An overview of the SWOT Analysis
How self-aware is your business? How often does your organization take a good hard look at itself — not counting team selfies? A SWOT analysis is a simple but powerful tool that gives you a strong foundation before you create your new business strategy.
This article will dive into the key elements of a SWOT analysis, explaining the key elements and how they work as a whole. By the end, you'll have the know-how and the ready-to-roll SWOT analysis templates to create a roadmap that improves the focus of your strategy.
Get started by exploring four easy steps:
- What is a SWOT analysis?
- A Working Example of a SWOT Analysis
- Internal and external factors: How to go next-level with your SWOT analysis
- Free SWOT analysis templates
What is a SWOT analysis?
A SWOT analysis is a strategic planning tool that helps a business identify the internal strengths, weaknesses, and external opportunities and threats that can impact the organization's growth initiatives and pursuit of its goals.
This practice offers a structured approach to evaluate what your business does best and how it can do even better. With the standard SWOT analysis template, you have a grid that considers the four key elements.
Your SWOT analysis can be a digital document, a poster, written on a whiteboard, or even a restaurant napkin. Whatever your preference, the analysis is a valuable and effective tool to develop an insightful strategy.
SWOT analyses work best when you set up a group brainstorm where everyone makes suggestions for each category. When you engage employees and strategize everyone’s roles from the very beginning, they will become more invested in the outcome.
You can learn more about the benefits in our post on the uses and benefits of SWOT analysis.
A Working Example of a SWOT Analysis
So, how does a SWOT analysis work?
It’s best to explain this analysis based on a popular brand we covered in our Strategy Factory case studies — the tasty fast-food chain Pizza Hut.
Pizza Hut is a self-aware brand that is constantly reinventing itself. Let’s imagine that the C-suite plans to evolve to succeed in the digital age. Their game-changing idea is to introduce 'Hutbux' — a new digital reward currency that customers can use to get exclusive discounts and Pizza Hut NFTs.
Here’s what the SWOT analysis for this project might look like:
The Strengths section focuses on the aspects of your company that help it stand out from the pack. Consider its key selling points, achievements, and reputation. What does your business do best or better than anyone else? What qualities do your customers love about your brand?
For example, Pizza Hut’s strengths are:
- Strong brand reputation: Pizza Hut is one of the world’s most recognizable pizza brands with a high market share.
- History of innovation: Pizza Hut has successfully released numerous innovative products. Its customers expect great ideas and memorable meals from the company.
- Global presence: Pizza Hut is internationally recognized, owning popular restaurants in over 110 countries as of 2020.
- Excellent customer relations: Pizza Hut puts a lot of stock in customer engagement as the company runs focus groups and responds to customer feedback.
The Weaknesses section considers the sub-optimal aspects of the business that the business must improve to maintain its competitive edge. Don’t flinch when listing weaknesses — sugar-coating doesn’t help your business or your strategy. We know you like to think your business is the bomb, but it’s time for a walk up honesty street. What could you improve? What’s holding you back from your goals?
For example, check out Pizza Hut’s weaknesses:
- Lack of expertise: Producing a digital currency will require skilled programmers to build and maintain the overall system and related apps. This venture won’t be cheap or easy, unless there are coding prodigies are rolling the dough in the kitchen.
- Poor communication: In a franchise business like Pizza Hut, you have a lot of employees. It's vital to bring everyone on board with the big picture, or else you'll hit resistance. If people don't understand the purpose or feel connected to the vision, they will be unwilling to make changes or work together.
The Opportunities section of the SWOT analysis considers the external factors that could potentially offer the company a competitive advantage.
For example, check out Pizza Hut's opportunities:
- First mover advantage: As the first to release this kind of product or service in the fast-food market, Pizza Hut can establish strong recognition and loyalty among consumers before a rival has a chance to launch similar products.
- Secondary income stream: A digital currency can generate income through the sale of NFTs, collectibles, and promotional tie-ins with other brands.
- ‘Meme’ Culture: Digital currencies can generate enormous meme appeal and fan followings. With clever marketing, Pizza Hut could tap into that cultural upswell and grab a huge slice of the market (see what we did there?).
The Threats section of the SWOT analysis considers the external factors that could potentially harm the company or derail the pursuit of its goals. Who or what is your company worried about right now? Are there any issues that could ruin your plans as bad as receiving a Hawaiian pizza when you ordered a double pepperoni?
For the most part, threats will have an external focus, but you can include some internal elements as well — it depends on the nature of the project or business and the nature of the threats themselves.
For example, check out Pizza Hut’s threats:
- Public perception: The public and media are divided on the subject of digital currencies from legitimacy to environmental issues. This new venture may be seen as a controversial move, resulting in negative press. Cancel culture is a branding nightmare.
- Lack of consumer trust: People enjoy convenient, home delivery options. But, with online scams and fraud, some people are wary of anything that might risk their money. Given the impact of the pandemic and the threat of recession, a risky foray into the crypto world might lose the trust of people.
- Novelty and complexity: Digital currencies are still in their infancy. As a technical concept that is far removed from anything the company has done before, it may be difficult to train and educate staff on how exactly a Pizza Hut digital currency is expected to work.
Internal and external factors: How to go next-level with your SWOT analysis
So, you’ve done your basic SWOT analysis — you’re equipped to build a business strategy now. But, if you want to give your team more juice to run on, there is an additional quick-and-easy step that will help you figure out how much control you have over your current problems and opportunities.
To do this, categorize the four elements of the SWOT analysis into internal and external factors. (Fun fact: A SWOT analysis is also known as an Internal-External Analysis or IE matrix).
Here’s how this shakes out:
- Strengths are internal and positive
- Weaknesses are internal and negative
- Opportunities are external and positive
- Threats are external and negative
Imagine you have communication issues across remote teams. On the surface, that’s a weakness. The good news is, you have the power to change this problem, which makes it an internal factor.
Another example is the case of new emerging competitors. Unless you’ve cornered an untapped super-niche — like heart monitor software for anxious hamsters — you’re bound to have some competition. When they appear with a copycat product (right down to the fluffy mascot), that’s a threat. But, as it’s out of your control, it’s an external factor.
As you group your internal and external factors, you can create pairs that act as starting points for your strategy planning:
- Strength-opportunity strategies: Which of your company’s strengths can you use to make the most impact on your opportunities?
- Weakness-opportunity strategies: What meaningful actions can you take to minimize your company’s weaknesses so you can take advantage of the opportunities?
- Strength-threat strategies: Which of your company’s strengths can you use to minimize the threats?
- Weakness-threat strategies: How can you minimize your company’s weaknesses to avoid the threats?
Download our free SWOT matrix to take your SWOT analysis to the next level.
This matrix is a flexible tool, so you can combine the four elements however you see fit. No rule states you can't bypass a threat by capitalizing on an opportunity.
Whichever way you combine the elements, the objective of taking a SWOT analysis to this next level is to encourage thought and innovation. Your team can use this technique to find new ways to do things better.
Free SWOT analysis templates
We’ve all sat down to start a project and found ourselves bogged down in the laborious process of “preparing to begin.” The traditional approach to a SWOT analysis involves legacy software that wastes your time and saps your motivation.
Why struggle to build your own personal SWOT analysis framework when we’ve done it for you?
Our free simple SWOT analysis templates give you a starting point for your finished SWOT matrix. This prebuilt Excel file is a fast, easy-to-use project management tool ready to kickstart your team brainstorming sessions. Anyone can use them, from sole traders to small businesses to multinational enterprises intent on world domination (mwahaha).
Take a peek at the examples of our templates that are included when you use our strategy execution software.
SWOT analysis template for Excel
Fed up fiddling with rows and columns? Fumbling over formulas? You can save your frustrations when you stop wasting hours building custom SWOT analyses in Microsoft Excel. We’ve made things super simple with these time-saving, straightforward SWOT analysis templates for Excel
Are you ready to improve your strategic planning? Download our free ready-to-go SWOT analysis template to kickstart your business strategy.
What are your weaknesses?
9 out of 10 businesses will fail to reach their strategic goals. A big reason for that flop rate is that many businesses don’t do the groundwork before diving into new markets or launching a new product. When you involve your people in strategy planning, you’ll get more information to help guide your strategy. A SWOT analysis is the perfect starting point.
This analysis will drive engagement across the organization as you invite all team members to take part in helping the company set realistic, achievable goals. As you provide more context to the vision, you’ll improve employee well-being, which motivates people to generate their best work.
You can accelerate this process when you use a SWOT analysis template. At Cascade, our library of resources includes SWOT diagrams, KPI reporting templates, and change management strategy guides — all designed to help you achieve your business goals.