Business and Marketing

What is SWOT Analysis and Its Applications in Decision Making?

SWOT stands for “strengths, weaknesses, opportunities, and threats.” SWOT analysis is a tool for auditing an organisation and its environment.

SWOT analysis is recognised as the framework that managers and employees of an organisation use to evaluate the company’s competitive situation and establish a strategic plan for addressing the organisation. This aids in the evaluation of the internal aspects of the company, thereby developing the existing and future potential of the people or the organisation.

While SWOT analysis is typically conducted as a company-wide exercise, it can also examine the performance of individual departments, products, or services.

There are a number of different ways to approach SWOT analysis, but one of the most popular is to use the SWOT template. This template provides a simple SWOT framework and can be used for any business or individual.

To use the SWOT template, simply print it out or save it to your computer, and then fill in the blanks with your own information. When you’re done with the template, you’ll know exactly your company’s strengths, weaknesses, opportunities, and threats.


Simply put, a company’s strengths are what it is good at. Nike is great at selling sports products, McDonald’s makes food quickly and cheaply, and Ferrari makes fast, beautiful cars. When a company conducts a strengths analysis, it compiles a list of its competencies and assets. Does the company have a lot of cash on hand? This is an asset. Does the company employ highly qualified personnel? Another advantage. A company’s ability to capitalise on its strengths depends on its understanding. Nike can plan to expand its business by producing products for a sport it currently does not serve. Its expertise in sports marketing will aid in successfully launching the new product line.

Following are some examples of strengths in a SWOT analysis.

-A strong brand that is recognized and trusted by consumers
-A strong reputation for quality and value
-A wide range of products that meet the needs of a variety of customers


A company’s weaknesses are the areas in which it is deficient or lacks the capacity to perform well. Keep in mind that weaknesses are not necessarily flaws; not all businesses can excel in all areas. When a company is aware of its weaknesses, it will avoid attempting tasks for which it lacks the necessary skills or resources, or it will look for ways to improve its weaknesses before attempting something new. Weaknesses of a company are simply gaps in capabilities, which do not always need to be filled internally.

Following are some examples of weaknesses of a company in a SWOT analysis.

-A reliance on a small number of key suppliers
-A limited marketing budget
-A lack of online presence


While an organization’s internal strengths and weaknesses, opportunities and threats are always external. An opportunity is a potential situation that a business is able to capitalise on. Consider opportunities in terms of market-related occurrences. Before deciding on a course of action, it is essential to consider the entire SWOT analysis. Opportunities offer positive potential, but sometimes a company is not equipped to take advantage of them.

Below are some examples of opportunities for a company in a SWOT analysis.

-The launch of new products that appeal to a wider range of customers
-Increased marketing efforts to reach potential customers
-The development of an online sales platform


When a manager evaluates the external competitive environment, they label as a threat anything that would make it more difficult for their company to be successful. Threats to a company’s chances of success can range from an economic downturn to a competitor releasing a superior version of a product that the company also offers. A thorough threat assessment examines the external environment and identifies threats to the business to prepare for them.

Below are some examples of threats for a company in a SWOT analysis.

-The entry of new competitors into the market
-Changes in consumer preferences
-Economic downturns that impact consumer spending

How does SWOT Analysis Help Forming Business Decisions?

SWOT analysis helps determine what is likely to be successful, what might be failing, and how you can turn your weaknesses into strengths. It can help you make decisions and understand what needs to be done to succeed. It helps you to prioritize your resources and resources and to allocate those resources towards accomplishing your goal.

SWOT analysis can be used to develop your business strategy, understand how you would react to the changes in the global business environment, and ensure that your strategic direction is the best that it can be.

By knowing what you do best and your organization’s strengths, you can align your operations with those strengths and choose whether to expand or contract to reach a specific goal. It also gives you a chance to build on those strengths and create new ones by understanding your organisation’s weaknesses and how it could be better.

The Limitations of SWOT Analysis

One of the limitations of SWOT analysis is that it relies heavily on subjective assessments and opinions, which can lead to biased or incomplete analyses.

Some organisational qualities or factors may serve as both strengths and weaknesses. This is one of the most significant SWOT analysis constraints. Changing environmental rules, for instance, can be both a threat and an opportunity for a firm, in the sense that it will level the playing pitch or provide it an advantage over competitors if it is able to produce products more quickly.

Finally, SWOT analysis may not be as useful in dynamic and rapidly changing environments. As the business world continues to evolve at a fast pace, companies need to be able to adapt quickly and respond to changing circumstances. SWOT analysis may not be able to capture the speed and complexity of these changes, which could limit its usefulness in some situations. Companies may need to supplement SWOT analysis with other tools and approaches to stay agile and responsive in the face of uncertainty and disruption.

Final Words

The word SWOT analysis refers to how one can evaluate the performance, risk, and competitiveness in the internal and external environment in which they operate. A SWOT matrix should be part of the strategic planning process for even small and medium-scale businesses so they can grow their businesses to large scale as well.

Also Read: How to Apply the Iron Law of Marketing to Your Business

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Raj Maurya

Raj Maurya is the founder of Digital Gyan. He is a technical content writer on Fiverr and When not working, he plays Valorant.

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