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How To Do A SWOT Analysis [with examples]
Do you know the areas in which your organization can improve and where it’s doing well, both internally and externally? Use this SWOT analysis example to get a definitive answer on both fronts.
A SWOT analysis is a high-level strategic planning model that helps organizations identify where they’re doing well and where they can improve, both from an internal and external perspective. It is an acronym for “Strengths, Weaknesses, Opportunities, and Threats.”
You typically want to conduct a SWOT analysis at the beginning of your strategic planning process or during a strategy refresh. Your entire leadership team should be heavily involved, because they should have the ability to look across your organization and offer insight into your competitive environment and/or business landscape. When the leadership team offers appropriate recommendations regarding your strengths, weaknesses, opportunities, and threats, you will end up with a SWOT analysis that has the credibility to be used constructively in the strategic planning process.
After completing your SWOT analysis, jump right into outlining your strategy with our strategic planning templates.
How To Do A SWOT Analysis
To help you get started, we’ve created this step-by-step SWOT analysis template. The examples below are specific to the airline industry (since that’s the example we use in our grid), but the SWOT analysis exercise is applicable to all businesses.
You’ll notice we divided our hypothetical examples for strengths, weaknesses, opportunities, and threats based on the four Balanced Scorecard perspectives. You don’t have to use the Balanced Scorecard to be successful with your SWOT analysis, but this method does provide a strong framework for your discussion.
Not using the Balanced Scorecard? Look to the guiding principles of whatever strategic management framework you are using for ways to think about your business. For example, the VRIO framework emphasizes value, rarity, imitability, and organization; you can conduct a SWOT analysis through the lens of these criteria instead.
Start by asking the question, “What are we good at?” This is a broad question, but in the beginning stages of your discussion, you should accept all answers.
- Financial Strengths: What is your most reliable source of financial growth? Is it your service destinations? A large fleet size? Your customer loyalty program?
- Customer Strengths: Where is your customer growth coming from? Is it due to excellent service ratings or low prices? Why are your customers choosing you over your competitors?
- Internal Strengths: What do you do very well as an organization? Are your operations easily scalable? Do you have an exceptionally high employee retention rate? How complex is your maintenance program?
- Learning & Growth Strengths: Where do you excel insofar as your employees are concerned? Is it your compensation model? Could it be your workforce development program? Are people coming or leaving because of your culture?
Having considered these questions, you might come up with multiple responses in some categories. Below is a sample of the strengths portion of the SWOT analysis for a fictional company, Upward Airlines:
Next you should ask yourself, “What are we not good at?” or “Where do we have opportunities to improve?”
- Financial Weaknesses: What is your biggest financial weakness? Perhaps your destinations are all in the U.S., which limits your growth, or there are a large number of new competitors entering the market, decreasing your market share. Do you have challenges with debt or credit?
- Customer Weaknesses: Where do your customers think you need to improve? This could be related to frequently canceled flights, lost baggage, complexity of the reservation process, or cleanliness, for instance.
- Internal Weaknesses: What do you do poorly? Are you slow at handling customer complaints? Are your maintenance costs about industry average? What about plane utilization?
- Learning & Growth Weaknesses: What are your biggest challenges with employees? Is your staff security training proving ineffective, or is there a negative perception of the organizational culture? Do your employee surveys reveal low engagement?
Upward Airlines’ specific weaknesses might be as follows:
Following your discussion on threats, ask those in leadership to look toward the future and consider, “Where do we see big possibilities for our organization?”
- Financial Opportunities: What is your biggest opportunity to improve your finances? This might mean taking advantage of federal loans in a time of crisis (like COVID-19) or adopting specific technology to lower costs. Maybe there is an opportunity to purchase a weaker competitor.
- Customer Opportunities: Where could you dramatically improve with your customers? Could you enhance your online interface? Create and promote new standards of cleanliness? What about finding new ways to engage with customers when travel opportunities are low?
- Internal Opportunities: What processes will drive you well into the future if you could improve upon them? Adopting certain climate initiatives to reduce your carbon footprint, for instance, will make you more eco-friendly (and, by extension, more appealing to customers). Maybe now is the time to upgrade a reservation or pricing system.
- Learning & Growth Opportunities: What opportunities do you have to leverage staff? For example, do you have cross-training opportunities? Could you make a few tweaks to improve your culture and thus your retention?
Upward Airlines’ opportunities for the foreseeable future might be:
After identifying opportunities, zero in on your biggest threats by asking, “What do we see on the horizon as being potentially harmful to our organization?”
- Financial Threats: What threats could seriously impact your financial health? This could be low-cost competitors, ongoing global health issues that prevent travel, or the rising cost of oil.
- Customer Threats: What is your biggest concern about your customers? Has a competitor created a more attractive loyalty program? Has your number of business clients been trending downward?
- Internal Threats: What current areas of your business might harm you later? Is a contract dispute imminent that could disrupt business? Is a potential merger or acquisition on the horizon?
- Learning & Growth Threats: What threatens the people within your organization? This could be anything from instability in your customer support department to staff member departures to a department-specific pushback against new technology.
The external threats deemed most imminent for Upward Airlines might be:
Your SWOT analysis is now complete! Done correctly, this analysis is another valuable tool in your toolbox for improving business performance and minimizing threats and weaknesses going forward. It can also prompt organizations to be more innovative with their strategy—new ideas may emerge that would not normally have been considered without such a thorough examination of the business from all angles.
Complement SWOT With PEST
A SWOT analysis is a way of understanding and evaluating all facets of your company so you’re in a better position to make decisions about the future. But there are also external factors that will have an impact on your company’s future; these things are beyond your control but still require consideration as you map out your strategy. That’s why many organizations choose to complement a SWOT analysis with a PEST analysis—together, they provide a complete picture of your business environment for effective strategic planning.
What is a PEST Analysis?
PEST stands for political, economic, social, and technological—the four key areas outside your business that are likely to impact it. A PEST analysis is a strategic planning tool that helps organizations assess each of these areas and the ways they might influence operations.
Among the benefits of doing a PEST analysis are that it:
- Helps identify business opportunities, and offers advanced warning of significant threats.
- Clarifies changes within your business environment so you can align your activities and future vision appropriately.
- Helps you choose projects more strategically, so you can avoid starting initiatives that are likely to fail for reasons beyond your control.
The PEST analysis is often linked with SWOT analysis, but each has different areas of focus. SWOT focuses on your business activities (things you’re doing); PEST takes a deep dive into the big picture around what’s happening outside your organization. External factors, such as changing regulatory policies and market volatility, may be identified as threats in a SWOT analysis; however, factors such as these are complex and influenced by numerous outside forces, which makes them more appropriate for the PEST analysis.
Also, a PEST analysis tends to deal with factors that will play out over long time frames. An economic slowdown, for instance, could take years to resolve, but you can take action to address staff training issues fairly quickly. Thus, a PEST analysis is more valuable when it comes to formulating longer-term plans and business strategies.
Our recommendation is to do a SWOT analysis first, followed by a PEST analysis, in order to get a complete picture of the business landscape.
Completing your SWOT analysis is only the first step. Below are five steps to incorporate your SWOT analysis into your wider strategic planning process, ensuring it helps inform the decisions you make.
After you have completed your SWOT analysis brainstorming session, take the following steps:
1. Consolidate your analysis results into a four-box SWOT matrix.
As we mentioned in the introduction (and in our SWOT analysis example), your SWOT helps you identify strengths and weaknesses that are either helpful or harmful to your organization. As you can see from the SWOT matrix example above, strengths and weaknesses are internal to the organization, while opportunities and threats are of external origin. Strengths and opportunities are helpful to your organization’s strategy, and weaknesses and threats are harmful to your organization’s strategy.
Once you’ve completed the SWOT brainstorming process with your leadership, consolidate your results so you can see all the positive opportunities—and any negative trends—that could affect your strategy, and how you operate on the whole.
2. Start developing your strategy map.
As you may recall from our previous article, a strategy map is a visual, one-page depiction of your strategy. Before you can begin developing your strategy map, you need to be certain you fully understand strategy mapping. (Take a look at this strategy execution toolkit for more information.)
Now it’s time to put your SWOT analysis to good use. If you have asked the questions posed in the SWOT analysis example above (specific to each of the Balanced Scorecard perspectives), then it should be relatively straightforward to filter by each perspective and come up with key objectives for that area. For example, does it seem as though you urgently need to make strategic adjustments to one particular area of your strategy? Should one thing be prioritized over another? This will be the foundation of your strategy map.
In our Upward Airlines example, for instance, four weaknesses are listed:
- High maintenance costs
- Fewer direct travel routes than our competitors
- No uniform project management system in place
- Below-average employee satisfaction
Some of these weaknesses are easier to address than others, such as improving employee satisfaction and your project management practices. Others, like the lack of direct travel routes, may be difficult to address in a time when COVID-19 is severely limiting travel and profits are low. Similarly, you want to continue to support your current strengths. You won’t want to let your excellent training program lapse, but this needn’t be a focus if the number of new hires over the next year is expected to be low. However, improving your virtual communication practices will most likely prove to be beneficial moving forward.
In some cases, it may be helpful to do a risk assessment to weigh the risks associated with particular objectives, as well as the expected overall impact of those risks on your organization.
Make sure there is a clear and strong link between your SWOT analysis and strategy map. For example, if you’re a for-profit organization, your financial perspective will be the top priority—build your analysis into your map in a manner that drives those finances in the right direction. Maybe your SWOT analysis foretold an opportunity to hit a new line of business or forecast that a line of business would dry up. Your strategy map needs to reflect that. When you get to the processes stage of strategy mapping, you can set activities based on your strengths and improvement needs. Your SWOT analysis will also affect target setting across all areas.
The Upward Airlines SWOT analysis above might drive your strategy in the following ways:
- An objective might be to improve employee satisfaction; to accomplish that goal you might reevaluate your benefits plan or start a surveying program for employee feedback.
- An objective might be to make flying as safe as possible for customers; to get that done you might implement a new cleaning regimen and increase your communication with customers about new procedures.
- An objective might be to secure pandemic-related government aid; to achieve that goal you might create a new department focused on applying for and following up on these opportunities.
In short, your SWOT analysis isn’t a standalone effort and should be closely linked to your strategy map—it should provide key information on how your strengths and weaknesses impact your strategy.
3. Communicate to the organization where, how, and why you will be changing your strategy.
At this point, we recommend running a “brown paper exercise” with your SWOT analysis that involves everyone in your organization. Print your SWOT matrix in large size, and ask employees to add post-it notes in any or all of the four boxes of the SWOT matrix if they feel there is something the leadership team missed. (You can also ask employees to add their names next to their suggestions so leadership can follow up with them.) Not only is this exercise great for inter-office discussion, but it also gives leaders the chance to consider opinions from staff “in the field.”
4. As you start implementing a strategy, build programs to help overcome weaknesses or go after opportunities.
Keep in mind that your SWOT analysis isn’t an end product—it’s the first step to helping you align your strategy around the areas you’ve identified as strengths, weaknesses, opportunities, and threats. Specifically, you’ll want to put some measures in place to track progress on correcting your weaknesses and seizing your opportunities.
- Weaknesses: As mentioned above, if one of your weaknesses is below-average employee satisfaction, you could start an initiative to survey employees for feedback or review your benefits plan.
- Opportunities: If you’ve identified an opportunity for a new service, you may decide to work with one of your closest customers to fully define and understand their needs in order to strengthen the service—or you may decide to sell an early version to customers in a particular test market before you invest heavily in an unproven area.
So, don’t expect your strategy to change unless you do something to make it change. You can worry about threats or get excited about the opportunities, but if your organization doesn’t shift its behavior, the opportunities will pass you by and the threats may sink your business.
Changing that organizational behavior is all about implementing initiatives or projects. Projects have start dates and end dates, budget and resources, and clear steps to make strategic “redirections” in your organization. Align your projects with measurable results for weaknesses and opportunities, so that you can effectively drive your strategy along the right path. For example, a local government that has uncovered community policing as a weakness in its SWOT analysis will need to develop and roll out a police force training program. The program should include measurable targets to prove that policing levels—and therefore community safety—increased.
5. Keep your strategy alive.
You just spent a significant amount of time and attention on crafting your strategy. Doing a SWOT analysis is tough, and thinking about your organization’s vulnerabilities can understandably make many leaders uncomfortable. But don’t shy away from the fault lines you uncovered; instead, take advantage of the work you did and the alignment you created. Review your strategy (and even your SWOT analysis) on a regular basis. How regularly? That varies by industry and organization, but typically you need to do it as frequently as your industry changes—a company operating in the tech industry will need to do more frequent reviews than one in the utilities industry. You should also launch a review anytime a significant economic, political, or environmental shift occurs that could impact your organization. Ultimately, you need to make sure you’re comfortable managing the risks and opportunities you see, regardless of timing.
Too many strategies sit on a shelf, waiting to be recycled when the next one is created. Put a methodical strategy review process in place, which can easily be organized and managed with the support of ClearPoint (that’s what our software was designed to do!).
Be prepared to take action on your SWOT analysis once you complete it!
Once you’re done, use your SWOT analysis as input for developing or further refining your strategic plan. It should help you focus on priority goals and initiatives. If you need some guidance with this process, download our free strategic planning template booklet. It includes eight of the most popular templates used to build strategic plans, including a SWOT analysis template. Download it today!