Albert Humphrey of the Stanford Research Institute determined in the 1960s to identify why corporate planning consistently failed. Thus the origination of the SWOT analysis. Today, the SWOT analysis is one of the most important concepts in the business world and is widely used by all types of organizations to help build a strategic plan.
So, what is a SWOT analysis, how do you create one, and what do you do with it? In this article, we’ll explain it all (and share some SWOT analysis examples to boot) from start to finish.
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 an external perspective. SWOT is an acronym for “Strengths, Weaknesses, Opportunities, and Threats.”
SWOT works because it helps you evaluate your business by considering multiple factors:
Organizations use SWOT to plot out a future course that plays on their strengths and minimizes risks. Taking the time to look at your organization from different perspectives and honestly assess your future prospects is a worthwhile activity; the insights you glean as a result you should then use constructively as part of the strategic planning process.
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.
Undertaking a SWOT analysis requires planning and organization; it can also be a lengthy process. For those reasons, we recommend treating it like a project. If you already have project management (PM) software, by all means use it.
If you don’t have software (or if you’re considering making a change), we encourage you to take a look at ClearPoint. It’s ideal for keeping individual projects on track, but it also does much more than that—it shows you how important projects impact your organization’s overall strategy. Are your projects moving the needle when it comes to your larger goals? That’s an important aspect of project management you can’t get with any other PM tool.
Viewing your SWOT analysis as a project within ClearPoint has multiple benefits:
Another benefit of treating your SWOT analysis as a project in ClearPoint: You won’t have to reinvent the wheel every time you repeat the process. You can just duplicate the framework, make any necessary adjustments, and then repeat the process as before, even comparing your newest SWOT to the previous analysis if necessary.
Below is a screenshot of what it might look like to set up a SWOT analysis as a project within ClearPoint, with some sample milestones shown.
Now, let’s dig into the steps of the analysis process.
This is the grid-like matrix that will house the information you gather. As you can see in the SWOT analysis template below, each quadrant features one of the four elements you’ll be focusing on—strengths, weaknesses, opportunities, and threats. Using a matrix helps present your findings in a clear, easy-to-understand way.
Pull people from all departments to participate in the analysis. Your entire leadership team should be involved because they can provide a broad view of the organization and offer insight into the competitive landscape. But having lots of different perspectives is beneficial, and that means including leaders from every department—and anyone else you think might have valuable input. The more diverse the group, the better insights you’ll generate. Not all ideas will make it to the final list, but it’s important to consider them all.
Ask the group: What are we good at? How are we better than our competitors? These are broad questions, but in the beginning stages of your discussion, you should accept all answers.
Examine these questions in relation to the Balanced Scorecard perspectives. For the fictional company Upward Airlines, the discussion might look like this:
Having considered these questions for your own organization, you might come up with multiple responses in some categories. Below is a sample of the strengths portion of the SWOT analysis for Upward Airlines:
TIP: As mentioned above, you can use ClearPoint to simplify this and the remaining information-gathering steps. Rather than asking everyone to brainstorm simultaneously in a conference room, give people time to review relevant data (also housed in ClearPoint) that would help identify strengths and weaknesses, as well as potential opportunities. Participants can then input their thoughts into ClearPoint, link to key supporting metrics, and even add contextual information surrounding their thought process.
Doing your analysis within a single tool not only makes it easier to collect the information but also gives you the visibility to see how the various components that make up your SWOT might be linked. Further, ClearPoint has a discussion feature that allows users to @ mention other users, and thus facilitates conversations about your strengths and weaknesses.
Ask the group: What are we not good at? Where can we grow? What are we lacking? The Upward Airlines discussion might look like this:
Ask the group: Where do we see big (and small) possibilities for our organization? What do we see happening in the future?
The Upward Airlines group might discuss the following:
Upward Airlines’ opportunities for the foreseeable future might be:
Ask the group: What do we see as a threat? What obstacles do we anticipate? What is changing that could hurt us? As a travel-related company in a tough economy, Upward Airlines might uncover a number of potential threats:
The external threats deemed most imminent for Upward Airlines might be:
In looking at your SWOT matrix, do some of your strengths naturally support the identified opportunities? If you eliminate weaknesses, would that present additional opportunities?
At this point, we recommend running a “brown paper exercise”—print your SWOT matrix in large size, and ask employees to add post-it notes in any or all of the matrix’s four boxes if they feel the leadership team missed something. (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.
Done correctly, the SWOT 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 leadership would not normally have 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 impact 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.
PEST stands for political, economic, social, and technological—the four key areas outside your business that are likely to impact it. These factors tend to 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 than SWOT 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, to get a complete picture of the business landscape.
Congratulations! Hopefully, you understand your business a little better after completing your SWOT analysis; now it’s time to put those insights to good use. Your ideas on how to use your strengths and overcome your weaknesses should inform your strategy.
Developing a strategy is in and of itself a big step. It involves defining objectives for your company to move toward, creating priority initiatives (projects) to help make them a reality, and identifying measures to make sure the strategy is unfolding the way it should.
Our Upward Airlines SWOT analysis example, for instance, lists four weaknesses:
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 airlines are still recovering from the COVID-19 fallout and profits are low. Similarly, you want to continue supporting your current strengths. While you shouldn’t let your excellent training program lapse, it needn’t be a focus if you expect the number of new hires over the next year to be low. However, improving your virtual communication practices will most likely prove to be beneficial moving forward.
Therefore, the Upward Airlines SWOT analysis above might drive strategy in the following ways:
Make sure there is a clear and strong link between your SWOT analysis and your 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 needs to reflect that information.
If you’re using ClearPoint for strategy execution, you can make sure the projects you initiate as a result of your SWOT will actually have an impact by a) creating links within the software to show clear connections between projects and objectives, and b) tracking progress on your goals and initiatives over time. That way, you’ll be able to see if, for example, your revised capacity plan positively impacted revenue in any substantial way—or if it had a negative effect on the bottom line. If you’re continuously monitoring progress, you’ll be able to adjust your course of action in a timely manner if needed. Those insights will also be useful for your next SWOT analysis.
Still uncertain as to how your team can use the information produced by a SWOT analysis? We reached out to the business community to ask about their experiences with SWOT. Their answers, listed below, show that SWOT can be applied to any number of business activities, from developing a long-term overall strategy to launching campaigns, new products, and more.
"We focus on the opportunity aspect of SWOT. We are always looking to find new ways of growing our company, and we use this analysis to show us areas where our business might thrive.
A SWOT analysis showed us how important it would be for us to partner with over 15 different insurance companies, so that we can freely match each client with whichever one is best for them. Most companies like ours only work with one or two companies, but we have seized the opportunity, and we are growing because of it."
—Anthony Martin of Choice Mutual
"We took action to understand that it's not enough to simply have a great product; we need to make sure our customers know how it can help them. By servicing the market, we found ways to add value for our customers and build relationships with them by providing helpful resources on our website and offering free trials. This has helped us to focus on creating and providing value to our customers, rather than just trying to get them to buy our product. As a result, we've created a much more sustainable and successful business."
—Diana Stepanova of Monitask
"One of the most important things that came out of our SWOT analysis was identifying untapped opportunities. After changing the game with our magnetic lashes, we saw a gap in the acrylic nail market. Through a SWOT analysis, we have realized our strength in reimagining highly used beauty products and making them better for the consumer. That has opened up even more opportunities to revolutionize the billion-dollar beauty industry."
—Ann McFerran of Glamnetic
"Our SWOT analysis revealed that we could create additional revenue streams by white-labeling our writing service and marketing it to other agencies. We offered interested parties discounts on our already-competitive rates, which made working with us very attractive and profitable for both sides. This allowed us to effectively double the size of our market. Most of the work we do now is for our agency partners, which means we can spend less time chasing sales and instead focus on ensuring quality in our service."
—Milo Cruz of Freelance Writing Jobs
“The best insight I gained from performing a SWOT analysis of my organization is that we are very good at what we do and have a lot of growth potential. One action that we took because of this insight was to expand our product line. We now offer various [photo] backdrops, including some specifically designed for events. We have also started marketing to new customers, which has helped us grow our business.
At first, we didn't think that expanding our product line would help us much, but it has been one of the best things we've done for our business. It's enabled us to attract new customers and grow our sales. Marketing to new customers has also been helpful in terms of growing our business. These actions have made us a more prosperous and well-rounded company. "
—Kate Zhang of Kate Backdrop
"The SWOT analysis helped us identify potential opportunities that were unique to us in terms of reach. This allowed us to focus on key areas and strategies that would allow us to be the go-to choice of a specific market.
"Knowing where your company stands in relation to its competitors is crucial for developing strategies that will give you a competitive advantage. It also gives you insight into your unique opportunities that your competitors may not have. This is the kind of information that can help you make decisions that will take your company to the next level."
—Linda Shaffer of Checkr
"There are many roofing contractors competing for business, and it can be difficult for customers to understand what sets us apart from the rest. In order to address this issue, we have revamped our marketing materials to better communicate our unique selling points.
As a result, potential customers can now see that our company is the best choice for quality roofing services, and we have experienced a significant increase in sales."
—Marty Ford of BulletpRoof Roof Systems Ltd.
“Owners of startups and small businesses need, but cannot find, a system to start, market, operate, or finance a business. Through our SWOT analysis, we noticed that our competitors left important questions and needs unanswered. For example, a competitor might help you set up a corporation, but have nothing for you after that.
You started the business, but now need marketing, operational, or finance help. We strive to be the entrepreneur's best friend by giving you the needed tools."
—James Chittenden of One Click Advisor
"SWOT analysis was incredibly helpful when it came to understanding the strengths of my business. I was then able to play to those strengths and build on them.
One strength was integrity—my business is always honest—and I’ve built that honesty into our brand."
—Keith Terrell of Backpacks Global
"Overcoming our weaknesses doesn't mean we are not keeping an eye on our existing strengths. If there's one thing SWOT analysis has taught us, it’s that we should treasure the things that keep our company strong by being innovative. Our positive attributes can become a weakness if we refuse to adapt to changes.
Consistently monitoring our strengths has allowed us to hit all our targets and go beyond our goals. As a result, we have outperformed our competitors by always bringing something new to the table."
—Adam Garcia of The Stock Dork
"Two of the issues we identified were the great resignation and the recession. Knowing them in advance gave us plenty of time to make the necessary changes (like retaining your best employees by offering new benefits—remote work, PTO, and unlimited growth opportunities). We also changed our inventory strategy and made sure we had enough to counter the price increases, shortages, and demand.
These strategy changes helped us limit the adverse effects of the recession, optimize our stocks, and make sure all our orders were fulfilled on time. The changes were also able to help us retain our best employees; thus, we never even had any problems throughout the great resignation."
—Michael Perry of Fitness Fixed Gear
"In our SWOT analysis, we were able to pinpoint areas where our employees may be lacking the skills they needed to succeed in our company. We decided to offer free online learning to our workers to help them add to their skill set.
This has helped us not only improve the skill sets of our employees, but it has also increased employee retention. Employees want to stay loyal to a company that helps them grow."
—Mark Daoust of Quiet Light
"Prior to the SWOT analysis, I had always approached marketing from a product-centric perspective; however, the SWOT analysis made me realize that we needed to focus more on customer-centric marketing. We needed to connect with our target audience and build relationships with them.
As a result, we've made some changes to our marketing approach, and I believe that these changes will help us to be more successful in the long run."
—Jacob Villa of Authority
"We have always prided ourselves on having good client relationships, but this exercise showed us that we needed to have strong client relationships. We have studied our weakness (why we have monthly policy cancellations or non-renewals) and the results showed that we need to focus on building and maintaining client relationships. After doing that, we have seen a significant increase in the average tenure of our clients and customer satisfaction scores."
—Loran Marmes of Medicare Solutions Team
"One threat we encountered in our business was the sudden and huge dip in our customer satisfaction score, which has never happened in the past five years. To resolve this issue and ensure we eliminate the threat that's harming our relationship with customers, we allocated time to engage with our employees and immediately gave them intensive customer service training.
Our urgent action to eradicate this threat has helped our business bounce back and we’ve regained the trust of our customers. It has also taught us to listen to customer feedback seriously and do our best to live up to their expectations."
—Jake Smith of Absolute Reg LTD
"A successful SWOT analysis encourages discussion from employees of different levels, from operational, to managerial, to administrative level. By doing this, everyone contributes their thoughts on the status and standing of the company—it’s not just about how one person sees it. This way, all aspects of the business are considered and addressed from all levels."
—Corey Morgan of Kind Home Painting
To create the most accurate and effective SWOT analysis, we recommend the following best practices:
If you need some guidance with this process, download our free strategic planning booklet. It includes eight of the most popular templates to build strategic plans, including a SWOT analysis template.
The strategic plan you develop from your SWOT analysis is powerful, so once you’ve created it, don’t let it sit! Use strategy execution software like ClearPoint to track your progress over time. (Read more about strategy execution and how you can use ClearPoint for tracking here.) Ready to take action? tart planning for the future now!