SWOT Analysis Made Simple – History, Definition, Tools, Templates & Worksheets
How to do a SWOT analysis
SWOT analysis made simple – date reviewed June This page has been developed to help you to carry out a SWOT analysis or TOWS analysis for strategic planning or business review purposes. It contains many examples, templates and outlines
A SWOT analysis is a planning tool used to understand the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business. It involves specifying the objective of the business or project and identifying the internal and external factors that are supportive or unfavourable to achieving that objective. SWOT is often used as part of a strategic planning process. SWOT or TOWS is an acronym for Strengths, Weaknesses, Opportunities, Threats. There are several ways of graphically representing a SWOT analysis on a matrix or grid. Several versions of a SWOT analysis grid/ matrixare shown on this page – use the one which is best suited to your application and preferred style. While at first glance this (A SWOT analysis) looks like a simple model and easy to apply, I can say from experience, that to do a SWOT analysis that is both effective and meaningful, requires time and a significant resource. A true SWOT analysis cannot be done effectively by just one person. It requires a team effort. The methodology (SWOT analysis) has the advantage of being used as a ‘quick and dirty’ tool or a comprehensive management tool, more importantly this is not a decision that has to be made in advanced as one can lead to the other. This flexibility is one of the factors that has contributed to its success, along with many believing it is light weight, due to their lack of its original purpose. The term “SWOT ANALYSIS” is in itself an interesting term. Many believe the SWOT is not an analysis, but a summary of a set of previous analyses – even if those were not more than 15 minutes of mini-brainstorming with yourself in front of your computer. The analysis or more correctly interpretation comes after the SWOT summary has been produced. See our SWOT Analysis slides on slideshare
|Positive||Internal||Negative or potential to be negative© rapidbi.com|
An Alternative SWOT Matrix:
|Opportunities||Offensive-make the most of these||Defensive-watch competition closely|
|Threats||Adjust-restore strengths||Survive -turn around© rapidbi.com|
A process generates information that is helpful in matching an organization or group’s goals, programs, and capacities to the social environment in which it operates. Note that in itself is only a data capture – the analysis follows. SWOT Analysis – Strengths
- Positive tangible and intangible attributes, internal to an organization.
- They are within the organization’s control.
SWOT Analysis -Weakness
- Factors that are within an organization’s control that detract from its ability to attain the desired goal.
- Which areas might the organization improve?
SWOT Analysis -Opportunities
- External attractive factors that represent the reason for an organization to exist and develop.
- What opportunities exist in the environment, which will propel the organization? Identify them by their “time frames”
SWOT Analysis -Threats
- External factors, beyond an organization’s control, which could place the organization mission or operation at risk.
- The organization may benefit by having contingency plans to address them if they should occur.
- Classify them by their “seriousness” and “probability of occurrence”.
Background & History of the SWOT Analysis
The origins of the SWOT analysis technique is credited by Albert Humphrey, who led a research project at Stanford University in the 1960s and 1970s using data from many top companies. The goal was to identify why corporate planning failed. The resulting research identified a number of key areas and the tool used to explore each of the critical areas was called SOFT analysis. Humphrey and the original research team used the categories “What is good in the present is Satisfactory, good in the future is an Opportunity; bad in the present is a Fault and bad in the future is a Threat.”
Some researchers reference the 1965 publication “business Policy, text and cases” by Learned, Christensen, Andrews and Guth (from Harvard University) in which a framework is used which closely resembles a SWOT analysis, however these words are not used and certainly the framework is not described as succinctly as we know it today. In this book the terms used are:
problems of other industries.
In fact these authors reference a course note from K R Andrews “a concept of corporate strategy “for much of the strategy framework. On its own, it is said that a SWOT analysis is meaningless (we at RapidBI fully agree!). It works best when part of an overall strategy or in a given context or situation. This strategy may be as simple as:
- Goal or objective
- SWOT analysis
- Evaluation or measures of success strategy
- Aim – is the Goal or objective
- Assess – is the SWOT review itself
- Activate – identify the strengths or measures of success and use them to advantage
- Apply - take action
The SWOT analysis is great for developing an understanding of an organization or situation and decision-making for all sorts of situations in business, organizations and for individuals. The SWOT analysis approach headings provide a good framework for reviewing strategy, position and direction of a company, product, project or person (career). Doing a SWOT analysis can be very simple, however its strengths lie in the flexibility and experienced application of a swot analysis. Remember the SWOT capture is only part of the picture.
Applications of SWOT analysis
A SWOT analysis can be used for:
- Workshop sessions
- Brainstorm meetings
- Problem solving
- Product evaluation
- Competitor evaluation
- Personal Development Planning
- Decision Making (with force field analysis)
The SWOT analysis is a great tool that can be used in association with PESTLE & PRIMO-F go to top
|SWOT Analysis||POSITIVE/ HELPFULto achieving the goal||NEGATIVE/ HARMFUL/ RISKSto achieving the goal|
|INTERNAL Originfacts/ factors of the organization||StrengthsThings that are good now, maintain them, build on them and use as leverage||WeaknessesThings that are bad now, remedy, change or stop them.|
|EXTERNAL Originfacts/ factors of the environment in which the organization operates||OpportunitiesThings that are good for the future, prioritize them, capture them, build on them and optimize||ThreatsThings that are bad for the future, put in plans to manage them or counter them©rapidbi.com|
Aim of a SWOT Analysis
- Reveal your competitive advantages
- Analyze your prospects for sales, profitability and product development
- Prepare your company for problems
- Allow for the development of contingency plans
A SWOT analysis is a process to identify where you are strong and vulnerable — where you should defend and attack. The result of the process is a ‘plan of action’, or ‘action plan’. The swot analysis can be performed on a product, on a service, a company or even on an individual. Done properly, a SWOT analysis will give you the BIG PICTURE of the MOST IMPORTANT FACTORS that influence SURVIVAL and PROSPERITY. As well as a PLAN to ACT ON. go to top
How to do a SWOT
Irrespective of whether you or your team are future planning for specific products, work, personal or any other area, the SWOT analysis process is the same.
- Step 1 of a swot analysis– Information collection – In the here and now… List all strengths that exist now. Then in turn, list all weaknesses that exist now. Be realistic but avoid modesty!
- You can conduct one-on-one interviews. Or get a group together to brainstorm. A bit of both is frequently best.
- You’ll first want to prepare questions that relate to the specific company or product that you are analyzing. You’ll find some questions and issues below to get you going.
- When facilitating a SWOT – search for insight through intelligent questioning and probing
- Step 2 of a swot analysis– What might be… List all opportunities that exist in the future. Opportunities are potential future strengths. Then in turn, list all threats that exist in the future. Threats are potential future weaknesses.
- Step 3 of a swot analysis– Plan of action… Review your SWOT matrix with a view to creating an action plan to address each of the four areas.
In summary a swot analysis:
- Strengths need to be maintained, built upon or leveraged.
- Weaknesses need to be remedied, changed or stopped.
- Opportunities need to be prioritized, captured, built on and optimized.
- Threats need to be countered or minimized and managed.
A SWOT analysis can be very subjective, and two people rarely come-up with the same final version of a SWOT analysis. It is an excellent tool however, for looking at the negative factors first in order to turn them into positive factors. Use a SWOT analysis/ framework as guide and not a prescription. go to top
Simple rules for a successful SWOT analysis
- Be realistic about the strengths and weaknesses of your organization
- The Analysis should distinguish between where your organization is today, and where it could be in the future.
- Be specific. Avoid grey areas
- Always analyze in relation to your competition i.e. better than or worse than your competition
- Keep your SWOT analysis short and simple – but only as short and simple as the application or situation demands – it is about ‘fitness for purpose’
- Avoid unnecessary complexity and over (swot) analysis
- There is no point listing an opportunity (O) if the same opportunity is available to competitors
- It is pointless to say you have strengths (S) if your competitors have the same
What makes a SWOT analysis work?
Due to the collaborative nature of a swot analysis, your working group will need certain qualities to succeed:
- Trust – The questions that a SWOT analysis will bring up, particularly in the Weaknesses and Threats categories may be uncomfortable. Your group must be at a point in its working relationship where weaknesses and potential threats can be faced openly and objectively.
- Ability and willingness to implement change.
- Diversity – The team conducting the SWOT analysis should be representative of your entire planning team.
- Time – Taking time to do a thorough SWOT analysis and assessment will help your group move forward in developing a workable plan.
- Establish that your coalition has the necessary components to successfully conduct a SWOT analysis (above).
- Assemble the group that will conduct the SWOT analysis
- Set up meeting times (if the SWOT analysis is not going to be completed in one ‘sitting’
- Distribute/ complete the swot analysis tool/template individually
- In the group meeting, combine individual answers. Collaborate on each category. Complete the analysis.
- Discuss how to use the information gathered from the SWOT analysis to inform your next steps.
Using SWOTs with an Objective or Goal
If a SWOT analysis does not start with defining a desired end state or objective, it runs the risk of being an exercise for the sake of an exercise (i.e. useless). A SWOT analysis may (should) be incorporated into a strategic planning model. If a clear objective has been identified, SWOT analysis can be used to help in the pursuit of that objective. In this case, SWOT analysis are:
- Strengths: attributes of the organization that are helpful to achieving the objective.
- Weaknesses: attributes of the organization that are harmful to achieving the objective.
- Opportunities: external conditions that are helpful to achieving the objective.
- Threats: external conditions that are harmful to achieving the objective.
Decision makers can then us the results from a SWOT analysis to determine whether the objective is attainable, given the resulting analysis and summary. If the objective is NOT attainable a different objective must be selected and the process repeated. go to top Generating Strategies – get them USED When the desired objective has been deemed attainable, the SWOTs are used as inputs to the creative generation of possible strategies, by asking and answering each of the following four questions, many times:
- How can we Use each Strength?
- How can we Stop each Weakness?
- How can we Exploit each Opportunity?
- How can we Defend against each Threat?
Ideally a cross-functional team or a task force that represents a broad range of perspectives should carry out the SWOT analysis. For example, a SWOT team may include an accountant, a salesperson, an executive manager, operational staff and an engineer, go to top
What strengths and weaknesses are examined in a swot analysis?
The strengths and weaknesses analysis is an internal examination that focuses on your past performance, present strategy, resources and capabilities. It is based on an analysis of facts and assumptions about the company, including:
- People (Human Resources)
- People and skills (in particular marketing, export experience)
- Staff development
- Properties (Buildings, Equipment and other facilities)
- Processes (Such as quality, finance, M.I.S. etc.)
- Financial resources (debt to asset ratio and personal equity)
- Management/ leadership
- Staff development
- Products (Publications etc.)
- Capabilities/ scalability
- Capital structure suppliers
- Customers (market research)
- Intellectual property
Some organizations us the framework PRIMO-F as the structure for capturing SW factors of a swot analysis:
- Ideas/ Innovation
- Operations (products services etc)
In other words –
- What do you do well? Is there anything you do better than most? Better than anyone else?
- What should be improved? What do you do poorly? What should you avoid, based on mistakes in the past?
What opportunities and threats are examined
The opportunity and threat analysis is carried out by examining external factors in your domestic and export markets. This is usually broken down into environmental factors and competitors, including:
|Environmental Factors||Competitor Factors|
- Where can you find, or create, a competitive advantage? What are some major trends in your business? – Consolidation / Diversification? – Specialization / Generalization? – Changes in technology. Such as computer software that lets you perform services that others can not. – Changes in the types of businesses in your potential market, such as the demand for healthcare or telecommunications expertise. – Changes in social patterns, population profiles, lifestyle. – Changes in creative trends. – Changes in demand for certain types of services, perhaps related to interactive / Internet.
- What obstacles do you face?
- What are your competitors doing that may result in a loss of clients, customers, market share? Are the required specifications for your job, products or services changing?
- Is changing technology threatening your position? Do you have cash-flow problems?
|SWOT Analysis – Strengths and Weaknesses- Internal Factors||Opportunities and Threats- External Factors|
|What advantages does your company have?What do you do better than anyone else?What unique or lowest-cost resources do you have access to?What do people in your market see as your strengths?What factors mean that you “get the sale”?What could you improve?What should you avoid?What are people in your market likely to see as weaknesses?What factors lose you sales?Advantages/ Disadvantages of proposition?Capabilities/ Gaps?Competitive advantages?USP’s (unique selling points)/ reputation?Resources, Assets, People?Experience, knowledge, data?Financial reserves, likely returns? Marketing – reach, distribution, awareness? Innovative aspects? Location and geographical? Price, value, quality? Accreditations, qualifications, certifications? Processes, systems, IT, communications? Cultural, attitudinal, behavioral? Management cover, succession? Other factors may include: Resources: financial, intellectual, location Cost advantages from proprietary know-how Creativity / ability to develop new products Valuable intangible assets: intellectual capital Competitive capabilities Big company selection||
Useful opportunities can come from such things as:
Other factors may include:
|In the BIRwe use the following as SWot factors:PRIMO-F
|External factors can be also listed using a PESTLE Analysis|
With the objective of: “To double the businesses turnover in the next three years.”
|Internal Factors||External Factors|
Is the defined objective attainable? Since historical and trend data are not given, it is difficult to judge whether the business can be doubled as that would require an annual growth rate of 26 per cent per year. Therefore, it would be more realistic to restate the objective as: “To increase the business over the next three years.” The same SWOT analysis details apply. go to top
More examples of a SWOT analysis in use and types of SWOT application
|E X T E R N A L||Opportunities
SWOT Analysis Examples
You know the situation, you are asked to undertake a simple SWOT review of a department. You are given a little time and are aware of certain factors which may or may not impact. So lets have a look at the first initial SWOT:
A SWOT Analysis on a Human Resource function:
|Developed techniques for dealing with major areas of HR, job evaluation, psychometric testing and basic training||Reactive rather than pro-active; needs to be asked rather than developing unsolicited ideas||New management team, wanting to improve overall organizational effectiveness through organizational development and cultural management programs||HR contribution not recognized by top management who by-pass it by employing external consultants|
Or from another point of view:
|Able to react to changing conditions effectively||Reliant on specific individuals with key skills and external tools which may change without our control||To use external consultants as a channel to influence senior management||New management team want to make their own mark and have a history of outsourcing|
So as you can see there is no right or wrong answer to any section, it is down to your analysis of the situation. SWOT Analysis are more effective when undertaken as a team activity with people from varying backgrounds and experiences. The very best application is when a task team or change team is assembled to undertake the data capture and analysis. A team approach will help to ensure a balanced approach and that one aspect is not emphasized inappropriately. go to top
SWOT Analysis Examples continued
S W O T analysis approaches can be used for:
- Business Planning
- Career Development
- Competitor Analysis
- Situational Analysis
- Strategic Planning
- Personal Development
- Managing People
- Problem Solving
|SWOT Analysis – Possible Strengths|
|Tangible Strengths||Intangible Strengths||Processes & Systems|
|Remember – Strengths – internal to your business; characteristics or qualities of your business/ organization that make you better than your competitors. Add any additional strengths that are unique to your business.|
|SWOT Analysis – Possible Weaknesses|
|Tangible Weaknesses||Intangible Weaknesses||Processes & Systems|
|Remember – Weaknesses – internal to your business/ organization; characteristics or qualities of the way you work that make you less competitive than your competitors. Add any additional weaknesses that are unique to your business/ organization.|
|SWOT Analysis – Possible Opportunities|
|Industry/ Sector Opportunities||External Opportunities|
|Remember – Opportunities are external to your business. They exist either within your industrial sector or outside of your sector. Add any additional opportunities that are unique to your business.|
|SWOT Analysis – Possible Threats|
|Industry/ Sector Opportunities||External Opportunities|
|Remember – Threats are external to your business. They exist either within your industrial sector or outside of your sector. Add any additional threats that are unique to your business.|
|For clarity we have moved our templates and worksheetsto the following page – Templates|
For ease of use our templates have now been moved to our page on SWOT analysis Templates Many of our users have said this page was too long and could we break it up. Now we have separated off the ready to use templates from the examples and text. We hope you find this easier to navigate. go to top- Try our business analysis tool for free NOW
Example SWOT Template / Worksheet 3
Example Template / Worksheet 4 – SWOT Analysis Matrix For ease of use our templates have now been moved to our page on Templates
go to top- Try our business diagnostic analysis tool for free NOW Opportunities/Threats Analysis: For ease of use our templates have now been moved to our page on SWOT analysis Templates go to top- Try our business diagnostic analysis tool for free NOW Business and Market Segment Opportunities: For ease of use our templates have now been moved to our page on SWOT analysis Templates go to top of SWOT analysis- Try our business diagnostic analysis tool for free NOW 5 common mistakes in doing a SWOT analysis
Critical Success Factors (CSF’s)
To S.W.O.T. or not to S.W.O.T?
Although a SWOT analysis is often promoted as a useful technique in many texts and courses, it is not universally praised: Some prefer to think of SWOT as a “Significant Waste of Time.” (Hill & Westbrook) The problem with a SWOT analysis is potentially more serious than just wasting time. Because it mixes idea generation with evaluation, it is likely to reduce the range of strategies that are considered unless managed effectively. In addition, people who use a SWOT analysis might conclude that they have done an adequate job of planning and ignore such sensible things as defining the firm’s objectives or calculating ROI for alternate strategies. To be effective, A SWOT analysis should only be undertaken in the CONTEXT of the organization, its goals and market place. Several studies have looked at S W O T . These include Menon et al. (1999). The findings showed that us of this framework harmed performance. When Hill and Westbrook (1997) examined the use of it by 20 companies in the UK in 1993-94, they concluded that the process was so flawed that it was time for a “product recall.” While there are no real ways of knowing whether a given process is robust, to throw away such a simple and effective tool is a little premature. Certainly care needs to taken in its use, and we have already seen that the more people involved in undertaking a diagnostic process the more reliable it is likely to be. I would say continue to use the SWOT and being aware of its strengths and limitations. Remember at the end of the day it is a tool and not a robust process.
One supporter asked: if not SWOT, then what? Borrowing from corporate strategic planning literature, one option for planners is to follow a formal written process to:
- Set objectives
- Generate alternative strategies
- Evaluate alternative strategies
- Monitor results, and
- Gain commitment among the stakeholders during each step of this process (Armstrong 1982).
Evidence on the value of this (5 step process) planning process, obtained from 28 validation studies (summarized in Armstrong 1990), showed that it led to improved corporate performance. Given the evidence, a SWOT analysis is should be used with care and in the CONTEXT of the organization, taking into account the financial situation of the organization. go to top
When undertaking a traditional strategic planning process, debating future direction, or assessing existing opportunities for the organization, a board or management team can rely on a SWOT analysis for help. During the analysis, the team lists and assesses the organization’s Strengths, Weaknesses, Opportunities, and Threats, often on a matrix. Each of these controlling forces prompts the team to consider factors that might easily be overlooked as it shapes the future of the organization. This process provides insights to the organization’s internal and external positioning, examining internal and external elements that must be factored into future decision making. It prohibits the organization from becoming too insular and functioning without proper feedback. go to top When to Use The BIR:
- Conduct a review on your company
- Conduct an analysis on your product
- Conduct a review on your services
- Conduct an analysis on yourself
- Conduct an analysis on your intranet site
- Conduct an analysis on your competitors
- Offer an analysis to your current clients
- Offer an analysis to your current customers
Note “Management tools can help to better understand particular aspects of an organization or its environment. For the following step – the analysis of insights provided by the models – however, there is no model. Management models are effective only if their users are able to realize connections and gaps and to draw appropriate conclusions.” – Dagmar Recklies SWOT is sometimes known as a TOWS analysis or a TOWS review Other acronyms used in the strategic planning cycle include:
- SWAN analysis (Strengths, Weaknesses, Achievements, Next step) alternatives – SW And Needs, SW Ambitions Needs, Stakeholders Wants And Needs,- The SWAN model is almost as confused as the SMART model for objective setting
- SMFPHR, can serve as a conceptual model: S: Strategy M: Marketing F: Finance P: Production HR: Human Resources
- ViSA (Vision, Strategy and Action plan) A SWAN analysis can be undertaken for each of these factors
- Kaplan and Norton (1996) – the Balanced Business Scorecard.
- Customer Perspective
- Financial Perspective
- Internal Business Perspective
- Learning and Growth Perspective
- They elaborate on these perspectives in terms of following key ideas:
- Customer perspective: To achieve our vision, how should we appear to customers?
- Financial perspective: To succeed financially, how should we appear to our shareholders?
- Internal business process: To satisfy shareholders and customers, what business processes must we excel at?
- Learning and growth perspective: To achieve our vision, how will we sustain our ability to change and improve?
The SWAN model was developed by Solow For a complete Internal SWot, look at our Business Improvement Review or access the limited function free version here Find out more about our proven diagnostic tools:
go to top Have you also seen our PESTLE, Need to develop CSF’s?, Need to write SMART objectives? or CSR (Corporate Social Responsibility) pages. Your feedback and comments are welcome. This page has been developed by Mike Morrison – Principle consultant at RapidBI. You are free to use any of the SWOT tools on this page, however if you wish to use this page on a web site please credit us and link to our home page, and keep all links intact.go to top of SWOT analysis to revisit our SWOT analysis review This page originally published August 2008 Reviewed July 2014
A SWOT analysis is a valuable diagnostic tool, but it is only as good as the data and context considered. Remember, keep the analysis real, in context and focussed on the goal you are seeking.
When using a SWOT analysis, always use the PRIMO-F & PEST or PESTLE analysis profiles to ensure all factors are covered.
For more on SWOT analysis read our other articles.