your company’s success or challenges.

3. Plan

A SWOT analysis isn’t just about understanding where your company stands now. It’s a strategic planning tool designed to help you chart a course to a successful future.

Once your SWOT analysis is complete, it’s time to turn each insight into an action strategy. Carefully consider how to capitalize on each strength and opportunity and turn each weakness and threat into an actionable solution.

Here’s where a SWOT analysis can give you a competitive advantage. Whether you’re preparing to launch a new product or enter a new market, the SWOT framework can serve as a map to informed decision-making.

A TOWS analysis (threats, opportunities, weaknesses, strengths) is often the next step after a SWOT analysis; it helps you form actionable strategies by aligning individual internal strengths and weaknesses with external opportunities and threats.

SWOT analysis examples

A SWOT analysis is a versatile tool that can be applied to nearly any strategic decision-making process. In this section, we’ll look at examples illustrating how different organizations might use SWOT analysis to arrive at data-backed conclusions.

Business strategy

Imagine you’re a small business owner running a successful plumbing service in a small Texas town located a few hours from Austin. Your business has earned a great local reputation due to your team members’ high-quality workmanship, courtesy, and promptness.

You’re considering expanding your business to include a second location in downtown Austin. Given the magnitude of the business decision you’re facing, you decide on a SWOT analysis that looks something like this:

Strengths

  • You have a great team of plumbers who understand the competitive advantage of maintaining high service standards.
  • Your loyal customer base and great online reviews have earned you most of the local market share.
  • Your finances are in good enough shape to cover the overhead of a second location.

Weaknesses

  • You’ve largely managed your business yourself and are unsure whether you’d feel comfortable trusting another manager to oversee the second location.
  • You’re not particularly tech savvy and your website is in desperate need of an update.
  • None of your existing employees seem interested in relocating and you’re worried about building a new team from the ground up.

Opportunities

  • Plumbing services don’t tend to be vulnerable to shifting marketing trends.
  • The neighborhood you’re considering expanding to has very few plumbing providers with solid customer reviews.
  • The largest plumbing service in your potential new market just announced a major price hike, resulting in plenty of angry customer reviews.

Threats

  • While the prospective area’s largest competitor has mixed reviews, they’re a nationwide franchise that’s very well known.
  • A large part of your business comes from including high-quality replacement parts with installation, and material costs can be unpredictable.
  • You’ve heard rumors that other local plumbing services are considering expanding to the same area.

This SWOT analysis points to the need for more market research. Based on the considerations highlighted, the next stages in your planning process might include looking into hiring a marketing expert, gaining more insights into your competition, and comparing Austin to other possible markets.

Application scenarios

While a SWOT analysis can be very helpful for significant business decisions, it’s also a solid strategic planning tool for tackling more minor issues. Let’s look at several other situations where it could serve as a valuable decision-making strategy.

New technology adoption

Even if a company knows that its outdated software is one of its weaknesses, company leaders will need to consider several things before adopting a new technology. The company might measure a potential new piece of software against its budget, resources, and the technical expertise of its staff.

Whether each of these factors counts as an internal strength or weakness is important to consider. The company might also consider whether the new technology will give them a competitive advantage or if it’s the best solution to meeting shifting customer expectations.

Project management and supply chain optimization

A company dealing with supply chain issues might use a SWOT analysis to separate efficient vendors and project managers from their unreliable counterparts. They might look into opportunities to work with alternative vendors or adopt new technologies that could streamline the project management process.

Along the way, they’d also want to evaluate external factors like supply shortages and develop risk mitigation strategies.

Human resources and organizational development

A human resources and development SWOT analysis can provide valuable clues for attracting and retaining top talent. Evaluating the strengths and weaknesses of recruiting processes, company culture, and training programs can help form a solid action plan for future growth.

It might also lead a company to consider adopting more robust HR technology, implementing policies that appeal to workers from younger demographics, or identifying trends that are (and aren’t) working for competitors.

SWOT analysis template

Ready to try your own SWOT analysis? We’ll help you get started with a free SWOT analysis template.

This template will guide you through all the steps discussed above and help you consider all relevant strategic planning aspects. Feel free to adapt and expand it to suit the specific needs and nuances of your business or project.

Leveraging SWOT analysis for future growth

Conducting a SWOT analysis can be a powerful tool for growth, but only if you don’t stop once your analysis is complete. Use these insights to formulate an action plan with a clear list of objectives and timelines.

Then, take the next step by assigning tasks and roles to various team members. Remember, the goal of a SWOT analysis is to enable informed decision-making, which requires a proactive approach. Opportunities like partnerships and customer base expansion will never become anything more than opportunities without specific action.

Continuous improvement

Keep in mind that a single SWOT analysis will rarely prove effective for ongoing goals. The SWOT framework can be far more powerful when used as a tool for continuous improvement rather than a one-time activity.

Regularly revisit your SWOT analysis to incorporate evolving feedback, market trends, and technological advancements. The business world evolves so rapidly that a SWOT analysis today may bring up completely different considerations than one conducted last year or even last quarter.

Incorporate the SWOT strategies we’ve discussed into your business planning cycles. When used regularly, the SWOT analysis process can be a dynamic tool for maintaining strategic alignment and fostering growth through continuous learning and adaptation.

SWOT for strategic success

Whether you plan on using a SWOT analysis for strategic planning or decision-making, we hope it helps you outline a solid path to success. Throughout your analyses, you may come across talent gaps that are not so easily filled.

In these instances, you may want to consider adding a team of freelance professionals to your list of company strengths. Whether you want to expand your customer service team or hire a reliable developer or IT expert, Upwork has you covered.

Our talent marketplace offers connections to top independent professionals from a wide range of industries who are available to work as needed.

If you’re a professional searching for your next opportunity, Upwork can help you find work with top clients in your industry. Sign up for a free account and cross “lack of opportunities” off your “weaknesses” list.

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SWOT Analysis: Basics, Examples, and How To Perform One
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Upwork is the world’s work marketplace that connects businesses with independent talent from across the globe. We serve everyone from one-person startups to large, Fortune 100 enterprises with a powerful, trust-driven platform that enables companies and talent to work together in new ways that unlock their potential.

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