A strengths, weaknesses, opportunities and threats (SWOT) analysis is a strategic tool that businesses utilize in many industries to evaluate existing data and provide a strategic overview of the elements that dictate the feasibility of a new initiative.
When used effectively, a SWOT analysis maximizes your organization’s strengths, provides a new viewpoint on opportunities, identifies weaknesses and mitigates threats. Understanding the finer points of this strategic framework makes it a successful tool for almost any business.
In This Article
SWOT Analysis Defined
A SWOT analysis is an evaluation tool for assessing a company’s position regarding its competitors and developing strategic planning initiatives. This model considers internal and external factors influencing your competitive processes and current and future potential.
This analysis is meant to be used as a guide, facilitating factual data focusing on real-life applications to run a successful business and make the most of your strategic initiatives. It’s best used before making significant decisions impacting your business growth. It’s also an excellent tool for strategizing new business ventures.
4 Elements of a SWOT Analysis
A SWOT analysis breaks the data into four parts to get an unbiased and inclusive view of your business and its current and future potential.
1. Strengths
Establishing your strengths is the starting point of a good SWOT analysis. Strengths are internal and can be tangible or intangible. Making a list of every asset in your business, be it a team member, an advantage over the competition, a location or a resource, is a chance to remind yourself of your inherent value and assess opportunities that may arise from your unique advantages.
2. Weaknesses
Assessing your weaknesses is crucial to establish your competitive position. Weaknesses in a SWOT analysis are internal factors that can influence your current context or impede your progress.
Consider what areas in your business require more attention. Is further education or a reallocation of resources required? How strong is your internal communication? When you identify your weaknesses acruately, your SWOT analysis is much more valuable for your assessment.
3. Opportunities
According to the SWOT paradigm, opportunities are external factors with the potential to grant favorable outcomes. Implementing your strategy will help you leverage these opportunities, which include market or lifestyle changes, conflict resolutions, cutting down tariffs, or a gap in the market that creates a unique demand.
When brainstorming opportunities for a SWOT analysis, ask what opportunities exist in your market or in the environment from which you hope to benefit. Keep in mind that if you identify SWOT opportunities that are internal to the organization and within your control, move them to the “strengths” quadrant of your SWOT.
4. Threats
Addressing external threats is the last step in completing your SWOT analysis. These factors aren’t within your realm of control yet represent significant risks to your business and competitive position. Examples of threats in a SWOT analysis may be increasing material costs or a competitor opening a store across the road.
Competition — existing or potential — is always a threat. What other factors represent threats to your business? Take time to create an overview of existing and potential threats. The more you can identify, the stronger your position becomes, as you can take a proactive stance in planning and respond to them accordingly.
How to Do a SWOT Analysis
Conduct a SWOT analysis by following these simple steps:
1. Determine Your Objective
Narrow down your analysis to one critical project, strategy or objective. What’s the ideal outcome of this project? How do you want to maintain or enhance your competitive advantage?
2. Gather Resources
A SWOT analysis relies on factual and anecdotal information, so compile as many data points relevant to your internal and external context as possible.
3. Compile Ideas
Create a grid with four quadrants, known as a SWOT table. Label them with the four elements of a SWOT analysis from the top left corner to the bottom right.
Start with your strengths. You can include qualitative and anecdotal elements. List them in bullet form and ensure you include your team’s input and additions. Then, move on to the rest of your headings.
4. Refine Your Findings
The first stage of your SWOT analysis should yield many ideas. You and your team need to rank and refine these findings to create an actionable strategy. Ask yourselves the following questions:
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- How can we turn our strengths into opportunities?
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- How can we use our strengths to minimize the threats we identified?
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- What opportunities did we identify that can minimize our weaknesses?
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- How can we minimize weaknesses to avoid the threats we identified?
5. Develop the Strategy
Consider whether the positive outcomes of your project outweigh the negative, grab a calendar and set up some strategic objectives and critical success factors for your initiative. Ensure you regularly review your progress and conduct further SWOT analyses if needed.
Benefits of a SWOT Analysis
A SWOT analysis is a versatile strategic tool with many benefits, including the following:
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- Elevates data integration: A SWOT analysis provides a unique combination of qualitative and quantitative data. Having this information available aids in decision-making and augments positive planning and communication.
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- Decreased cost: Conducting a SWOT analysis doesn’t require hiring anyone or renting expensive equipment. All you need is time, willing team members and a little out-of-the-box thinking.
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- Fosters communication: Having your team take active roles in strategic planning promotes open discussion and communication. This element satisfies and engages employees and provides management with an opportunity to incorporate everyone’s ideas and viewpoints.
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- Provides multiple viewpoints: By definition, a SWOT analysis gives you four different views of the same objective and allows you to create both proactive and reactive strategies for internal and external elements that may craft your business success.
SWOT Analysis Example
A SWOT analysis is helpful for almost any industry and examines the strengths, weaknesses, opportunities and threats that arise from many initiatives. Specifically, the health care industry can benefit significantly from using a SWOT analysis for new projects. Let’s examine an example of a SWOT analysis in health care.
The goal of your SWOT analysis could be to introduce a new initiative to your health care facility. Your SWOT table could look something like this:
Strengths
A list of strengths for your SWOT analysis could include the following:
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- Access to specialists.
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- New electronic booking technologies.
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- The excellent reputation of your facility.
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- Geographic location.
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- Database of satisfied patients.
Weaknesses
Your weaknesses might involve:
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- Budgetary constraints.
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- Lack of marketing expertise.
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- A damaged reputation.
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- Falling behind with technology.
Opportunities
The external opportunities to consider could be:
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- The emergence of a new niche market.
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- A service your competitors have neglected.
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- A new technology.
Threats
External threats to your new project could include:
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- New competitors in your local market.
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- Changes in regulations.
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- Increased costs of supplies.
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- Loss of critical staff members.
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- Economic changes.
4 Flaws of a SWOT Analysis to Avoid
Although a SWOT analysis has many advantages in strategic planning, some missteps can impact its effectiveness. Avoid the following common errors to get the most from your SWOT analysis:
1. Misunderstanding the SWOT Categories
Remember, strengths and weaknesses are internal elements within your organization that you have control over and can change. Opportunities and threats are elements outside your organization. When conducting your SWOT analysis, ensure you place your findings in the correct quadrant, or it could affect the outcome.
2. Not Using Data as SWOT Inputs
The purpose of SWOT analysis is to categorize qualitative and quantitative data and use it to provide the best possible strategy. While a significant element of brainstorming is involved, it should be done after you’ve categorized your data.
3. Improperly Assembling the SWOT Team
Many teams make the mistake of conducting a SWOT analysis with only top-ranking members of their organization. For it to be effective, the input of team members from across the organization is necessary, from CEOs to frontline staff.
Consider adding external stakeholders, as they offer different, valuable perspectives you’d miss if the people conducting the analysis all come from the same place in the company.
4. Failing to Translate SWOT to Strategy
In order for your SWOT analysis to be practical, you must consider what happens after it’s complete. The information you gather can only be helpful if you translate it into something actionable. Once you’ve categorized your data correctly and enhanced your perspectives, take your outcomes and create a strategic change agenda that formulates an actionable strategy you can implement in your workflow.
How AchieveIt Helps Develop a SWOT Analysis
The AchieveIt Execution Management platform includes a SWOT analysis tool to help you develop and document the strategies that will drive results. The online SWOT is fed by other strategy development tools, such as a Strategic Themes Assessment, Capabilities Gap, and PESTEL Analysis.
By completing these quantifiable assessments, the SWOT is automatically populated with the consensus thinking of the organization. Once your strategic planning team is ready to conduct its SWOT brainstorming session, the starting point is a SWOT analysis containing considerable data. Hence, your team has to fill in gaps rather than start from scratch.
About AchieveIt
With AchieveIt, you can input your key plans and initiatives, build them out, and assign them to the correct members of your team. With automatic updates requesting updates across your organization, you can take the results of your SWOT analysis out of the boardroom and bring them to fruition.
Our strategic execution experts help you create strategic initiatives for your business. With AchieveIt strategic management software, you can connect, manage and execute critical initiatives with every possible advantage. Request a demo today and see firsthand why top organizations across the globe choose AchieveIt. Let’s actually do this.
