A SWOT (strengths, weaknesses, opportunities and threats) analysis is a useful tool for strategic business planning and decision making. It can be used to evaluate a business, project or idea and is often carried out while developing a business plan or marketing plan.
The benefits of SWOT analysis
Carrying out a SWOT analysis can help to clarify business objectives and decide what actions to take. It can be particularly useful when:
- Starting up in business.
- Reviewing business plans or strategies.
- Considering a new product or business idea.
- Embarking on a new project.
A SWOT analysis can provide valuable insights into a business and the wider market. It can also help to:
- Identify business strengths and build on them for future success.
- Pinpoint weaknesses in a business, so action can be taken to correct them.
- Discover opportunities that had not previously been considered.
- Address, manage or avoid specific risks that a business faces in the marketplace.
What is a SWOT analysis?
A SWOT analysis involves considering both the internal and external factors that may affect a business or project.
- Strengths and weaknesses are internal to the business. They can be identified by looking at resources, skills, staff, products, processes, etc.
- Opportunities and threats arise externally, so it is important to carry out regular reviews of the environment in which the business operates. This can include looking at market and consumer trends, competitor activities, changes in technology, legislation and financial issues.
Hints and tips
SWOT analysis should be carried out regularly. The business environment and markets change constantly, and repeated use of the SWOT process is a way of analysing and evaluating changes in business performance over time.
It is important to focus on all the potential issues that may affect the business, not just on the obvious ones such as a major new competitor entering the market.
It is useful to ask employees, customers and suppliers to help complete the analysis. These views can be very useful and provide an objective opinion about the business.
Download our guide and worksheet to analyse your business against its strengths, weaknesses, opportunities and threats.
Techniques that help you understand your competitive environment; identify the options open to you; set strategic priorities; deliver your strategy; and work intelligently in areas like purchasing, marketing, operations, and manufacturing.