Discover all you need to know about a SWOT analysis with our go-to guide covering their importance, how to create your own, examples, templates, and much more.
The strategy creation process of any organization can be a long, arduous journey that requires careful consideration and accurate information. One essential tool widely used in business development is the SWOT analysis—an acronym for Strengths, Weaknesses, Opportunities, and Threats.
A well-executed SWOT analysis can help clarify an organization’s current situation and the steps to ensure the most successful outcomes moving forward.
This blog post looks at everything you need to know about a SWOT analysis, including what it is, how to create one effectively, and answers to your frequently asked questions.
Read on for our guide to SWOTs.
Jump to the section you want
- What is a SWOT?
- Why are SWOTs important?
- What are the benefits of a SWOT?
- What are the challenges of creating a SWOT?
- How often should you create a SWOT?
- Who should create a SWOT?
- How can you create a SWOT analysis?
- Examples of SWOT in Marketing, Manufacturing, and Healthcare
- SWOT templates
What is a SWOT analysis, and why is it important?
A SWOT analysis is a type of strategic planning process used to understand an organization's internal and external environment.
What is a SWOT made up of?
It stands for Strengths, Weaknesses, Opportunities, and Threats and is often represented as a diagram with each component in its box.
Strengths refer to the elements within the organization which demonstrate competitive advantages over other market players; this could be anything from optimized operational processes to superior customer service.
Weaknesses look at areas where the company may fall short compared to industry standards, including inefficient operations or lack of access to specific resources.
Opportunities are outside influences that can help the organization achieve its goals, including new partnerships, partnerships with suppliers, access to capital, etc.
Lastly, threats are external factors that present potential harm or disruption to the business, including competitors entering the exact market or changes in consumer behavior.
Internal v external
The SWOT analysis pays particular attention to internal factors and external influencers on your ability to be successful.
A SWOT matrix will therefore address these, and to reach the point of analyzing the data gathered and creating a clear list of issues, you may use tools such as:
- VRIO analysis
- Gap analysis
- Value chain
- Porter's five forces
So, given these components, why exactly is a SWOT analysis critical?
Why are SWOT analyses important?
The answer lies in its ability to equip organizations with essential decision-making tools which allow them to identify where they stand within their respective industry landscape before decisions around investments or growth strategies are made.
The SWOT provides insight into what success may look like before resources are allocated toward development stages.
It also creates transparency between stakeholders, so there is a clear understanding of expectations up front allowing everyone involved in the project to have precise alignment regarding objectives and desired outcomes.
And by recognizing areas where organizations have either competitive advantages or disadvantages, they can tailor strategies that maximize strengths while minimizing weaknesses helping them stay ahead of the competition while simultaneously preparing for any roadblocks they may encounter.
What are the benefits of creating a SWOT?
A SWOT analysis can help your business identify its strengths, weaknesses, opportunities, and threats. By understanding these factors, a company can make informed decisions about achieving its goals and addressing challenges.
Specifically, a SWOT analysis can help a business:
- Identify internal strengths and weaknesses that can be leveraged or improved upon
- Recognize external opportunities for growth and expansion
- Address potential threats to the company before they become significant problems
- Develop a clear and actionable plan for achieving its goals
- Prioritize initiatives by comparing the potential impact of different strategies
More advantages of a SWOT include:
The benefits of creating a SWOT analysis are numerous, but first on the list is generating actionable insights from data rather than assumptions or opinions from inexperienced people making uninformed decisions.
Gathering information related to internal and external influences helps inform investment decision-making.
This is because it provides insight into what success may look like before implementation and allows open discussion about expectations up front, ensuring that everyone involved in the project understands objectives before the execution phase.
Alignment to goals
Engagement between stakeholders throughout the entire process also helps create alignment among members.
This means that all efforts throughout the strategy execution phases lead toward the same goal without any deviation due to miscommunication or lack of direction from those leading initiatives.
What are the challenges of creating a SWOT?
Although several positives are associated with completing a SWOT analysis, there are also some challenges.
Firstly, since this type of assessment is subjective, there is always the potential for bias during the data collection stages.
Due diligence must be taken when gathering information, so that results accurately reflect reality rather than opinions or assumptions made by those collecting it.
A SWOT analysis should involve various stakeholders, including employees, customers, and industry experts. Identifying the right stakeholders and getting their input can be challenging.
Furthermore, because the scope of such assessments typically involves internal and external influences being taken into account, tasks can become very broad if not managed correctly.
This will lead to too much effort expended trying to gather information rather than analyzing what has been collected. This results in fatigue among team members who engage in this activity.
A SWOT analysis can generate a large amount of information. Prioritizing this information and focusing on the most important factors can be challenging.
Even so, manipulating a SWOT template and the static nature of the document means it easily gets out of data relatively quickly.
This can be overcome through rigor (regularly updating), but so too can the use of software which allows you to conduct, edit, and aggregate SWOT analyses across divisions and the organization.
How often should you conduct a SWOT?
Firstly, the frequency with which a business or organization should create a SWOT analysis will depend on the specific industry and context in which they operate, as well as their goals and objectives.
Generally speaking, conducting a comprehensive SWOT analysis at least once a year is advisable to identify any new opportunities or threats that may have arisen since the last assessment.
In addition, it may also be beneficial to carry out smaller assessments more regularly (e.g., quarterly or biannually) depending on the size of the business or organization and how quickly the environment or market in which they operate changes.
When determining who should create a SWOT analysis, it’s essential to consider the internal and external stakeholders involved in assessing the strategy.
Internally, this could involve senior executives or heads of departments such as marketing, HR, IT, etc., while externally, it could include consultants from outside companies with expertise deemed necessary for this project.
It is worth noting, though, that those assigned with creating the SWOT analysis should not just be experts within their field but capable of critically evaluating internal and external factors to identify potential opportunities and threats posed by each aspect of their environment or market.
In terms of steps required for completing a SWOT analysis, specific procedures must be followed to ensure accuracy and effectiveness.
Who conducts a SWOT analysis in a business?
Firstly, those responsible for the assessment must understand why they are doing so: what is the purpose behind conducting this analysis? Are they attempting to develop new strategies? Designing campaigns? Identifying areas for improvement?
Once this has been established, objectives can be set accordingly for each factor being assessed, e.g., “what does success look like for this particular strategy/campaign/area?”
This will help inform decision-making throughout the process by clarifying expectations at each stage before the execution takes place.
What is clear is that a SWOT analysis, and strategy creation, therefore, as a whole, is not limited to a corporate level of an organization. It is a key tool in the armory of any manager.
Regular SWOT analyses allow businesses and organizations access invaluable information that informs decision-making around investments, strategies, campaigns, etc.
While many positives are associated with such assessments, there are also some downsides – most notably, potential bias during data collection stages and general fatigue amongst team members if the scope is too broad.
With these factors considered, though, one cannot deny the value generated from completing such analyses since, without them, strategic planning sessions would likely be a little different than guesswork, no matter how experienced those making decisions may be.
Thus it is incumbent upon those responsible for leading organizational initiatives to ensure the proper steps for successful completion are undertaken so all available insights are capitalized upon before finalizing plans related to growth strategies intended to improve efficiency, profitability, competitiveness, etc.
How can you create a SWOT?
To conduct a SWOT analysis, follow these steps:
1. Gather information
Collect information about the business, its industry, and its environment. This can include financial reports, customer feedback, market research, and industry trends.
2. Identify stakeholders
Identify the stakeholders involved in the analysis, such as employees, customers, and industry experts.
3. Create a SWOT matrix
Use a SWOT matrix template to organize the information collected. The matrix should have four quadrants: one for strengths, one for weaknesses, one for opportunities, and one for threats.
4. Identify strengths
Identify the internal factors that give the business an advantage over its competitors. These include a strong brand, talented employees, or a unique product or service.
5. Identify weaknesses
Identify the internal factors that hinder the business's performance. These include a lack of resources, poor management, or outdated technology.
6. Identify opportunities
Identify external factors that the business can capitalize on to achieve its goals. These can include a growing market, new technology, or a change in consumer trends.
7. Identify threats
Identify external factors that could negatively impact the business. These can include things like a recession, new competitors, or changes in government regulations.
8. Prioritize findings
Prioritize the identified strengths, weaknesses, opportunities, and threats based on their potential impact on the business.
9. Develop a plan
Develop a clear and actionable plan for addressing the identified strengths, weaknesses, opportunities, and threats. This should include specific goals, strategies, and tactics.
10. Implement the plan
Communicate the plan clearly to all stakeholders and monitor progress to ensure the plan is being effectively implemented and achieving desired results.
It's important to note that a SWOT analysis should be revisited periodically to ensure that the information is current and relevant and that the plan is still relevant and practical.
What are some examples of a SWOT?
When creating your SWOT matrix, examples often go a long way. Here are three examples - one for launching a new product, one for a manufacturing plant, and one for a healthcare organization.
Marketing a new product launch
Here's an example of a SWOT analysis for a marketing campaign for a new product launch.
- Strong brand awareness and reputation
- High-quality product with unique features
- Experienced and skilled marketing team
- Limited budget for the campaign
- Little data on the target market
- Limited distribution channels
- Growing demand for similar products
- Potential to reach the new target market
- Use of social media and influencer marketing
- Strong competition from established brands
- Limited time to launch before similar products hit the market
- Potential for negative online reviews
Based on this SWOT analysis, the marketing team could develop a plan that focuses on leveraging their strengths (such as their strong brand and skilled marketing team) and addressing their weaknesses (such as their limited budget and lack of data on the target market).
The plan could also include strategies to capitalize on the opportunities (such as using social media and influencer marketing) and mitigate the threats (such as solid competition and potentially harmful reviews).
For example, the team might focus on building brand awareness and reputation through social media marketing, influencer campaigns, and public relations. The team might also focus on targeting the right audience by conducting market research to understand the target market better.
Additionally, they may consider budget optimization by approaching cost-effective distribution channels, such as digital marketing.
Here's an example of a SWOT analysis for a manufacturing plant.
- Experienced and skilled workforce
- Efficient and well-maintained production equipment
- Strong relationships with suppliers and customers
- Strong reputation for producing high-quality products
- Limited capacity for expansion
- Limited use of automation and technology
- Dependence on a small number of customers
- Growing demand for the products it produces
- Potential for new market expansion
- Use of automation and technology to increase efficiency and reduce costs
- Increasing competition from other manufacturers
- Potentially volatile raw material costs
- Changing regulations and standards
- Dependence on a small number of customers
Based on this SWOT analysis, the manufacturing plant could develop a plan that focuses on leveraging its strengths (such as its experienced workforce and strong relationships with suppliers and customers) and addressing its weaknesses (such as its limited capacity for expansion and limited use of automation and technology).
The plan could also include strategies to capitalize on the opportunities (such as increasing efficiency and reducing costs through automation and technology) and mitigate the threats (such as increasing competition and changing regulations and standards).
For example, the manufacturing plant might invest in automation and technology to increase efficiency, reduce costs and improve quality. They might also consider expanding their customer base and exploring new markets. Additionally, they may choose to invest in research and development to improve their production process and increase their range of products.
Here's an example of a SWOT analysis for a healthcare facility:
- Experienced and qualified medical staff
- State-of-the-art equipment and technology
- Strong reputation for providing high-quality healthcare services
- Strong relationships with insurance providers and other healthcare facilities
- Limited capacity and resources
- Limited patient access to certain specialists
- High costs associated with the care
- Growing demand for healthcare services
- Potential to expand services offered
- Use of telemedicine and virtual consultations
- Increasing competition from other healthcare facilities
- Potential changes to healthcare regulations and reimbursement
- Shortages of qualified medical staff
- Changing patient expectations and demands
Based on this SWOT analysis, the healthcare facility could develop a plan that focuses on leveraging its strengths (such as its experienced medical staff and state-of-the-art equipment and technology) and addressing its weaknesses (such as limited capacity and resources).
The plan could also include strategies to capitalize on the opportunities (such as expanding services offered and implementing telemedicine and virtual consultations) and mitigate the threats (such as increasing competition and potential changes to healthcare regulations and reimbursement).
For example, the healthcare facility might invest in expanding its services, such as adding new specialties or increasing the number of beds. They might also consider implementing telemedicine and virtual consultations to improve accessibility and reduce costs.
Additionally, they may choose to invest in recruitment and retention programs to address the shortages of qualified medical staff.
Create your SWOT analysis with i-nexus
SWOT analysis has become one of the most popular methods when creating strategies.
That's because the SWOT is an invaluable decision-making tool that recognizes internal and external factors that play into the performance of businesses and products. With this matrix, leaders can access essential information when deciding how best to approach projects and programs for growth or improvement efforts.
Benefits do exist. Identifying competitive advantages while mitigating risks associated with new investments only scratches the surface of how valuable this type of assessment is. But, they come with some downsides, such as risk bias during data collection stages or fatigue due to the scope being too broad if not appropriately managed.
Despite these drawbacks, you cannot deny the value generated from completing such analyses since, without them, the strategy will look a little different than guesswork, no matter how experienced those making decisions may be.
Click below to download your copy of our i-nexus SWOT template.
Learn more about strategy creation
Take the next steps in your journey by exploring our strategy execution resource hub or any of the below:
- Key to strategy execution eBook: Read how companies like Danaher and HP have mastered strategy execution and what you can learn from them.
- What does it mean to be Business Agile?: Leap into the future of strategic planning and execution with this fascinating insight.
- How AI and Machine-Assisted Learning will help strategy execution: As Artificial Intelligence becomes a mainstay in our lives, read how AI and machine-assisted learning will evolve to support your strategy execution.
About the author
James Milsom is Head of Marketing at i-nexus.
As Head of Marketing, his drive is to raise awareness and understanding of the challenges facing enterprises in delivering strategic objectives and transformation amidst changing markets and the obstacles traditional tools and methods present leaders.
If you’d like to talk more about strategy, reach out to James on email@example.com or connect with him on LinkedIn for the latest insights.