Business and Marketing

What is SWOT Analysis? How does it Help Forming Business Decisions?

SWOT analysis is a tool for auditing an organisation and its environment. It is the first planning stage and helps marketers focus on key issues. SWOT stands for “strengths, weaknesses, opportunities, and threats.”

SWOT analysis is a simple but powerful strategic planning tool for understanding your business’s strengths and weaknesses and identifying the opportunities and threats you face. It helps companies focus on their strengths and identify and overcome weaknesses. It also lets you see the opportunities, take advantage of them, and see the threats that could hurt your business and find ways to deal with them.

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

swot analysis

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 what your company’s strengths, weaknesses, opportunities, and threats are.


Simply put, a company’s strengths are what it is good at. Nike is great at selling sports products, McDonald’s is great at making food quickly and cheaply, and Ferrari is great at making 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

Although a SWOT analysis can identify significant factors and situations affecting a company, it is only as effective as the analyst conducting it. SWOT can generate a good evaluation of a company’s internal and external environments, but it is more likely to overlook key issues because it is difficult to identify or imagine everything that could, for instance, be a threat to the company.

Final Words

It could be said that SWOT analysis provides a framework to scan the internal and external business environment and factors that make a company’s position stronger or weaker as compared to market rivals. A SWOT matrix should be the part of strategic planning process for even small and medium scale businesses so they can grow their businesses to large scale as well.

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