SWOT Analysis: What it Is and How to Perform One

A SWOT analysis is a strategic planning tool that identifies an organization’s Strengths, Weaknesses, Opportunities, and Threats. It combines internal and external factors to clarify competitive position, evaluate risk and potential, and guide decision-making for companies, teams, products, or projects.

How SWOT Works

Uses internal and external data to reveal where an organization excels and where it needs improvement.
Helps prioritize strategic options by contrasting internal capabilities with external market forces.
Applicable across businesses, nonprofits, governments, and individuals.

SWOT Components

Strengths (internal, positive): What the organization does well or owns that gives it an advantage (e.g., strong brand, proprietary technology, loyal customers).
Weaknesses (internal, negative): Internal limitations that hinder performance (e.g., production bottlenecks, high debt, weak brand).
Opportunities (external, positive): External trends or conditions that could be exploited for growth (e.g., market expansion, regulatory changes, new technology).
Threats (external, negative): External risks that could harm the organization (e.g., increased competition, supply-chain disruption, economic downturn).

Common layout: a four-quadrant table with internal factors (strengths/weaknesses) on one axis and external factors (opportunities/threats) on the other; positives on the left, negatives on the right.

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How to Do a SWOT Analysis (5 Steps)

Determine your objective
Define the specific decision or area the analysis will address (company strategy, new product rollout, market entry).
Gather resources
Collect relevant internal data (finance, operations, HR) and external information (market trends, competitors, regulation).
Assemble a diverse team with different perspectives (operations, sales, customers, suppliers).
Compile ideas
Brainstorm items for each quadrant. Example questions:
- Strengths: What do we do well? What assets set us apart?
- Weaknesses: What holds us back? Where are we underperforming?
- Opportunities: What market trends or gaps can we exploit?
- Threats: What external risks or competitors could harm us?
Use whiteboarding or sticky-note sessions to collect many ideas before filtering.
Refine findings
Consolidate, clarify, and prioritize the list. Debate and rank items by impact and likelihood.
Develop strategy
Translate findings into actions: leverage strengths to seize opportunities, shore up weaknesses, and mitigate threats. Set timelines and owners.

Common Mistakes to Avoid

Lack of objectivity: Overstating strengths and downplaying weaknesses skews results.
Limited participation: Excluding diverse stakeholders misses important perspectives.
No prioritization: Treating all items equally leads to unfocused plans.
One-off exercise: Failing to revisit the SWOT reduces relevance as conditions change.
No follow-through: Analysis without concrete action produces little value.

Benefits

Simplifies complex decisions into a concise framework.
Forces consideration of external factors beyond internal control.
Versatile—can analyze organizations, product lines, teams, or projects.
Uses multiple data sources and perspectives, reducing single-source bias.
Often inexpensive to conduct and accessible to many staff levels.

Example: Tesla (condensed)

Strengths: Strong brand recognition, advanced battery technology, extensive Supercharger network.
Weaknesses: Production constraints, recurring quality-control issues, relatively high vehicle prices.
Opportunities: Growing global EV demand, expansion into energy storage/solar, autonomous-driving development, untapped emerging markets.
Threats: Intensifying EV competition, economic downturns affecting luxury sales, supply-chain risks for battery materials.

Frequently Asked Questions

What are the four parts of a SWOT analysis?
Strengths, Weaknesses, Opportunities, and Threats (internal vs. external; positive vs. negative).
How do you write a good SWOT analysis?
Define an objective, gather diverse data, brainstorm comprehensively, prioritize items, and convert findings into actionable strategy.
Why is a SWOT analysis used?
To identify competitive advantages, improvement areas, and external risks so leaders can make informed strategic decisions.
What are its limitations?
Can oversimplify complex situations, be biased by participants, and won’t by itself prescribe specific solutions. Requires prioritization and follow-up analysis.

Bottom Line

A SWOT analysis is a practical, flexible tool for clarifying strategic choices by balancing internal capabilities against external realities. Its value depends on honest assessment, diverse input, careful prioritization, and turning insights into concrete actions. Revisit and update the SWOT regularly and combine it with deeper analyses as needed.