How to do a SWOT analysis (with examples)

SWOT Analysis, or SWOT, as it is known in some places, is a valuable technique that facilitates the study of the situation of a company, project or circumstance, with the aim of making better decisions. Its applicability extends to diverse environments, from SMEs to larger organizations.

It can also be used for a wide range of purposes, such as market research or product decisions. In this article, we will discover the fundamental concepts of SWOT analysis and the process you must follow to evaluate the situation of your project and optimize its possibilities. You are ready?

What is a SWOT analysis?

The acronym SWOT represents the words: weaknesses, threats, strengths and opportunities. It is an analysis tool used to examine the internal and external environment of a company or plan. The objective is to create an effective business strategy that allows you to achieve the proposed objectives.

When executing it, it is essential to keep in mind that it is a balance of forces. On the one hand, there will be weaknesses and threats; on the other, strengths and opportunities. Besides, This model is not static and must be adapted according to changing circumstances.

Parts of a SWOT analysis

Before creating a SWOT matrix, we must know each of its components separately. In this section we are going to detail them.

Internal study

Two primary factors must be addressed:

The strenghts: They are the attributes that allow you to generate an advantage. If we run the analysis on a company, we will have to evaluate the availability of capital resources, personnel, assets, among others. These attributes allow generate an advantage over your competitors.The weaknesses: On the other hand, weaknesses would be all the elements, energy resources, skills and attitudes that represent an impediment or that can limit the company. These are nothing more than internal problems, which must be identified in order to eliminate them.

External study

An organization or a person cannot exist without the environment that surrounds it. Therefore, the next step is to carry out an external study to find out what the opportunities and threats are in the context. A first step to discover them is to look for what elements we can find that have some relationship with the organization.

The opportunities: They are going to be the positive factors that are generated in the environment. They are external situations or trends that can be used to achieve objectives more effectively or for growth.The threats: They are going to be the negative factors. They are the elements that can threaten the organization, so if necessary, it may be necessary to design an appropriate strategy to be able to overcome them.

SWOT Matrix

Once these steps are completed, it is time to add all the data obtained in a two-by-two matrix. The more we schematize the data obtained, the easier it will be to visualize it. Additionally, placing different dots or dashes to establish each element within the two previous studies will help this part of the process.

By placing the data in the matrix we will have, on the one hand, the strengths and opportunities that correspond to the positive aspects of our company and the environment. These will form the potentialities: They tell us the lines of action or decisions to take.

The other part of the matrix will show us the limitations, determined by the combination of weaknesses and threats. These are going to give a warning.

This matrix also leaves us with a third combination, which forms the diagonals. The combination of strengths and threats form risks, while the combination of weaknesses and opportunities form challenges.. Both the risks and the challenges will be those that mark the path forward. They will determine future actions.

How to do a SWOT analysis

After having the bases, we can structure the steps to follow to develop it. The first thing is to select the objective that we want to analyze and on which a decision is going to be made; and then execute the previous steps. This can be visualized as follows:

Evaluate the current situation and the market in general.Define a strategy to overcome weaknesses and threats.Recognize strengths, opportunities, weaknesses and threats.Identify the capabilities and competitive advantages of the organization.Analyze how to take advantage of strengths and opportunities to achieve the proposed objective.

It is important to keep in mind that the SWOT analysis must be a continuous and dynamic process, which allows us to adapt to changes in our organization and market.

How to know if your analysis is correct

To ensure that your SWOT analysis is solid and complete, consider asking the following questions and keeping the following aspects in mind:

Strengths:

What skills or knowledge do I possess that can benefit my business? What assets, such as equipment, technology or people, are available to leverage? What advantages or resources does my company, product or situation have that make me stand out from the competition? What Have aspects of my business been successful in the past and can they continue to do so in the future?

Weaknesses:

In what areas do I lack experience or resources? What problems or challenges does my business currently face? What are the weaknesses that competitors can exploit? What are the aspects in which my company, product or situation can improve ?

Opportunities:

What trends in the market can benefit my business? Are there untapped market segments or niches that I could address? What changes in technology or regulation can open new opportunities? How can I leverage the strengths of my business to capitalize these opportunities?

Threats:

How can I mitigate or prepare to face these threats? What are my competitors doing that could pose a threat? What are the external factors that could negatively affect my business? Are there economic, political or environmental risks that could negatively impact my business? negative?

Additional considerations:

How can I proactively address weaknesses and threats to minimize risks? What strategies can I develop based on the connections between the elements of my analysis? How do strengths and opportunities interact to maximize growth potential? How can I establish specific goals and actions to capitalize on opportunities and overcome identified challenges?

Remember that it is a flexible tool, soIt’s important to review it periodically to adapt it to changes in your business or environment.. On the other hand, it is useful to get feedback from colleagues, consultants or experts in the industry to ensure that your study is complete and accurate.

3 examples of a SWOT analysis to inspire you

To illustrate the process, we are going to exemplify 3 situations where this tool is ideal to put into practice. Although the introduction is short, remember that you should dedicate your time to evaluate all the available options.

Example 1: Impulse, a store located in Madrid, wants to expand to new markets during the pandemic. These are some points that we could identify:StrengthsWeaknessesQuality customer service. Wide variety of products. Good location of the physical store. Lack of financial resources. Little experience in e-commerce.Low market share in the industry.OpportunitiesThreatsNew international markets. Efficient distribution infrastructure. Growth of the fashion market on-line.Current economic situation.Strong competition in the industry.Changes in the industry’s business model.Example 2: A store focused on winter sports wants to evaluate the current situation of its headquarters in Spain to better understand the market. Let’s look at a possible SWOT analysis:StrengthsWeaknessesConnections with renowned brands.Strategic location in mountain areas.Specialization in winter sports (trusted source).Extreme seasonality.Local and online competition.Investment in expensive inventory.OpportunitiesThreatsEquipment rental.Growth in winter tourism.Online sales and shipping nationwide.Climate changes.Unstable economy.Online competitors.Example 3: A person who lives in Barcelona is considering buying a bicycle with the aim of improving his mobility and reducing his environmental footprint in the city:StrengthsWeaknessesPleasant climate. Economic savings. Cycling infrastructure. Urban traffic. Inexperience in cycling. Bicycle maintenance.OpportunitiesThreatsSustainability.Health and well-being.Free parking.Traffic accidents (take precautions).Adverse weather conditions.Bicycle thefts.

decision making

At this point, we already have our SWOT analysis completed. We can only evaluate the results of the matrix and make appropriate decisions. The entire process followed so far is based on organizing the information necessary to make objective decisions. In addition, the SWOT analysis will also allow us to create future strategies.

Although the SWOT is carried out seeking to make appropriate decisions, the results will depend largely on the quality of the information. On the other hand, if you want to advance further, you can always complete the six hats technique, which consists of optimizing problem solving and improving the reasoning process in work groups.

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