SWOT analysis (alternatively SWOT matrix) is an acronym for
Strengths, Weaknesses, Opportunities, and Threats and is a structured planning
method that evaluates those four elements of a project or business venture. A SWOT analysis can be carried out for a
company, product, place, industry, or person.
As its name states, a SWOT analysis examines four elements:
Strengths - internal attributes and resources
that support a successful outcome.
Weaknesses - internal attributes resources that
work against a successful outcome.
Opportunities - external factors the project can
capitalize on or use to its advantage.
Threats - external factors that could jeopardize
Used in a business context, it helps you carve a sustainable
niche in your market. Used in a personal
context, it helps you develop your career in a way that takes best advantage of
your talents, abilities, and opportunities. Strengths and weaknesses are often internal to
your organization, while opportunities and threats generally relate to external
factors. For this reason, SWOT is
sometimes called Internal-External Analysis and the SWOT Matrix is sometimes
called an IE Matrix.
The framework is credited to Albert Humphrey, who tested the
approach in 1960s and 1970s at the Stanford Research Institute (now SRI
International). Developed for business
and based on data from Fortune 500 companies, the SWOT analysis has been
adopted by organizations of all types as an aid to making decisions.
The usefulness of SWOT analysis is not limited to
profit-seeking organizations. SWOT
analysis may be used in any decision-making situation when a desired end-state
(objective) is defined.
While preparing SWOT analysis, we have to always keep in
mind that strengths may counter-balance weaknesses and opportunities can offset
threats. Users of SWOT analysis must ask
and answer questions that generate meaningful information for each category
(strengths, weaknesses, opportunities, and threats) to make the analysis useful
and find their competitive advantage.
A typical example is given below for a business entity.
What advantages does your organization have?
What do you do better than anyone else?
What unique or lowest-cost resources can you
draw upon that others can't?
What do people in your market see as your
What is your organization's Unique Selling
Consider your strengths from both
an internal perspective, and from the point of view of your customers and
people in your market.
What could you improve?
What should you avoid?
What are people in your market likely to see as
What factors lose you sales?
Again, consider this from an
internal and external basis: Do other
people seem to perceive weaknesses that you don't see? Are your competitors
doing any better than you? It's best to
be realistic now, and face any unpleasant truths as soon as possible.
• What good opportunities can you spot?
• What interesting trends are you aware
Useful opportunities can come
from such things as:
Changes in technology and markets on both a
broad and narrow scale.
Changes in government policy related to your
Changes in social patterns, population profiles,
lifestyle changes, and so on.
Tip: A useful approach when looking at
opportunities is to look at your strengths and ask yourself whether these open
up any opportunities. Alternatively,
look at your weaknesses and ask yourself whether you could open up
opportunities by eliminating them.
What obstacles do you face?
What are your competitors doing?
Are quality standards or specifications for your
job, products or services changing?
Is changing technology threatening your
Do you have bad debt or cash-flow problems?
Tip: When looking at opportunities and threats,
PEST/PESTLE Analysis can help to ensure that you don't overlook external
factors, such as new government regulations or technological changes in your
SWOT analysis is just one method of categorization and has
its own weaknesses. For example, it may
tend to persuade its users to compile lists rather than to think about actual
important factors in achieving objectives. It also presents the resulting lists
uncritically and without clear prioritization so that, for example, weak
opportunities may appear to balance strong threats.
Another limitation includes the development of a SWOT
analysis simply to defend previously decided goals and objectives. This misuse
leads to limitations on brainstorming possibilities and "real"
identification of barriers. This misuse
also places the organization’s interest above the well-being of the community.
Further, a SWOT analysis should be developed as a
collaborative with a variety of contributions made by participants including
community members. The design of a SWOT analysis by one or two community
workers is limiting to the realities of the forces, specifically external
factors, and devalues the possible contributions of community members.