SWOT Analysis - How to Do It Properly - SM Insight (2023)


Swot analysis involves the collection and portrayal of information about internal and external factors which have, or may have, an impact on business.[2]

SWOT is a framework that allows managers to synthesize insights obtained from an internal analysis of the company’s strengths and weaknesses with those from an analysis of external opportunities and threats.[3]

Understanding the tool

What is SWOT analysis? The answer to the question is simple: it’s a tool used for situation (business or personal) analysis! SWOT is an acronym which stands for:

Strengths: factors that give an edge for the company over its competitors.
Weaknesses: factors that can be harmful if used against the firm by its competitors.
Opportunities: favorable situations which can bring a competitive advantage.
Threats: unfavorable situations which can negatively affect the business.

Strengths and weaknesses are internal to the company and can be directly managed by it, while the opportunities and threats are external and the company can only anticipate and react to them. Often, swot is presented in a form of a matrix as in the illustration below:

SWOT Analysis - How to Do It Properly - SM Insight (1)

Swot is widely accepted tool due to its simplicity and value of focusing on the key issues which affect the firm. The aim of swot is to identify the strengths and weaknesses that are relevant in meeting opportunities and threats in particular situation. [4]

(Video) SWOT analysis in Hindi (with Examples) | By Syed Fahad


Swot tool has 5 key benefits:

  • Simple to do and practical to use;
  • Clear to understand;
  • Focuses on the key internal and external factors affecting the company;
  • Helps to identify future goals;
  • Initiates further analysis.


Although there are clear benefits of doing the analysis, many managers and academics heavily criticize or don’t even recognize it as a serious tool.[2] According to many, it is a ‘low-grade’ analysis. Here are the main flaws identified by a research:[2][5]

  • Excessive lists of strengths, weaknesses, opportunities and threats;
  • No prioritization of factors;
  • Factors are described too broadly;
  • Factors are often opinions not facts;
  • No recognized method to distinguish between strengths and weaknesses, opportunities and threats.

How to perform the analysis?

Swot can be done by one person or a group of members that are directly responsible for the situation assessment in the company. Basic swot analysis is done fairly easily and comprises of only few steps:

Step 1. Listing the firm’s key strengths and weaknesses
Step 2. Identifying opportunities and threats

Strengths and Weaknesses

Strengths and weaknesses are the factors of the firm’s internal environment. When looking for strengths, ask what do you do better or have more valuable than your competitors have? In case of the weaknesses, ask what could you improve and at least catch up with your competitors?

Where to look for them?

Some strengths or weaknesses can be recognized instantly without deeper studying of the organization. But usually the process is harder and managers have to look into the firm’s:

  • Resources: land, equipment, knowledge, brand equity, intellectual property, etc.
  • Core competencies
  • Capabilities
  • Functional areas: management, operations, marketing, finances, human resources and R&D
  • Organizational culture
  • Value chain activities

Strength or a weakness?

Often, company’s internal factors are seen as both, strengths and weaknesses, at the same time. It is also hard to tell if a characteristic is a strength (weakness) or not. For example, firm’s organizational structure can be a strength, a weakness or neither! In such cases, you should rely on:

(Video) Strategic Planning and SWOT Analysis

Clear definition. Very often factors which are described too broadly may fit both strengths and weaknesses. For example, “brand image” might be a weakness if the company has poor brand image. However, it can also be a strength if the company has the most valuable brand in the market, valued at $100 billion. Therefore, it is easier to identify if a factor is a strength or a weakness when it’s defined precisely.

Benchmarking. The key emphasize in doing swot is to identify the factors that are the strengths or weaknesses in comparison to the competitors. For example, 17% profit margin would be an excellent margin for many firms in most industries and it would be considered as a strength. But what if the average profit margin of your competitors is 20%? Then company’s 17% profit margin would be considered as a weakness.

VRIO framework. A resource can be seen as a strength if it exhibits VRIO (valuable, rare and cannot be imitated) framework characteristics. Otherwise, it doesn’t provide any strategic advantage for the company.

Opportunities and threats

Opportunities and threats are the external uncontrollable factors that usually appear or arise due to the changes in the macro environment, industry or competitors’ actions. Opportunities represent the external situations that bring a competitive advantage if seized upon. Threats may damage your company so you would better avoid or defend against them.

Where to look for them?

PESTEL. PEST or PESTEL analysis represents all the major external forces (political, economic, social, technological, environmental and legal) affecting the company so it’s the best place to look for the existing or new opportunities and threats.

Competition. Competitor’s react to your moves and external changes. They also change their existing strategies or introduce new ones. Therefore, the company must always follow the actions of its competitors as new opportunities and threats may open at any time.

Market changes. The most visible opportunities and threats appear during the market changes. Markets converge, starting to satisfy other market segment needs with the same product. New geographical markets open up allowing the firm to increase its export volumes or start operations in a new country. Often niche markets become profitable due to technological changes. As a result, changes in the market create new opportunities and threats that must be seized upon or dealt with if the company wants to gain and sustain competitive advantage.

(Video) How to build a SWOT analysis matrix (Antonio Ghezzi)

Opportunity or threat?

Most external changes can represent both opportunities and threats. For example, exchange rates may increase or reduce the profits gained from exports. This depends on the exchange rate, which may rise (opportunity) or fall (threat) against the home country currency. The organization can only guess the outcome of the change and count on analysts’ forecasts. In such cases, when organization cannot identify if the external factor will affect it positively or negatively, it should gather unbiased and reliable information from the external sources and make the best possible judgement.

Guidelines for successful SWOT

The following guidelines are very important in writing a successful swot analysis. They eliminate most of swot limitations and improve it’s results significantly:

  • Factors have to be identified relative to the competitors. It allows specifying whether the factor is a strength or a weakness.
  • List between 3 – 5 items for each category. Prevents creating too short or endless lists.
  • Items must be clearly defined and as specific as possible. For example, firm’s strength is: brand image (vague); strong brand image (more precise); brand image valued at $10 billion, which is the most valued brand in the market (very good).
  • Rely on facts not opinions. Find some external information or involve someone who could provide an unbiased opinion.
  • Factors should be action orientated. For example, “slow introduction of new products” is action orientated weakness.

SWOT analysis example A

This is a basic example of the analysis:

1. Second most valuable brand in the world valued at $76 billion
2. Diversified income (5 different brands earning more than $4 billion each)
3. Strong patents portfolio (15,000 patents)
4. Investments in R&D reaching 4 billion a year.
5. Competent in mergers & acquisitions
6. Have an access to cheap cash reserves
7. Effective corporate social responsibility (CSR) projects
8. Localized products
9. Highly skilled workforce
10. Economies of scale or economies of scope
1. Investments in R&D are below the industry average
2. Very low or zero profit margins
3. Poor customer services
4. High employee turnover
5. High cost structure
6. Weak brand portfolio
7. Rigid (bureaucratic) organizational culture impeding fast introduction of new products
8. High debt level ($3 billion)
9. Brand dilution (the firm has too many brands)
10 Poor presence in the world’s largest markets
1. Market growth for the main firm’s product
2. Growing demand for renewable energy
3. New technology, that would drive production costs by 20% is in development
4. Our country accession to EU
5. Changing customer habits
6. Disposable income level will increase
7. Government’s incentives for ‘specific’ industry
8. Economy is expected to grow by 4% next year
9 Growing number of people buying online
10. Interest rates falling to 1%
1. Corporate tax may increase from 20% to 22% in 2013
2. Rising pay levels
3. Rising raw material prices
4. Intense competition
5. Market is expected to grow by only 1% next year indicating market saturation
6. Increasing fuel prices
7. Aging population
8. Stricter laws regulating environment pollution
9. Lawsuits against the company
10. Currency fluctuations

You can find an extensive list of strengths, weaknesses, opportunities and threats by looking at our examples of swot analyses, which include Alphabet (Google) swot, Amazon.com swot, Apple Inc. swot, The Coca Cola Company swot, Ford Motor Company swot, McDonald’s Corporation swot, PepsiCo Inc. swot, Samsung Electronics swot, Starbucks Corporation swot, Walmart Stores, Inc. swot and many more swot analyses.

Advanced SWOT

At the most, swot is considered to be only a reference to further analysis as it has too many limitations and cannot be used alone in the situation analysis. The previous guidelines identified in this article meet the most of swot limitations except one: “prioritization of factors”. An advanced swot goes a step further and eliminates this important drawback.

In a simple swot, strengths and weaknesses or opportunities and threats are equal to each other, therefore a minor weakness can balance a major strength. Without prioritization, some factors might be given too much or too little emphasis and the most relevant factors might simply be overlooked.

The aim of advanced swot is to identify the most significant factors of the analysis from all the items listed on it. How to perform it?

(Video) Top 5 Mistakes Made with Doing a SWOT Analysis

Step 1. Identify strengths, weakness, opportunities and threats.
Step 2. Prioritize them.

(The first step was discussed earlier so please refer to it when doing advanced swot analysis. See example B when reading further instructions.)


Strengths and weaknesses are evaluated on 3 categories:

  • Importance. Importance shows how important a strength or a weakness is for the organization in its industry as some strengths (weaknesses) might be more important than others. A number from 0.01 (not important) to 1.0 (very important) should be assigned to each strength and weakness. The sum of all weights should equal 1.0 (including strengths and weaknesses).
  • Rating. A score from 1 to 3 is given to each factor to indicate whether it is a major (3) or a minor (1) strength for the company. The same rating should be assigned to the weaknesses where 1 would mean a minor weakness and 3 a major weakness.
  • Score. Score is a result of importance multiplied by rating. It allows prioritizing the strengths and weaknesses. You should rely on your most important strengths and try to convert or defend your weakest parts of the organization.

Opportunities and threats are prioritized slightly differently than strengths and weaknesses. Their evaluation includes:

  • Importance. It shows to what extent the external factor might impact the business. Again, the numbers from 0.01 (no impact) to 1.0 (very high impact) should be assigned to each item. The sum of all weights should equal 1.0 (including opportunities and threats).
  • Probability. Probability of occurrence is showing how likely the opportunity or threat will have any impact on business. It should be rated from 1 (low probability) to 3 (high probability).
  • Score. Importance multiplied by probability will give a score by which you’ll be able to prioritize opportunities and threats. Pay attention to the factors having the highest score and ignore the factors that will not likely affect your business.

SWOT analysis example B

This swot example is adopted from the previous example and additionally includes prioritization. Highlighted cells point to the most significant factors affecting the organization.

Advanced SWOT of Company X

Second most valuable brand in the world0.0310.03
Diversified income0.0120.02
Strong patents portfolio (15,000 patents)0.1530.45
Investments in R&D reaching 4 billion a year0.1020.20
Competent in mergers & acquisitions0.0530.15
An access to cheap cash reserves0.0210.02
Effective corporate social responsibility (CSR) projects0.0310.03
Localized products0.0110.01
Highly skilled workforce0.0820.16
Economies of scale/economies of scope0.0230.06
Investments in R&D are below the industry average0.0320.06
Very low or zero profit margins0.0820.24
Poor customer services0.1020.20
High employee turnover0.0520.10
High cost structure0.0330.09
Weak brand portfolio0.0210.02
Bureaucratic organizational culture0.0310.03
High debt level ($3 billion)0.0310.03
Brand dilution (the firm has too many brands)0.0110.01
Poor presence in the world’s largest markets0.1220.24
Market growth for the main business product0.1020.20
Growing demand for renewable energy0.0110.01
New technology is in development0.1310.13
Our country accession to EU0.0530.15
Changing customer habits0.0510.05
Disposable income level will increase0.0230.06
Government’s incentives for ‘specific’ industry0.0320.06
Economy is expected to grow by 4% next year0.0120.02
Growing number of people buying online0.0830.24
Interest rates falling to 1%0.0230.06
Corporate tax may increase from 20% to 22% in 20210.1220.24
Rising pay levels0.0320.06
Rising raw material prices0.0930.27
Intense competition0.0710.07
Market is expected to grow by only 1% next year0.0530.15
Increasing fuel prices0.0130.03
Aging population0.0130.03
Stricter laws regulating environment pollution0.0110.01
Lawsuits against the company0.0210.02
Currency fluctuations0.0920.18


  1. Thompson, J. and Martin, F. (2010). Strategic Management: Awareness & Change. 6th ed. Cengage Learning EMEA, p. 140, 817
  2. Pickton, D.W. and Wright, S. (1998). What’s swot in strategic analysis? Strategic Change Vol. 7, pp. 101-109, 105-106
  3. Rothaermel, F. T. (2012). Strategic Management: Concepts and Cases. McGraw-Hill/Irwin, p. 105-106
  4. Johnson, G, Scholes, K. Whittington, R. (2008). Exploring Corporate Strategy. 8th ed. FT Prentice Hall, p. 156, 160
  5. Coman, A. and Ronen, B. (2009). Focused SWOT: diagnosing critical strengths and weaknesses. International Journal of Production Research Vol. 40, Issues 20, pp. 5677–5689
  6. Kotler, P. (1991). Marketing Management. 7th ed. Prentice-Hall
  7. David, F.R. (2009). Strategic Management: Concepts and Cases. 12th ed. FT Prentice Hall, p. 125-126, 166-168
  8. Virtual Strategist (2008). SWOT analysis: How to perform one for your organization (VIDEO). Available at: https://www.youtube.com/watch?v=GNXYI10Po6A
  9. Wikipedia (2013). SWOT analysis. Available at: https://en.wikipedia.org/wiki/SWOT_analysis

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SWOT Analysis - How to Do It Properly - SM Insight? ›

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT analysis is a technique for assessing these four aspects of your business. SWOT Analysis is a tool that can help you to analyze what your company does best now, and to devise a successful strategy for the future.

What is the insight of SWOT analysis? ›

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT analysis is a technique for assessing these four aspects of your business. SWOT Analysis is a tool that can help you to analyze what your company does best now, and to devise a successful strategy for the future.

How to do a SWOT analysis properly? ›

Conducting a SWOT
  1. What does the business do well?
  2. What is your competitive advantage? ...
  3. What internal strengths does your business have? ...
  4. What external strengths does your business have? ...
  5. How can the business build on its strengths?
  6. What skills and training do you and your staff have?
Dec 8, 2022

What are 3 simple rules for successful SWOT analysis? ›

SWOT should always be specific. Avoid grey areas. Stay focused on the topic being analyzed, in this case, the workforce. Always apply SWOT in relation to your competition, i.e. better than or worse than your competition.

What are the 5 elements of SWOT analysis? ›

What are the elements of a SWOT analysis?
Strengths Assets Resources Opportunities ProspectsWeaknesses Limitations Restrictions Threats Challenges

Which two areas in a SWOT analysis are tied together and also provide insight? ›

The two internal elements of SWOT analysis are strengths and weakness.

What are the key points of SWOT analysis? ›

The four points of a proper SWOT analysis are Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses focus internally on the business being evaluated, while Opportunities and Threats look at competition and things going on externally.

What are the biggest mistakes in SWOT analysis? ›

Listing down too many things is probably the most common SWOT analysis mistake. This usually happens when there is no clear goal or if the scope is not well defined.

What are the 3 C's in SWOT analysis? ›

This method has you focusing your analysis on the 3C's or strategic triangle: the customers, the competitors and the corporation.

What are the 4 pillars of SWOT analysis? ›

Strengths, weaknesses, opportunities and threats – these four pillars make up our SWOT Analysis and will help you approach and overcome different business challenges as they arise.

What is a SWOT analysis example? ›

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses are internal to your company—things that you have some control over and can change. Examples include who is on your team, your patents and intellectual property, and your location.

What do you write in threats in SWOT analysis? ›

9 examples of threats in a SWOT analysis
  • Social perception. With the rise of social media, consumers are increasingly aware of the business practices of the companies they support. ...
  • Natural disasters. ...
  • Technological changes. ...
  • Legislation. ...
  • Competition. ...
  • Globalization. ...
  • Data security. ...
  • Rising costs.
Mar 10, 2023

What are examples of strength in SWOT analysis? ›

In a SWOT Analysis, strengths are written in the top left quadrant. They highlight the internal strengths that you or your organization might be able to take advantage of to meet your goals. Examples of strengths for a SWOT analysis might include motivation, a clear vision, or having strong prior knowledge.

How can you turn your strengths into opportunities examples? ›

Here are the ways you can leverage those strengths while on the job:
  • Define your strengths. Before you can leverage your strengths, you need to understand your unique abilities. ...
  • Set professional goals. ...
  • Show evidence of your strengths. ...
  • Strengthen your strengths. ...
  • Choose strength-building behaviors.
Feb 16, 2023

What are the two main focus areas of a SWOT analysis? ›

First, a company assesses its internal capabilities and determines its strengths and weaknesses. Then, a company looks outward and evaluates external factors that impact its business. These external factors may create opportunities or threaten existing operations.

What are some examples of opportunities? ›

What are some examples of opportunities?
  • Get help on projects.
  • Propose working groups.
  • Get testers for new ideas or products.
  • Create a team to work on an idea you have.
  • Share your expertise or best practices in a particular field.

How do you write weaknesses in SWOT analysis? ›

In a SWOT Analysis, weaknesses are written in the top right quadrant. They highlight the internal weaknesses that you or your organization need to address to meet your goals. Examples of weaknesses for a SWOT analysis might include lack of motivation, lack of a clear vision, or poor time management skills.

What is the most difficult part of the SWOT analysis? ›

A: The most challenging part of your SWOT analysis is looking at your internal and external data to decide what indeed are your strengths, weaknesses, opportunities, and threats. We recommend looking at objective data to help make these decisions.

What are 5 examples of weakness in SWOT analysis? ›

  • Weak brand(s)
  • Higher-than-average turnover.
  • High levels of debt.
  • Inadequate supply chain.
  • Lack of capital.
  • Inefficient systems, tools, processes.
  • Poor customer experience, service, reviews.
Sep 22, 2022

What is one of the major challenges associated with the SWOT analysis? ›

One of the main challenges of SWOT analysis is avoiding bias and assumptions that can skew your results. For example, you might overestimate your strengths and underestimate your weaknesses, or ignore external factors that could affect your opportunities and threats.

What is the process for conducting SWOT analysis 3 steps? ›

SWOT Analysis – A step by step guide
  • First, Determine the Strengths of your Business.
  • Second, Determine the Weaknesses of your Business.
  • Third, Determine the Opportunities for your Business.
  • Fourth, Determine the Threats to your Business.
  • Taking Action after your SWOT Analysis.
  • As a Conclusion,
Apr 22, 2020

What is 4p in business? ›

The four Ps are a “marketing mix” comprised of four key elements—product, price, place, and promotion—used when marketing a product or service. Typically, businesses consider the four Ps when creating marketing plans and strategies to effectively market to their target audience.

What is SWOT analysis learning objective? ›

Some of the objectives of SWOT analysis:

To make a summary analysis of external and internal factors. To identify key items for the management of the organization, which involves establishing priorities for action. To prepare strategic options: risks and problems to solve.

Who benefits from a SWOT analysis? ›

Benefits of SWOT

A SWOT analysis can provide your company with a good idea of where it stands and how to improve it. It also allows you to understand your business and its market better. Releasing your SWOT analysis to your employees can also help them better understand the business and improve their performance.

What is the relevance of SWOT analysis in a research? ›

A SWOT analysis is a strategic tool that helps you identify the strengths, weaknesses, opportunities, and threats of your design research project. It can help you evaluate your current situation, explore new possibilities, and plan for the future.

What is the primary goal of a SWOT analysis quizlet? ›

What is the GOAL of a SWOT analysis? is to match overall strengths with arising opportunities, improve upon or eliminate weaknesses, minimize and increase awareness of threats.


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