What is a SWOT analysis used for?

Posted by Mark Hobart on Jul 25, 2018 3:57:00 PM

What is a SWOT analysis used for

SWOT is an acronym commonly used in the world of business standing for strengths, weaknesses, opportunities and threats. A SWOT analysis is a common best practice business management model enabling organisations to ensure that they are self-aware. It is an incredibly useful, yet simple technique for understanding how your organisation can capitalise on its strengths; identify its weaknesses and necessary actions to overcome these; take forth opportunities and manage and mitigate identified threats.

The SWOT analysis originated from the Stanford Research Institute in the 1960s and stemmed from the need to find out why corporate planning failed. The research was funded by the fortune 500 companies to find out what could be done about this failure. The findings of the research identified that businesses needed to be much more self-aware.

What to consider in a SWOT analysis

When looking at strengths and weaknesses, your organisation should review its internal environment including areas such as products, pricing, costs, profitability, performance, quality, people, skills, adaptability, brands, services, reputation, processes and infrastructure. Opportunities and threats are typically related to the immediate external environment including factors relating to markets, sectors, audience, fashion, seasonality, trends, competition, economics, politics, society, culture, technology, environmental, media and law.

Key questions helping you to undertake a SWOT analysis are detailed below:


  • What advantages does your organisation have?
  • What do you do better than anyone else?
  • What do your staff, stakeholders and customers see as your strengths?
  • What are your organisation's USPs (unique selling points)?

It is important to consider your strengths from both an internal perspective, and from the point of view of your customers and people in your market.


  • What could you improve?
  • What should you avoid?
  • What are your staff, stakeholders and customers likely to see as weaknesses?
  • What factors lose you sales?

The key thing with identifying weaknesses is to be open and honest. It's best to be realistic now, and face any unpleasant truths as soon as possible.


  • What opportunities are on the horizon?
  • What interesting trends are you aware of?

Useful opportunities can come from such things as:

  • Changes in technology;
  • Changes in the economy;
  • Changes in government policy; and
  • Changes in social patterns, population profiles, lifestyle changes, and so on.

A useful approach when looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you could open up opportunities by eliminating them.


  • What obstacles do you face?
  • What are your competitors doing?
  • Is changing technology threatening your position?
  • Do you have financial challenges?
  • Could any of your weaknesses seriously threaten your business?

When looking at opportunities and threats, undertaking an in-depth external environmental analysis can be helpful. In terms of acronyms, this is often referred to as a PEST, PESTLE, STEEPLE or STEP analysis. The idea of this analysis is to identify key external factors in areas such as social, technological, economic, ethical, environmental, political and legal influences that may have an impact on your business.

In summary

What makes a SWOT analysis particularly powerful is that, with a little thought, it can help you uncover opportunities that you are well-placed to exploit. Similarly, by understanding the weaknesses of your organisation, you can manage and eliminate threats that would otherwise catch you unaware.

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Topics: Business Intelligence

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