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June 9, 2019

The Comprehensive Guide to SWOT Analysis

Diagrams for Businesses

What is SWOT Analysis?

SWOT analysis is a powerful tool for charting a high-level view of your business, feature, or an entire industry's competitive landscape. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses indicate “internal” factors, controlled by the makers of the decision, and opportunities and threats are “external” factors, outside of an individual or company's control. While primarily considered a diagram for businesses, making a SWOT chart comes in handy for cases across all industries.

When you need an overview of your business, the market, or a new feature idea, SWOT analysis is exactly the framework to get you started. Maybe you want to figure out a crisis remediation or a go-to-market strategy — SWOT's for that as well. Think of it as a kind of pumped-up pro and con chart, with more features and a slicker design that helps you actually get stuff done. Best of all, SWOT can be done by anyone.

Holy cow, right?!

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(Donald 'Jared' Dunn tries to convince the characters of Silicon Valley to SWOT themselves out of a dilemma. | Source

Example SWOT Analysis

Let's say you're an e-commerce app that helps people sell clothes and accessories that's thinking about adding some sort of social feature — what would the strengths, weaknesses, opportunities and threats look like for you as a company?

Strengths Analysis

Your strengths are the things you control that give you an advantage over your competitors. Maybe your app has more users than your competitors. Maybe it has the most items listed, or the best return policy.

Identifying Weaknesses

Your weaknesses are the things you have some control over, but that put you at a disadvantage. Maybe your app is only available in English, or only available on Android devices.

Spotting Opportunities

Your opportunities are what you don't control but that you can take advantage of — like the rise of mobile e-commerce or emerging VR capabilities that could give customers a better look at clothes.

Understanding Threats

Your threats are the factors you don't control that could negatively affect you. Perhaps there's a new competitor that is rapidly capturing the 35-45 age demographic you were just starting to get a foothold in, or your biggest international shipping route is from France to England, and England just imposed new international shipping fees.

The goal of SWOT analysis is to help planning and strategy. It can be used in a myriad of settings and for a myriad of projects, but is generally most effective in the early stages before a project or venture begins. 

This exercise can take many forms, but most choose to easily arrange them in a chart or a diagram, to compare factors side-by-side. Here are two of the most common, a column arrangement and a four quadrant arrangement:

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When Should You Use a SWOT Analysis?

SWOT analysis doesn't work well in every scenario. It's a broad tool that helps categorize and break down things for further consideration. It doesn't present a clear solution or path forward — it's a descriptive tool. Let's look at some of the places where it works best:

Early Brainstorming and Planning

The SWOT process is great for early stages when you're doing exploratory work to get a feel for a new venture, new feature, new strategic plan, etc. For example, you're trying to figure out whether or not to add a social feature to your e-commerce app.

Problem-Solving

When there's no clear solution in sight and you're chasing your tail trying to solve a problem, doing a SWOT exercise can help you get a clear grasp of your positives and limitations to incise into what is the root of your problem. For example, you're not sure about the best marketing avenue for your app, so you might conduct an analysis for each of your options.

Learning the Competitive Landscape

Whether you're trying to look at your internal structure or the business landscape, SWOT can provide a great platform to get a bird's eye view of current events and how your behavior helps and hinders you, generally. For example, it's time to expand your clothing app's team, and you want to figure out an overview of your company culture to add likeminded team members.

Why SWOT Analysis is a Powerful Tool

Now that we've gone over some good use cases for SWOT analysis, let's take a quick look at what makes it an effective tool:

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It's clear that these attributes align well with its best use cases of planning and overviews. The technique's rigidity and simple, but objective framework can really clarify early questions about new ventures.

Weaknesses of SWOT Analysis

To help you understand when (not) to do a SWOT, here are some of the big negatives to the framework. 

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Remember — every form of analysis has both a down and an upside. SWOT is a good tool, it's just not perfect for every scenario. SWOT is not a good tool when you need nitty gritty detail, or when you don't have a specific idea of what you're trying to analyze. It's not going to replace more complex systems, like you would see in a postmortem analysis, because it inherently resists being a comprehensive tool for breaking down actions and processes. However, it could surely play a role in such a process. 

When you try to nail down an exact solution to a problem or figure out what your next step is, a SWOT analysis isn't going to give you enough information to take those steps on its own.

SWOT Your Way to Success

Incorporating SWOT analysis into your planning is a great way to help clarify your planning and exploratory processes. It's quick and easy to assemble, and anyone in the company should be able to do it. As a tool, it's very accessible and provides a great framework for discussions. 

Soon, you too could be staring out at a beautiful billboard filled with ideas and analysis.

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(Although hopefully you're a little more business-minded than our friends in Silicon Valley. | Source)

To find out more about Gliffy's SWOT analysis tools, or to start a SWOT chart of your own, start a free trial in Confluence or Gliffy Online.

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