SWOT Analysis

Overview

SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats.
It’s a key part of strategic analysis which helps businesses assess their internal and external environment.
It helps guide decision-making and strategy formulation.

These are things that the business does well.
This might include strong brand recognition, unique products, a skilled workforce, or efficient operations.
Strengths are internal factors, meaning they’re typically within the business’s control.

These are areas where the business could improve.
This might include poor product quality, lack of innovation, high production costs, or a shrinking market share.
Weaknesses, like strengths, are internal factors, and businesses can take steps to improve or mitigate them.

These are factors in the business’s external environment that could be beneficial.
This might include a growing market, technological advancements, changes in legislation favouring the business, or new market trends.
Opportunities are external and often outside the business’s control, but the business can position itself to take advantage of them.

These are factors in the business’s external environment that could harm the business.
This could include increased competition, changing consumer tastes, negative legislation, or market instability.
Threats are external and often beyond the business’s control, but with strategic planning, their impact can be managed or reduced.

It provides a simple, yet highly effective tool for understanding your strengths and weaknesses, and for identifying both the opportunities open to you and the threats you face.
It helps uncover opportunities that are well-placed to exploit.
It helps to understand your weaknesses, so you can manage and eliminate threats that would otherwise catch you unawares.
It presents a clear picture of the internal and external environment which is beneficial when defining the strategic direction.