How To Do SWOT Analysis
Updated by Xtensio
The easiest way to learn how to do a SWOT analysis is to do a swot analysis for your business by using Xtensio’s free swot analysis template or swot analysis examples! These templates help you identify all internal and external factors for your swot analysis. You can utilize your swot analysis for many objectives such as evaluating a new business idea or evaluating the success of a product. Defining a clear objective is the first key step to doing an effective SWOT Analysis for businesses.
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Table of Contents
Before developing a swot analysis, let’s start with what it actually is.
What is a SWOT Analysis?
It’s a strategic planning technique used by organizations to evaluate their strengths, weaknesses, opportunities, and threats. The acronym SWOT stands for these four elements, with strengths and weaknesses referring to internal factors, while opportunities and threats pertaining to external factors.
With these aspects, a company can develop a business strategy that leverages its strengths, improves its weaknesses, capitalizes on opportunities, and removes threats.
Importance of a SWOT Analysis
SWOT analyses help organizations identify growth opportunities and areas to improve. By understanding their strengths, they can better align their resources and capabilities with the market’s opportunities. Recognizing weaknesses allows organizations to address internal issues that could hinder their success.
Note: The external opportunities and threats identified in SWOT analyses can also be used in a PEST analysis (Political, Economic, Social, and Technological), another strategic planning technique. This analysis provides a broader view of the external environment and can reveal factors that might not be immediately apparent in a SWOT analysis.
A step-by-step guide to doing a SWOT Analysis for your business
How To Do a SWOT Analysis | Step 1
The strengths of your company are the positive internal factors. Ask yourself the following questions to define these factors:
- What sets you apart from your companies?
- What is your competitive advantage? To find out, take advantage of our free competitive analysis template.
- What assets does your company have?
- What do customers like about your company?
- What are the features that help your company make a difference?
While listing your company’s strengths, focus on the core elements that brought your company to the point it’s at. These core values will help you overcome future risks and threats. Plus, understanding what your company does well will guide you while outlining effective business and marketing strategies.
How To Do a SWOT Analysis | Step 2
On the opposite spectrum, your company’s weaknesses are equally as important in understanding where you stand in the market and how you can improve your business and marketing strategies. It’s not easy to identify and accept your company’s downsides, but the better you indicate these factors, the quicker you will be able to take actions towards solving them.
Answering these questions will help you identify your weaknesses:
- What is not working for your company?
- What are your competitors doing better?
- What are your customer’s main complaints?
- What can you do better?
- If you needed to change one thing in the company, what would it be?
- Does your company have any disadvantages?
How To Do a SWOT Analysis | Step 3
After you successfully analyze the internal factors that define your business (i.e. your strengths and weaknesses), it’s time to focus on some of the external factors that can have a huge impact on reaching your business goals. First of all, you’ll need to define your company’s “Opportunites.” Here’s how:
- What are some external sources that could potentially be used in your company’s favor?
- What could be the next best move for your company’s growth?
- Did you consider entering into any new markets? Your product or service might not be performing the best in the current market you’re putting efforts into, but you may want to consider a more cost-efficient market that could end up being a game-changer.
- What do your customers want? A new product, feature or service to be considered?
- Any possible partnerships? Look into who/what can help your company make an impact.
How To Do a SWOT Analysis | Step 4
Here’s one of the most difficult steps to identify. Threats are also external factors that you will have to acknowledge and analyze for your company’s success. Many companies fail to consider the threats to their business, whether it’s a threat caused by the market, competitor or simply a financial threat as a result of increased resource costs in relation to revenue. Here’s how you can identify your company’s threats.
- Do you really know who your existing competitors are? You might be doing everything right, but a step your competitor takes can turn things upside down. Consider your competitors as a potential threat to your success in the market and make sure to stay up-to-date on the competition.
- Are there any political or economic risks in the market you’re operating in? Ignoring these risks can cause a big and unexpected failure, this is why SWOT Analysis is important- to help you to identify and consider them in advance.
- Is your market growing? Or are there emerging industries that threaten to take over your market?
- What is the cost of your resources? Is it increasing?
Easily and regularly update your SWOT Analysis
This is a tool you will need to update over time, whether it’s to achieve the latest goal, work on a different business idea or enter a new market. The template is adaptable just like other Xtensio tools, it can and should be repurposed, revisited, and revised to suit your evolving needs. You can always add, delete, and move your modules and sections around with Xtensio’s versatile editor to adopt your company’s SWOT analysis as you need it.
Let’s have a look at a good swot analysis example for inspiration. You can use any of Xtensio’s swot analysis examples and modify them to your meet your needs.
SWOT Analysis Case Study
For instance, a successful fast-food chain lists strong brand recognition and efficient internal processes as its primary strengths. Its weaknesses might include a high employee turnover rate and reliance on animal-based products, which are increasingly criticized due to environmental concerns.
Opportunities could include the growing demand for plant-based foods, while threats might be health-conscious trends and new competitors in the market.
To effectively use the SWOT matrix, strengths and weaknesses should be considered relative to competitors. Like, if the fast-food chain has the most efficient service among its peers, that’s a strength. The same characteristic could be a weakness if competitors offer better service.
Similarly, in a personnel SWOT analysis, an individual might consider their skill set, work experience, and personal traits as internal strengths and weaknesses. External opportunities and threats might include market trends, industry demands, or economic conditions.
How to Do Your Own SWOT Analysis?
Conducting your personal SWOT analysis begins with asking the right SWOT analysis questions. These questions should help identify the organization’s strengths, weaknesses, opportunities, and threats.
Create a SWOT table, dividing it into four quadrants. Each quadrant represents one of the SWOT elements. Begin by listing your organization’s strengths, such as unique capabilities or resources, strong brand reputation, or loyal customer base.
Next, identify your internal weaknesses, such as areas where your competitors outperform you, or any internal processes that need improvement.
Then identify external opportunities. These could be market trends, technological advancements, or regulatory changes that could benefit your business. Lastly, identify threats to your business, such as emerging competitors, negative market trends, or potential regulatory hurdles.
By understanding each of these elements, you can develop a comprehensive business strategy that maximizes your organization’s potential and prepares it for potential challenges. Remember, SWOT analysis helps inform decisions, inspire action, and drive success.
Frequently Asked Questions about SWOT Analysis
Why is SWOT Analysis important?
The Swot framework helps companies with strategy development. It informs the planning process for growth and affects the business plan.
Are there alternatives to the SWOT Analysis?
Yes. SWOT Analysis covers specific aspects of your strategic approach, or it may not be enough to cover and improve your entire your business model. Check out these SWOT Analysis Alternatives to do business in a changing world.
How do I make my own SWOT analysis?
Start with Xtensio’s free swot analysis template or with one of the editable swot analysis examples. Then fill out by simply following the instructions in each section:
1. List your strengths.
2. Consider your weaknesses.
3. Explore your opportunities.
4. Understand potential threats.
5. Use your swot analysis to inform strategic decisions.
What are the simple rules for a successful SWOT analysis?
1. Be specific and precise.
2. Always consider your competition.
3. Depend on your swot analysis on research and observations. Avoid personal bias.
4. Keep updating your swot analysis regularly.
5. Work with other stakeholders in your company for a better understanding from all angles.
What are the common mistakes in SWOT analysis?
The most common mistake is putting down too much information without focus. Your swot analysis should be concise and to the point without fluff.
Not working with others and doing the swot analysis in isolation leads to a limited understanding of the business.
Not revisiting your swot analysis regularly leads to missing the point in future strategic decisions.
How does SWOT analysis help strategic planning?
When organizations know their strengths weaknesses, opportunities, and threats, they can remain competitive by informing and improving all teams such as the marketing team, sales team, operations, human resources, customer support and more.
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