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SWOT Analysis

by Nathanael Okhuysen

What is a SWOT Analysis?

When practicing strategic decision making skills, there are a lot of factors to consider. It is easy to become overwhelmed by related circumstances, options, and data. A SWOT analysis, or SWOT matrix, is a decision-making framework for focusing on strategically important elements in this jumble. SWOT stands for Strengths, Weaknesses, Opportunities, Threats. These four categories describe whether an aspect of the decision is negative or positive, and whether it is external or internal to the organization. A thorough SWOT analysis can be the backbone of sound strategic planning.

	DEFINITION	EXAMPLE
S	Strengths Qualities or assets within the organization which are beneficial	”Operations in more than 40 countries.” ”Development costs under $50k.” ”Dried fruits and nuts are varied and of high quality.”
W	Weaknesses Qualities or liabilities within the organization which are detrimental	”Recent recalls have damaged sales and brand equity.” ”Update required every six months.” ”Total lack of certification systems.”
O	Opportunities Actual or potential conditions which are to the organization's advantage	”Rationalizing global retail network would reduce expenses.” ”No known competitors.” ”Largest raisin market, which commands .05% above average commodity prices.”
T	Threats Actual or potential conditions that negatively impact the organization	”Higher minimum wages affect operating margins.” ”Could be completely shut out by social networks, with no redress.” ”Prospective location is lowest rank dried fruit & nut supplier country.”

These four categories can be arranged in a 2x2 matrix for easy contrasts. Notice the internal/external and positive/negative relationships between each cell in the SWOT analysis example below.

SWOT Analysis Example

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How to Make a SWOT Analysis

A good SWOT analysis starts with asking the right questions. Below is a template to get you started on your own SWOT analysis. As you complete it, try asking yourself the following questions, and visualize the most salient answer to each in the appropriate cell. Feel free to brainstorm as much as you can, but try to focus on four or five items for each quadrant. Also, stay specific and concrete, avoiding vague statements. For example:

Avoid: We have lots of experience.

Instead use: We have manufactured and shipped widgets domestically for 10 years.

Strengths

(Positive, Internal)

What tangible assets (credit, capital, etc.) can be brought to bear in this situation?
What intangible assets (knowledge, networks, reputation, etc.) will help us?
What is it about our organization that will make this plan work?
What are we good at?
How are we better than the competition?

Weaknesses

(Negative, Internal)

What are the liabilities (debts, poor location, disorganization, etc.) that might impede this effort?
What assets are missing (expertise, access to technology, skills, etc.) to make this successful?
If something within the organization caused this to fail, what would that be?
Where does the organization need improvement?
How is the competition superior?

Opportunities

(Positive, External)

What market conditions benefit us?
What has recently changed in the world to make this easier?
What trends are cause for optimism?
Who are potential allies?
What environmental factors (regulation, technology, demand, etc.) make the organization robust?

Threats

(Negative, External)

Who is the competition?
What are the largest obstacles in the way?
If something currently existing outside the company causes this to fail, what would that be?
If something outside the company changed to cause failure, what might that be?
What would make this idea obsolete?

SWOT Template