SWOT Analysis: What, Why and How to Use Them Effectively

SWOT analysis is used across industries to measure Strengths, Weaknesses, Opportunities and Threats of a business venture. Although it’s mainly used to assess business ventures, it can also be easily used to measure almost anything that is influenced by external and internal factors. Now that you know what a SWOT analysis is, let’s look at why you should use them and how to use them.

Why Use SWOT Analysis?

With hundreds of methods to assess a business venture you might wonder why use SWOT analysis over other methods. Well here are few reasons

  • First introduced by Albert Humphrey in 1960’s it has stood the test of time and still effective as it was in 60’s and 70’s.
  • It’s simplicity allows anyone to participate without prior knowledge of the methods and encourages participation.
  • It can be used to assess places, competitors, businesses and even to do self assessments.
  • Clearly differentiates between internal ( strength/weaknesses ) and external ( opportunities/threats ) factors to help decision making.

There are many more but these are the main reasons why you should choose SWOT over other methods. Keep in mind though that some specialized methods like BPMN offer different advantages.

How to Use SWOT Analysis Technique Effectively

Now you know what and why it’s time to learn how to use them effectively.

Creating a SWOT Analysis Diagram

SWOT diagram comes in various shapes but the key thing is to list down the strengths, weaknesses, opportunities and threats in an easily identifiable manner. You can get started easily by using one of our professionally designed SWOT analysis templates.

You can modify any of those templates online using our SWOT analysis software. If you prefer there are some templates in PDF form so you can easily download and take a printout for offline usage. Below is a blank template you can start using immediately.

Blank SWOT analysis template

Blank SWOT template for quick download and printing

Now lets look at how to enter data to the SWOT diagram.

Adding Data to the SWOT Analysis Diagram

The first thing you can do is add strengths and weaknesses. Because they are internal factors they are generally easy to identify. Depending on what you’re using the SWOT diagram these factors can vary significantly.

In a business environment they can be

  • Human resources – size of your workforce, skill level of your employees, language barriers, geographical distribution
  • Financial Situation – Capital, investment capacity, income, predicted profit, seasonal income
  • Distribution – sales partners, regional distribution, supply chain efficiency, production capabilities
  • Operations – Efficiency of software, operation and implement cost of software, efficiency of reporting processes

Depending on the organization there can be many more areas that can be a strength or a weakness. For example for a company like Apple brand loyalty is a great strength while for Samsung it could be low production cost.

As mentioned above adding internal factors are somewhat easy. The hard part comes when adding external factors, opportunities and threats.

Fortunately there is a formal process called PEST analysis to assess those opportunities and threats. Check out our SWOT vs PEST article to learn about similarities and differences.

PEST stands for Political, Economic, Social and Technological factors. Sometimes it’s referred as PESTLE analysis with Legal and Environmental factors added to the mix.

SWOT analysis vs PEST analysis

How PEST analysis help in SWOT analysis

PEST provides you a structured and a formal way to assess the opportunities and threats. Different departments can work on different areas and come up with the necessary data needed for the final SWOT diagram. For large projects there is simply no option but to direct these to different departments.

Below is a breakdown of different areas and some important factors in those areas.

  • Political – Government stability, corruption levels, trade controls, import and export restrictions
  • Economic – Exchange rates, interest rates, income levels of population, wealth distribution
  • Social – Education levels, religious harmony, attitude towards health, social welfare programs
  • Technological – Internet penetration, access to basic infrastructure, software piracy, technology competency of workforce
  • Legal – Tax laws and regulations, labor laws and firing policies, copyright and anti-piracy laws
  • Environmental – Weather patterns, attitude towards recycling, attitude towards organic and green products

Obviously all the factors don’t apply to every organization. For example if you’re selling computers then weather patterns might not interest you but they are definitely important if you’re selling rain coats.

Who Needs/Creates SWOT Diagrams

SWOT analysis are used by decision makers who are part of the planning of a venture. So most of the time they’re used by managers and senior executives. But as I mentioned before they can be applied in many scenarios so almost anyone can be creating SWOT diagrams.

If it’s a large project then they are usually created during lengthy multiple meetings. Managers of different departments, senior level executives and many others might get together and work on the SWOT analysis.

A software like Creately with it’s real-time collaboration tools helps teams to collaborate on SWOT diagrams easily while always visualizing the changes made by others. The revision history is preserved so it’s clearly visible who made the changes and this makes it easy to reverse decisions as well.

Different Uses of SWOT Diagrams

SWOT can be used to cater to hundreds of scenarios. Here’s a look at some common situations where SWOT analysis becomes very useful.

I personally feel personal SWOT analysis is underutilized. It’s a great way to prepare for an interview. Especially so if it’s an internal interview for a promotion and you know who you’re up against. This enables you to focus on your strengths and how those strengths align with opportunities for the company. And it helps to stay clear or talk less about your weaknesses. Check out this FORBES article for a in depth look at doing a personal SWOT analysis.

Another area where SWOT analysis is heavily used is marketing. Marketing is all about getting ahead of your competitors and knowing their strengths and weaknesses helps to focus your message and highlight the strong points.

For example in our case we’re the only diagramming software that offers an online solution and an offline desktop solution that syncs with each other. This is obviously useful for frequent travelers who want access to their diagram from anywhere in the world. And we make sure to highlight this in conferences and meet-ups. Check out this article about using SWOT in marketing to see how you can apply them to your marketing plans.

I hope this article has helped you to understand what SWOT analysis are, why it’s used around the world and how you can use it make better decisions. As always if you have any question feel free to ask them in the comments.

Author

Nishadha

Software engineer turned tech evangelist. I handle marketing stuff here at Creately including writing blog posts and handling social media accounts. In my spare time I love to read and travel. Check out my personal blog Rumbling Lankan where I write about online marketing stuff.

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