What Is a SWOT Analysis?

The SWOT analysis represents a framework that is mostly used to evaluate the competitive position of a company and also to develop various strategic plans. The SWOT analysis includes a list of internal and external factors, and also the current or future company potential. 

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Also, the SWOT analysis is sometimes included in the planning process to help the company overcome its challenges or determine which ways the company should develop in order to achieve the expected success. 

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The SWOT analysis from the 4 factors that are considered in this analysis: the strengths, weaknesses, opportunities, and lastly the threats, which are some key factors that are capable of determining the success of a business strategy. 

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This analysis is mostly used by organizations, which include small businesses, non-profit organizations, and large corporations. It’s important to know that the SWOT analysis can also be used for personal strategies. 

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The SWOT analysis comes from these 4 key elements that are taken into consideration when proceeding with this analysis. These are Strengths, Weaknesses, Opportunities, and Threats. 

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If they are analyzed together, the SWOT framework can help visualize what the next steps are for the company or business. 

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• Strengths

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This key element in the analysis represents all the internal initiatives that have good performance. It’s important to examine the strengths in order to find out what is already working in the strategy and determine what should be done the same. Usually, the strengths element determines how successful the business or company is, and sets an example for others. 

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When analyzing a company from the strengths perspective, is also important to answer some of the questions like “What did this company do to have success?”, “What’s unique in this business?”, or “Which category from this business is able to surpass its competitors?”. 

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• Weaknesses 

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Weaknesses represent the element that is focused more on those internal initiatives that are not really working as expected. Usually, weaknesses are able to offer a starting point in the improvement process of these projects. 

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In order to determine all the weaknesses, it is necessary to ask these questions: “Which initiative is not performing well and why?”, “What activities can be improved?” “What resources and activities can be added to improve the overall performance of the organization?”

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• Opportunities 

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The Opportunities aspect of the SWOT analysis represents an outcome from the previous strengths and weaknesses initiatives, along with various external initiatives that are able to raise the company and place it in a stronger competitive position. 

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These opportunities might be determined by the weakness that needs to be improved. In this stage, the following questions must be answered: “What resources can be included to improve the several weaknesses?” “Are these some market gaps that need attention?” “What competitors are offering that can be included in the business strategy?” 

• Threats

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Threats represent the SWOT analysis element that is focused on those initiatives that are most likely to cause problems. This key element is usually an external one, and it can not be controlled by the business or the company. Threats can include various external events, and a good SWOT analysis example can be a global pandemic that can be managed and change the competitive landscape. 

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So, in order to determine potential threats in a SWOT analysis, you must answer the following questions: “What industry changes can cause these threats?” “Are there any market trends on the way?” “Why can competitors outperform the company?” 

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The SWOT analysis can be divided into several steps, which have their own analyzing elements besides the four components of the SWOT analysis. But, usually, the company situation analysis includes the following steps: ‍

‍1. Determine the overall objective

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Even if the SWOT analysis can be very general, it’s important to know that the analysis will be more valuable if it is focused on an objective. So, the goal of the SWOT analysis might be, for example, focused on discover whether or not the company should do a new product rollout. 

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When someone does the SWOT evaluation with a focus on the final goal, the company will eventually receive a general idea about what it will likely achieve at the end of the whole process. 

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2. Collect the needed resources

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Every situational analysis can indeed be different, and companies might need separate data and information to create a SWOT analysis. So, before creating the actual analysis, companies and organizations should understand what resources need to be accessed and what limitations they will face. 

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Also, a company should consider that not only the information and data, but the right mix of personnel for analysis is important for the company's situation analysis. Some team members should be focused more on external factors, while others should pay attention more to manufacturing and sales to have a stronger understanding of internal factors.

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3. Collect all ideas 

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It is important to have, for each of the four SWOT components, a group of a few people that can list various ideas. So, for Strengths, Weaknesses, Opportunities, and Threats it should be created a list of ideas and thoughts about the current situation of an organization or company. 

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This way, all ideas will be taken into consideration, and see how the situation can be improved in order to surpass our competitors in the industry. 

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4. Choose and improve the findings 

After every category has a list of ideas, it’s crucial to choose some of the best ones and improve them to determine the final thoughts. With clear ideas in mind, all companies and organizations can prepare to develop a good strategy that could help them outshine their direct competitors. 

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5. Develop the final strategy 

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After choosing and developing a powerful list of strengths, weaknesses, opportunities, and threats, the final step is to convert the situational analysis into a strategic plan. Each team member should take the refined ideas and transform them into a plan to offer directions to the final overall goal.

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It should be mentioned that, usually, companies do not follow a SWOT template or a strategic plan template due to the fact that every organization is different and can have various outcomes. 

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But, if an organization truly wants to follow a certain SWOT analysis template, they could search for one online and edit it according to the company’s business.

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Even though the SWOT situational analysis represents a powerful tool, it should be taken into consideration that it has some limitations. Sometimes it tends to reduce some complex situations, but it can sometimes be subjective. The SWOT analysis is not able to offer any specific directions about how different issues can be addressed. 

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However, the situation analysis remains a great way to control the meetings about the business and the strategy for a company. It’s important to include this kind of analysis in the business strategy in order to improve the company's ranking in the market. 

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