SWOT Analysis Explained

A SWOT analysis allows organizations to facilitate specifically fact-based data concerning their strengths and weaknesses. They also keep in mind the prospective interest and goals amongst the competitors as well. This article will explore what a SWOT analysis is, how you can apply it to your business strategy, and, of course, the benefits of SWOT analysis

swot analysis of a business

What Is a SWOT Analysis?

What does SWOT mean? SWOT stands for strengths, weaknesses, opportunities, and threats. It is an analysis framework that companies incorporate to evaluate and assess a company’s competitors. A SWOT analysis helps to develop strategic planning practices for the given company. Furthermore, SWOT is also responsible for creating assessments of both the internal and the external aspects of a company. These company-wide assessments include both presently ongoing evaluations and reviews that will take place in the future.

The person who creates the analysis must emphasize conducting proper research. Such precision avoids any issues of gray areas or misconstrued notions that may arrive. It is equally important that companies look upon the SWOT analysis results as more of a guideline rather than an actual definitive rule book. 

Keep This in Mind When Conducting a SWOT Analysis

Ultimately, a SWOT analysis provides a strategic and thorough advisory planning tool that gives a company access to a  unique and broad range of assessment tools.  

The objective of SWOT is to call upon the core strengths, weaknesses, opportunities, and threats of any given company to generate a logically sound analysis of statistical data, present organic perspectives, and combine ideas.

A SWOT analysis is most effective when a diverse team can work together and provide the company with a realistic and practical set of data points. Doing so strengthens the voice of the company as a whole.

strengths weaknesses opportunities threats

Strength Weakness Opportunity Threat Analysis

As previously mentioned, a SWOT analysis is a technique to accurately assess any particular business’s risks, competition, and performance. Some examples of this are the following: the inventory or product line of a business, legal team, sales team, call centers, factories, and warehouses. 

Now that you have a grip on the background knowledge that you need to understand SWOT properly let’s take a look at how to use both external and internal data to drive a company toward the valuable tools of data analysis that SWOT analysis offers. 

Internal Data and Factors

Typically a SWOT analysis of a business is presented as a square-shaped chart split into four quadrants. Each of the designated quadrants is for one of the four components: strengths, weaknesses, opportunities, threats.  The visual or graphic formatting of this gives the company a readable look into the company’s current standing.

Depending on the state or status of the company, certain quadrants may get priority over others. For instance, if a company has a severe labor shortage, the quadrant containing intel that addresses the company’s weakness will most likely get priority over the other quadrants. Let’s look at what each category would draw attention or focus on for a company’s analytical data.


By definition, strength is the state or quality of an object or idea being physically strong. In the context of a SWOT analysis, an organization’s strengths describe where the organization or company is currently excelling. For example, an online e-commerce company may be rapidly increasing its UPT or units per transaction. In this scenario, the quadrant will indicate the latest statistical data and analysis based on how many units or items customers purchase per transaction. 

The strengths of the SWOT analysis quadrant also indicate the unique or admirable qualities of an organization. This factor is essential because it provides the company with a highlighted insight into what qualities enable it to stand out from its competitors. For instance, a company might offer exceptional customer care or a fantastic loyalty program. High-end hotels or hospitality agencies will typically fall into this category of highly applauded customer care.

what is a swot analysis


A weakness is a quality that implies a disadvantage or a lack of strength. If a company has any flaws, the SWOT analysis chart with undoubtedly reflect them. Weaknesses can ultimately prevent an organization from excelling at its desired rate of performance. Furthermore, deficiencies can affect the consumer-to-business relationship if they do not address them head-on. 

Here are some examples of possible company weaknesses:

  • Labor shortage
  • Poor customer service
  • Dated on-site facilities 
  • Lack of management
  • Serious debts or delinquencies
  • Previous bankruptcy filed
  • Poor employee morale
  • Lack of SEO strategies
  • Budget 

External Data and Factors


An opportunity is when a given set of specific circumstances align to offer an organization any favorable advantage. The opportunities quadrant of the SWOT chart is an element of the external data that the company’s analysis reflects. Any external benefits can significantly increase the revenue of a company and boost company morale.

Here are some examples of external advantages or opportunities:

  • Lowered taxes (property of the company’s site)
  • Increased sales tax
  • High demand for certain products(i.e., Lysol spray during the Covid-19 Pandemic)
  • Stock Market upticks and downfalls
  • Natural disasters
  • Pandemics or Epidemics
  • Low employee turnover
  • Hiring events
  • Holiday sales
  • Frequently visited website


A threat is potential harm or liability to the business. If a company is at risk for harm, this jeopardizes both the well-being of the employees and the consumers. Certain factors have the potential to harm an organization. For example, suppose the local weather station indicates that a hurricane or tropical depression is on its way to making landfall. In that case, this would be detrimental for the agriculture industry. Companies must monitor threats as frequently as possible. Sometimes a threat can mean an end to an organization as a whole, which is unfortunately inevitable at times.

Here is a list of common threats that many organizations and companies must face from time to time.

  • Weather 
  • Stock market fluctuations
  • Unpredictable national tragedies
  • Abysmal reviews

swot analysis for business

SWOT Analysis of a Business

To create a successful SWOT analysis, you must consider all of the elements of SWOT individually. You should assess each category individually via a question-and-answer method. Using a Q&A tool will enable you to formulate a specific type of statistical analysis geared towards troubleshooting the company’s current issues. This method will also ensure that you are correctly highlighting the positive aspects of your company.

It is vital to begin your SWOT analysis plan with a question-and-answer approach to avoid wasting time. Would you want to waste time on improving sales and marketing if your numbers are already through the roof? The answer is no. If your sales and marketing are strengths, you must ask yourself questions regarding whether or not there is room for improvement in another SWOT analysis quadrant. For instance, you can ask yourself how much money the company can save on preventing property damages from natural disasters. Natural disasters are certainly a threat to many companies nationwide. Thus, you must indicate the need to eliminate hazards such as these for the future.

Now You are a Pro

We have covered quite a bit of new territory in this article. Nevertheless, you are can now feel better when preparing a SWOT analysis. You can use this article to guide your own business or as an analyst for another company. A thorough understanding of any given organization’s strengths, weaknesses, opportunities, and threats can save the organization or company a lot of time and money in the long run. Furthermore, the SWOT analysis enables the company to thrive more by expanding on its internal advantages and by eliminating external disadvantages as much as possible. Prevention tactics are the key here, and SWOT will give your data and analysis an edge against your competitors when applied effectively over time. 


  • What is a SWOT analysis?
  • What are examples of business weaknesses?
  • Why is a SWOT analysis critical?
  • What are the internal factors of a SWOT analysis?
  • What are the external aspects of a SWOT analysis?

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