LESSON PRESENTATION:

What is a SWOT analysis?

SWOT is an acronym for strengths, weaknesses, opportunities and threats.

 The SWOT analysis helps you see how you stand out in the marketplace, how you can grow
as a business and where you are vulnerable.
 This easy-to-use tool also helps you identify your company’s opportunities and any threats it
faces. The process takes account of both the internal and external factors your company must
navigate.
Strengths and weaknesses are often internal to your organization, while opportunities and threats
generally relate to external factors. For this reason, the SWOT Analysis is sometimes called internal-
external analysis and the SWOT matrix is sometimes called an IE matrix.

What are the benefits of a SWOT analysis?

What makes SWOT particularly powerful is that, with a little thought, it can help you uncover
opportunities that you are well placed to exploit. By understanding the weaknesses of your business,
you can manage and eliminate threats that might otherwise catch you unaware.
STRENGTHS—make a list of your company’s internal strengths. These are any competitive
advantage, skill, proficiency, experience, talent or other internal factor that improves your company’s
position in the marketplace and can't be easily copied.
Examples include: 
solid financing
a superior brand
valuable intellectual property
superior technology
modern equipment and/or machinery
a well-trained sales team
low staff turnover
management expertise
operational efficiency
high customer retention
good supplier relationships
Consider your strengths from both an internal perspective, and from the point of view of your
customers and people in your market.
Also, if you're having any difficulty identifying strengths, try writing down a list of your organization's
characteristics. Some of these will hopefully be strengths.
When looking at your strengths, think about them in relation to your competitors. For example, if all of
your competitors provide high quality products, then a high-quality production process is not a
strength in your organization's market, it's a necessity.
WEAKNESSES—these are the factors that reduce your company’s ability to achieve its objectives.
Examples include:
unreliable suppliers
outdated equipment and/or machinery
insufficient marketing efforts
lack of financing
management weaknesses
gaps in expertise
Again, consider this from an internal and external basis: Do other people seem to perceive
weaknesses that you don't see? Are your competitors doing any better than you?
Be as honest as you can when identifying these deficiencies. It's best to be realistic now and face any
unpleasant truths as soon as possible. Ignoring weaknesses means you can’t make decisions that
will strengthen your company.
OPPORTUNITIES—Opportunities are external factors that allow your business to grow and be more
profitable.
Examples include:
new potential markets
innovations
technological advances
consumer trends
support from governments, the community or business partners
Opportunities should reference demand for your products and services or development potential.
THREATS—Threats are external obstacles your business must overcome.
Examples include:
a declining economy
a consumer shift to other products
technological change
a labour shortage
community opposition
legal or regulatory changes
It’s often useful to take a close look at your competitors’ strengths to identify external threats to your
company. Again, be as honest as possible.
What is a SWOT analysis used for?
A SWOT analysis will position you to seize opportunities and prepare effective strategies. Getting a
clear and realistic view of your internal environment will help you identify ways to better satisfy clients,
achieve your objectives and strengthen weaker areas that have an impact on your performance.
Analyzing your external environment help you prepare for opportunities (e.g., changing
demographics, announcement of a new residential development in the area, new trade agreement)
and threats (e.g., new technologies, changing exchange rates, loss of a major employer in the
community, new trade agreement) that will affect your business in coming years.

How to Conduct a SWOT Analysis for Your Business Plan

In order to plan to seize business opportunities and sidestep potential threats, you start by conducting
a SWOT (strengths, weaknesses, opportunities, threats) analysis. A SWOT analysis helps you
analyze your company’s capabilities against the realities of your business environment so you can
direct your business toward areas where your capabilities are strong and your opportunities are great.
To conduct a SWOT analysis, follow these steps:
1. List your company’s strengths and weaknesses and its opportunities and threats.
2. Divide your strengths into two groups:
 o Those that can help you take advantage of opportunities facing your business
o Those that can help you head off potential threats
3. Divide your weaknesses into two groups:
o Those that require improvement before you can take advantage of opportunities
o Those that you need to completely and quickly overhaul and convert into strengths in
order to avert potential threats to your business
4. Use your lists as you make decisions that contribute to your business plan.
5. Develop strategies and actions for capitalizing on opportunities and create plans for
addressing threats and weaknesses that could threaten the future of your business.

Why is a SWOT analysis important?

A SWOT analysis can help you improve processes and plan for growth. While similar to a competitive
analysis, it differs in that it evaluates both internal and external factors. Analyzing key areas around
these opportunities and threats will equip you with the insights to set your team up for success. 

A SWOT analysis isn’t only useful for organizations. With a personal SWOT analysis, you can
examine areas of your life that could benefit from improvement, from your leadership style to your
communication skills. However you choose to use it, a SWOT analysis is important for these three
reasons. 

1. Identifies areas of opportunity

One of the biggest benefits of conducting an analysis is to determine opportunities for growth. It’s a
great starting point for startups and teams that know they want to improve but aren’t exactly sure how
to get started. 
Opportunities can come from many different avenues, like external factors such as diversifying your
products for competitive advantage or internal factors like improving your team’s workflow. Either
way, capitalizing on opportunities is an excellent way to grow as a team.

2. Identifies areas that could be improved

Improving existing projects is another foolproof way to continue growing. Identifying weaknesses and
threats during a SWOT analysis can pave the way to a better business strategy.
Ultimately, learning from your mistakes is the best way to excel. Once you find areas that can be
streamlined, you can work with team members to brainstorm an action plan. This will mean using
what you know works and building off of your company’s strengths. 

3. Identifies areas that could be at risk

Whether you have a risk register in place or not, it’s always crucial to identify risks before they
become a cause for concern. A SWOT analysis can help you stay on top of any actionable items that
may play a part in your risk decision-making process. 
It may be beneficial to pair your SWOT analysis with a PEST analysis which examines external
solutions such as political, economic, social, and technological factors—all of which can help you
identify potential risks ahead of time.
Example SWOT analysis

SUMMARY
 A SWOT analysis is a compilation of your company's strengths, weaknesses, opportunities
and threats.
 The primary objective of a SWOT analysis is to help organizations develop a full awareness of
all the factors involved in making a business decision.
 Perform a SWOT analysis before you commit to any sort of company action, whether you are
exploring new initiatives, revamping internal policies, considering opportunities to pivot or
altering a plan midway through its execution.
 Use your SWOT analysis to discover recommendations and strategies, with a focus on
leveraging strengths and opportunities to overcome weaknesses and threats.
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