SWOT analysis.

At its core, SWOT analysis is a strategic planning technique designed to identify and evaluate the strengths, weaknesses, opportunities, and threats pertinent to a business or a specific project. Often visualized as a SWOT matrix or situational analysis, this framework provides a panoramic view of an organization’s current position by examining internal capabilities and external environmental factors. Think of it as a snapshot of your current situation, looking at what’s happening inside your company and outside the market.

The main goal of a SWOT analysis is to gain an objective view of your business’s position, which helps you make better strategic decisions. By looking at these four areas, you can determine how to use your advantages, fix your shortcomings, take advantage of good situations, and protect yourself from potential problems. You can use SWOT for many things, like developing your overall business strategy, planning a project, launching a product, creating a marketing campaign, or analyzing competitors.

It’s important to remember that a SWOT analysis is usually just the starting point. It identifies the important factors, but the real value comes when you use these findings to create solid, actionable plans.

In this guide:

• What are the four elements of a SWOT analysis?
• How to do a SWOT analysis.
• SWOT analysis examples in action.
• Connecting SWOT.
• Using the TOWS matrix.
• Common mistakes to avoid in SWOT analysis.
• When to do a SWOT analysis.
• Why SWOT analysis matters for your business.
• SWOT vs. PESTLE.

The four principal elements of a SWOT analysis are:

Strengths (internal, positive).

These are the things your company does well or the resources you have that give you an advantage. They are your internal positive points.

Ask yourself:

• What are we good at?
• What unique resources do we have?
• What do our customers love about us?
• What advantages do we have over competitors?

Examples:

• Strong brand name
• Loyal customers
• Skilled employees
• Efficient processes
• Unique technology or patents
• Good financial health
• Great location

Weaknesses (internal, negative).

These are internal factors that hold your company back or put you at a disadvantage. These are areas where you need to improve.

Ask yourself:

• What areas are underperforming? Why?
• What do competitors do better?
• What key resources do we lack?
• Are our processes inefficient or outdated?
• What do customers complain about?

Examples:

• Weak brand or low awareness
• High debt or poor finances
• Lack of capital or funding
• Outdated technology
• Inefficient operations
• Poor location
• High employee turnover
• Unclear unique selling point (USP)
• Limited market reach
• Poor customer service
• Gaps in employee skills
• Relying too much on a few clients/products

Opportunities (external, positive).

These are external situations or trends you could use to your advantage. They are favorable conditions in the market.

Ask yourself:

• What market trends can we benefit from, whether technological, social, or economic ?
• Are there customer needs we aren’t meeting?
• Can we expand into new markets or reach new customers?
• Are there new technologies like AI that we could adopt?
• Could partnerships help us?
• What are our competitors’ weaknesses?

Examples:

• Entering new markets, whether local or international
• Changing customer tastes such as demands for sustainability or personalization
• New technologies such as AI, automation, digital platforms, or data analytics
• Helpful new regulations or government support
• Competitors showing weaknesses
• Chance to offer new products/services
• Potential partnerships or acquisitions
• Using data analytics for better insights
• Growing demand for specific services such as digital marketing or ecommerce
• Positive media attention
• New marketing channels such as social media and influencers
• Opportunities related to remote work trends

Threats (external, negative).

These are external factors that could potentially harm your business. They are risks or unfavorable market conditions.

Ask yourself:

• What challenges do we face from outside?
• Who are our competitors, and what are they doing? Are new ones emerging?
• Could new regulations hurt our business?
• Could an economic downturn affect us?
• Are customers losing interest in what we offer?
• Are there risks in our supply chain?
• Could new technology make us obsolete?
• Are cybersecurity or digital privacy regulations major risks?

Examples:

• New or stronger competitors
• Detrimental regulation changes
• Economic recession or instability
• Negative publicity
• Shifts in customer preferences
• Rising costs, such as labor and materials
• Disruptive technology changes
• Market getting too crowded
• Supply chain problems
• Cybersecurity threats, data breaches, digital privacy rules (GDPR, CCPA)

The most common way to organize these is in a SWOT matrix, a simple 2x2 grid with a box for each category: strengths, weaknesses, opportunities, and threats). This makes it easy to see everything at a glance.

A good SWOT analysis needs structure and honest input. Here’s how to conduct one effectively:

1. Know your goal. Be clear about why you’re doing the analysis. Are you looking at the whole company, a specific project, a new product, or something else? A clear goal keeps the analysis focused.

2. Get ready.

   • Assemble your team: Bring together people from different parts of your business (marketing, sales, operations, finance) for diverse viewpoints. Consider customer feedback too.
   • Gather information: Collect relevant data beforehand — performance numbers, financial reports, customer feedback, market research, competitor info, industry trends. Good data makes your analysis more credible.

3. Brainstorm.

   • Lead the discussion: Have someone facilitate the session to keep it on track and encourage participation. Create an open atmosphere where people feel safe to share honest thoughts, even about weaknesses.
   • Generate ideas: Review each section (Strengths, Weaknesses, Opportunities, Threats). Use guiding questions to spark ideas. Get as many ideas down as possible initially. Use whiteboards or collaborative tools.
   • Organize: Put the ideas into the four SWOT categories, often using the matrix grid.

4. Refine and prioritize.

   • Clean up the lists: Review the brainstormed points. Group similar ideas, remove duplicates, and make vague points more specific. Make sure everything is in the right category (internal vs. external).
   • Prioritize: Discuss which factors are most important or have the biggest potential impact. Rank them and focus on the top few (maybe 5-10) in each category.

5. Document it. Write the final, prioritized SWOT analysis clearly, usually in the matrix format. Share it with everyone involved.

Remember, the discussion and collaboration during the SWOT process are as valuable as the final document.

Here are some simplified examples to show how SWOT analysis looks for different types of businesses:

A SWOT analysis becomes truly actionable when you explore how the four areas intersect. Connecting internal strengths and weaknesses with external opportunities and threats can uncover clear paths for growth, improvement, and risk management.

• Strengths + Opportunities (SO): How can you use your strengths to capitalize on external opportunities?
  Example: Use strong brand recognition (strength) to expand into a fast-growing market (opportunity).
• Strengths + Threats (ST): How can your strengths help you mitigate or neutralize threats?
  Example: Lean on a loyal customer base (strength) to fend off competitors (threat) with an enhanced loyalty program.
• Weaknesses + Opportunities (WO): How can external opportunities help you address internal weaknesses?
  Example: Invest in e-commerce capabilities (opportunity) to improve underperforming digital channels (weakness).
• Weaknesses + Threats (WT): How can you minimize weaknesses and avoid threats to maintain stability?
  Example: Streamline operations (addressing weakness) to prepare for increased market competition or a pricing shift (threat).

A tool called the TOWS matrix helps structure this thinking. It uses the same SWOT information but arranges it to specifically generate these SO, ST, WO, and WT strategies by pairing internal and external factors. Using TOWS (or a similar method) helps turn your SWOT findings into real strategic options.

After identifying potential strategies, create a specific action plan:

1. Choose your strategies. Decide which strategies are most important and achievable based on impact, resources, and goals. You can’t do everything at once.
2. Define actions. Break down each chosen strategy into specific, measurable steps or SMART goals. What exactly needs to happen? What exactly needs to happen?
3. Assign responsibility. Decide who is responsible for each action and set deadlines.
4. Allocate resources. Ensure you have the money, people, and tools needed.
5. Track progress. Set up ways to measure progress and review regularly. Adjust the plan as needed.

• SWOT seems simple, but watch out for these common mistakes which can make it less useful. Being too vague. Points like “good brand” aren't helpful without specifics.

  • The fix: Be specific and use data if possible.

• Not prioritizing. Listing too many items without ranking them makes it hard to focus.

  • The fix: Rank items by importance.

• Ignoring the outside world. Focusing too much internally and not enough on external opportunities and threats.

  • The fix: Spend time researching the market and competitors.

• Being biased. Overstating strengths or downplaying weaknesses.

  • The fix: Get input from different people and be honest.

• Mixing up categories. Putting an external trend as a strength or confusing causes and effects.

  • The fix: Stick to the internal/external definitions and look for root causes.

• Making it a one-off task. Doing SWOT once and never revisiting it.

  • The fix: Review and update your SWOT analysis regularly.

• Not creating an action plan. Finishing the analysis but not deciding what to do next.

  • The fix: Use the findings to create specific, actionable strategies.

A good SWOT analysis requires effort, honesty, and a commitment to action.

A SWOT analysis works best before a decisive company action is undertaken, such as pivoting to explore new business opportunities, planning an expansion, or revamping internal policies. Some industry analysts advocate doing a SWOT analysis regularly at the end of the year, so you can think about the achievements and challenges of the previous year as you plan for the next one.

When conducting a SWOT analysis, involving more than the business owner is a good practice. By involving various team members or even people from all different parts of your company, you get more valuable input into the process and a more comprehensive analysis of the results.

SWOT analysis offers many benefits, making it a vital tool for planning. A SWOT analysis:

• Builds a strategic foundation. It gives you the essential information to create solid business strategies.
• Identifies your edge. It helps you see your unique strengths and how to use them against competitors.
• Shows where to improve. It identifies internal weaknesses, so you know where to focus your improvement efforts.
• Uncovers opportunities. It helps you spot chances for growth, innovation, or entering new markets you might have missed.
• Manages risks proactively. It helps you anticipate potential external threats and plan how to deal with them.
• Supports better decisions. With a clear, structured view (often backed by data), you can make smarter choices about where to invest resources, which markets to enter, or what products to develop.
• Improves team alignment. When different departments collaborate on a SWOT analysis, everyone understands the company’s position, which helps implement strategies.

The process itself, involving teamwork and open discussion, is valuable for building understanding and getting everyone on board with the resulting strategies.

SWOT isn’t the only planning tool. PESTLE analysis is another common one, but it’s different.

• PESTLE analysis (political, economic, social, technological, legal, environmental) looks only at the big-picture external factors affecting your whole industry.
• SWOT analysis looks at internal factors (strengths and weaknesses) and external factors (opportunities and threats) related to your business or project.

How they work together.

They can be used together. PESTLE can help you identify the opportunities and threats for your SWOT analysis by giving you a broad view of the external world.

When to use each.

• Use SWOT to assess your business or project’s position and find actionable steps.
• Use PESTLE to understand the major external forces affecting your industry, often as a first step before SWOT.

Quick comparison.

Knowing the difference helps you choose the right tools for your planning needs.

Use SWOT to unlock your strategic potential.

SWOT analysis is fundamental for understanding your business and planning its future. It helps you see your internal strengths and weaknesses alongside the external opportunities and threats you face.

A well-done SWOT analysis leads to smarter strategies and decisive actions, helping you use your advantages, fix vulnerabilities, grab opportunities, and defend against threats. This ultimately leads to better performance and a stronger position in your market. Tools like Adobe Workfront can also help you plan and track the actions you decide to take based on your SWOT analysis.