In This Article

  1. Introduction
  2. Internal Factors (S & W)
  3. External Factors (O & T)
  4. TOWS Matrix
  5. Conducting SWOT
  6. Limitations
  7. Conclusion

Introduction

SWOT Analysis is a strategic planning framework that evaluates an organization's internal Strengths and Weaknesses, and external Opportunities and Threats. Developed in the 1960s at Stanford, it remains one of the most widely used tools for strategic assessment.

Internal Factors: Strengths & Weaknesses

Internal factors are within the organization's control.

StrengthsWeaknesses
Strong brand recognitionWeak brand awareness
Proprietary technologyOutdated technology
Skilled workforceHigh employee turnover
Strong financial positionCash flow problems
Efficient operationsHigh cost structure
Customer loyaltyPoor customer service
Strong distributionLimited distribution

Questions to Identify Internal Factors

  • What do we do better than competitors?
  • What unique resources do we have?
  • Where do we lack resources or capabilities?
  • What do customers complain about?

External Factors: Opportunities & Threats

External factors are outside the organization's control but must be addressed.

OpportunitiesThreats
Emerging marketsNew competitors
Technological advancesDisruptive technology
Regulatory changes (favorable)Regulatory changes (unfavorable)
Changing customer needsChanging customer preferences
Economic growthEconomic recession
Strategic partnershipsSupply chain disruptions

Tools for External Analysis

  • PESTEL: Political, Economic, Social, Technological, Environmental, Legal
  • Porter's Five Forces: Industry competition analysis
  • Competitor analysis: Rival strategies and capabilities

TOWS Matrix: From Analysis to Strategy

TOWS extends SWOT by matching internal and external factors to generate strategies.

Strengths (S)Weaknesses (W)
Opportunities (O)SO Strategies: Use strengths to exploit opportunitiesWO Strategies: Overcome weaknesses by pursuing opportunities
Threats (T)ST Strategies: Use strengths to avoid threatsWT Strategies: Minimize weaknesses and avoid threats

Example: Apple (Simplified)

SO: Use design expertise (S) to enter wearables market (O)

WO: Reduce high prices (W) to capture emerging market opportunity (O)

ST: Use brand loyalty (S) to counter Android competition (T)

WT: Address Siri limitations (W) as voice assistants become critical (T)

Conducting Effective SWOT Analysis

Best Practices

  • Be specific: "Strong brand" is vague; "90% brand recognition in target market" is specific
  • Be honest: Don't ignore weaknesses or overstate strengths
  • Prioritize: Focus on factors that matter most
  • Use data: Support claims with evidence
  • Involve stakeholders: Get diverse perspectives
  • Keep it current: Update regularly as conditions change

Limitations of SWOT

  • Subjectivity: Different people may categorize factors differently
  • Static: Represents a point in time; environment changes
  • No prioritization: All factors appear equal
  • No action: Analysis doesn't automatically lead to strategy
  • Oversimplification: Complex issues reduced to bullet points
Tip: SWOT is a starting point, not an end point. Always follow with TOWS or other strategic planning to convert analysis into action.

Conclusion

Key Takeaways

  • SWOT assesses internal (S, W) and external (O, T) factors
  • Strengths & Weaknesses: What you can control
  • Opportunities & Threats: What you must respond to
  • TOWS Matrix converts analysis into strategic options
  • Be specific, honest, and data-driven
  • SWOT is a starting point for strategy, not the final answer
  • Update regularly as conditions change