Understanding SWOT Analysis
SWOT Analysis is an analytical tool used by businesses to identify
Internal strengths and weaknesses
External opportunities and threats
Effective SWOT analysis can help senior managers to understand the
current business position and future changes that may occur so
that appropriate strategic decisions may be made
Factors Considered in a SWOT Analysis
Strengths Weaknesses
What the business is good at!
What the business does poorly!
For example:
For example:
Qualities that separate the business from rivals
Ways in which the business lags behind competitors
Internal resources such as skilled staff or a
Resource or capital limitations, including labour and
particular innovation
finance
Possession of assets such as
Lack of a competitive advantage
capital, patents or intellectual property
Lack of a unique selling proposition (USP)
A loyal customer base
Poor online presence
Effective leadership
Opportunities Threats
Hazards that have the potential to damage business
Options a business may exploit to enjoy further
performance!
success!
For example:
For example:
Developing markets for specific products become New or emerging competitors are gaining market
apparent share
Few competitors exist A changing legal or political environment negatively
A changing legal or political environment positively impacting on business processes and decisions
impacts on business processes and decisions Social or technological developments
Social or technological developments create an threaten obsolescence of products
emerging need for the businesses products Economic indicators becoming less favourable
Economic indicators becoming more favourable Negative press coverage
A potential for positive media coverage of the
Changing customer attitudes towards the business
business
Once a SWOT Analysis has been completed by a business, appropriate
decisions can be made to improve performance
Strengths should be harnessed
Weaknesses should be eliminated
Opportunities should be seized
Threats should be mitigated
Resource Created by Jason Lincoln
Example SWOT Analysis
Small Cafe Business
Strengths Weaknesses
Excellent location with consistent footfall Higher costs than rival cafes
Good reputation in local community Modest advertising budget
Seasonal menu with locally sourced No social media presence
ingredients High level of staff turnover
Opportunities Threats
Growing interest in locally sourced Intensifying competition from established chain
ingredients
restaurants in the area
Government funding available for staff
Uncertain economic environment
training
Rising cost of key ingredients
Potential growth via food delivery apps
Having compiled the SWOT Analysis, the owner of the cafe may conclude that the
business should:
Seize the opportunity presented by the growing interest in locally sourced ingredients by
promoting the cafe's strength of its seasonal, locally sourced menu, especially given the
threat from large competitors
Make use of the government funding for staff training to attempt to
reduce staff turnover
Increase the volume of sales to a geographically wider target market
by teaming up with delivery apps and establishing an inexpensive social
media presence
Resource Created by Jason Lincoln
Evaluting the SWOT Analysis Tool
Factors Affecting the Usefulness of SWOT Analysis
Factor Explanation
The accuracy and reliability of the data used for SWOT
analysis greatly influence its usefulness
The Quality & Relevance of
If the information used for analysis is outdated, incomplete
Data Used
or biased, it can lead to flawed conclusions and ineffective
decision-making
SWOT analysis requires a fair and unbiased assessment of
the organisation's internal and external factors
Objectivity & Bias If the analysis is influenced by personal biases,
preconceived notions or subjective opinions, it can
undermine the usefulness of the analysis
Superficial analysis may overlook important factors or fail
to capture the complexity of the organisation's environment
Depth of Analysis A comprehensive and thorough analysis can provide more
accurate insights and improve the usefulness of SWOT
analysis
SWOT analysis should involve input from various
stakeholders within the organisation, including employees,
managers, customers, suppliers, and industry experts
Stakeholder Involvement Their diverse perspectives can provide a broader
understanding of the organisation's strengths, weaknesses,
opportunities and threats, thus increasing the usefulness of
the analysis
As market conditions, technology, and consumer
preferences change over time, the relevance of identified
Dynamic Nature of the Business strengths, weaknesses, opportunities, and threats may also
Environment shift
Regular updates and revisions to the analysis are
necessary to ensure its usefulness
Resource Created by Jason Lincoln