What is a SWOT analysis and how to do it right (with examples!)
Understanding the Strengths, Weaknesses, Opportunities and Threats: All you need to know about the SWOT analysis.
The SWOT analysis is an incredibly powerful, yet simple analytic tool. It is designed to facilitate a realistic, fact-based, data-driven look at the strengths and weaknesses of an organisation or project. SWOT analyses are used at the organisational level to determine how closely a business is aligned with its growth trajectories, but they can also be used to ascertain how well a particular project — such as an online advertising campaign — is performing according to initial projections.
“It is impossible to accurately map out a business’s future without first evaluating it from all angles, which includes an exhaustive look at all internal and external resources and threats,”
Bonnie Taylor, chief marketing strategist at CCS Innovations, told Business News Daily.
This method was created in the 1960s by Albert Humphrey of the Stanford Research Institute, during a study conducted to identify why corporate planning consistently failed. Since its creation, SWOT has become one of the most useful tools for business owners to start and grow their companies.
Conducting a SWOT analysis organises your strengths, weaknesses, opportunities, and threats into an organised list and is presented in a simple two-by-two grid. Go ahead and try it out on Pitchspot if you want to dive right in and get started! Otherwise, read on for more!
What does SWOT stand for?
This section delves into each category in the SWOT analysis, with Apple, one of the Big Four technology companies as an example.
Strengths
The first element of a SWOT analysis is Strengths. As you’ve probably guessed, this element addresses things that your company or project does especially well, and what sets you apart from competitors.
This could be something intangible, such as your company’s reputation and loyal customer base, or something more easily defined such as the unique selling proposition of a particular product line. (If you are just starting out, a way to determine your value proposition could be structuring your idea using a Business Model Canvas!) Your strengths could also lie in your team — literal human resources: strong leadership, accessible technology, or a great engineering team.
Some strengths of Apple include their extremely strong brand image and reputation, a loyal customer base, high profit margins and an effective rapid innovation process.
Weaknesses
Once you’ve figured out your strengths, turn that critical self-awareness on your weaknesses. Weaknesses are negative factors that detract from your strengths, and place your business or project at a disadvantage relative to others.
Weaknesses stop an organisation from performing at its optimum level. They are areas where the business needs to improve to remain competitive: a weak brand, higher-than-average turnover, shortage of skilled people, an inadequate supply chain, or lack of capital are some examples of weaknesses.
Apple’s weaknesses might include a dependence on sales to relatively high end markets, its premium prices, and narrow product lines as compared to competitors like Samsung.
Opportunities
Next up is Opportunities. Can’t keep up with the volume of leads being generated by your marketing team? That’s an opportunity! Is your company developing an innovative new idea that will open up new markets or demographics? That’s another opportunity.
Opportunities are favourable external factors in your business environment that are likely to contribute to your success, and give you a competitive advantage.
Apple constantly develops new product lines like the Apple TV and (possibly) Apple electric cars, which opens them to new markets. As the world affluence is growing, Apple also has increased opportunities through a rising demand for tech products.
Threats
The final element of a SWOT analysis is Threats — everything that could potentially jeopardise the future of your company or project. This could include things like emerging competitors, tight labour supply, changes in regulatory law, usually things that you have no control over.
Apple faces aggressive competition, difficulties in market penetration in some countries, and rising labour costs.
Internal vs External Factors
The four elements mentioned above are consistent with all SWOT analyses. However, many companies further compartmentalise these elements into two distinct subgroups: Internal and External. This can be helpful in determining your next move or evaluating the degree of control you have over a given problem or opportunity.
Strengths and weaknesses are internal to your company — things that you have some control over and can change, while opportunities and threats are external — things that are going on outside your company, in the larger market, and typically factors you have no control over. You can take advantage of opportunities and protect against threats, but you can’t change them. You may want to consider putting in place contingency plans for dealing with them if they occur.
Now What?
After filling up all the grids, how do you act upon your SWOT Analysis?Ideally, there are a few stages of action you should take upon completing a SWOT analysis. You can attempt to match your strengths with your opportunities, convert weaknesses into strengths, or consider how your strengths can combat the threats that are in the market. Let’s take a look at how this works!
Acting On Your Strengths
One of the best things about the strengths you identified in your SWOT analysis is that you’re already doing them. Essentially, acting upon your business’ strengths consists of “do more of what you’re already good at.”
Apple’s strong brand image, high profit margins and effective rapid innovation processes are all strengths. This tells that Apple should continue to invest in marketing and R&D efforts, and continue developing and nurturing the strong relationships with its customers that have strengthened the brand’s reputation.
Matching strengths to Opportunities
The Opportunities section of your SWOT analysis is by far the most actionable, and that’s by design. By identifying opportunities by evaluating your organisation’s strengths, you should have a ready-made list of targets to aim for.
The development of new project lines is a major opportunity for Apple to break into new industries. Apple TV managed to capture 15% share amongst strong competitors including Netflix. Apple has potential stepping stones into the automobile and entertainment industry. To aid these processes, Apple’s strengths of high profit margins and rapid innovation processes will come into play.
Shoring Up Your Weaknesses
Acting on the weaknesses you identified in your SWOT analysis is a little trickier, not least because you have to be honest enough with yourself about your weaknesses in the first place.
Apple has a limited distribution network because of the company’s policy of exclusivity, carefully selecting authorised sellers of its products. Although such exclusivity strategy limits market reach, it is also able to establish market power and develop premium product branding, which translates into a strength.
Mitigating Threats using Strengths
Anticipating and mitigating the threats identified in your SWOT analysis may be the most difficult challenge you’ll face in this scenario, primarily because threats are typically external factors.
Every threat, and its appropriate reactions, is different. Regardless of the specific threats you’ve identified, responding to, and monitoring them should be among your top priorities.
Although Apple as a brand has solidified itself, it still faces threats from competitors. With the advancement in technology, brands like Samsung, Google, and Dell are giving Apple tough competition. As the competition is getting stronger, Apple either has to continually introduce new technologies or revise its pricing policy to stay ahead of its competition.
A SWOT analysis is a great way to guide business or project strategies. It’s powerful to have everyone in the room to discuss the company’s core strengths and weaknesses and then move from there to define the opportunities and threats, then finally to brainstorming ideas and strategies for a specific segment such as marketing, production or sales.
Try out the SWOT analysis on Pitchspot! Still have questions on the SWOT analysis? Write in to us at hello@pitchspot.co!
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