Running a business is no mean feat. There is an endless list of tasks that need to be done. Managing finances, bookkeeping, managing personnel, production, purchasing, marketing, customer service, you name it.

With all these activities demanding your attention, you can easily get overwhelmed and forget about the big picture.

Yet if you want your business to remain successful in the long term, you need to periodically look at things from a broader perspective. You need to look at how your business is performing at the moment and how you expect it to perform in future. This is where a SWOT analysis comes in.

WHAT IS A SWOT ANALYSIS?

A SWOT analysis is a simple yet powerful strategic planning model that helps both new and existing businesses to come up with a business strategy. The Term SWOT is an acronym for strengths, weakness, opportunities and threats.

The SWOT analysis allows a business to look at its future potential by identifying what the business is doing well and where it needs to improve, both from an internal and external perspective. It also allows the business to identify and plan for changes that might impact the business’s future wellbeing.

Strengths and weakness provide an internal look into the company. They represent factors that are within the control of the company, things that you have the ability to change.

Examples of factors that might fall under strengths and weaknesses might include things such as your product, your business model, your team, your location, patents and intellectual property, and so on. Strengths and weakness also focus mostly on the present. They look at what you are doing now and its impact on your business’ wellbeing.

Opportunities and threats, on the other hand, are external. They are things happening within the market and the larger business environment. There is nothing you can do to change them. You can only react to them by either taking advantage of opportunities or protecting your business against threats.

Examples of factors that might fall under opportunities and threats include your competitors, government regulation, market trends, prices of raw materials, technological change, and so on.

Unlike strengths and weakness, opportunities and threats have their focus on the future. They look at things that might happen in future with a significant impact on your business.

SWOT analyses can be used to gain greater insights about the entire organization or individual projects within the company. For instance, you can use a SWOT analysis to evaluate the potential of a planned content project, an upcoming advertising campaign, a new product, and so on.

SWOT analyses should typically be conducted at the beginning of a strategic planning process or when the organization/project wants to refresh its strategy. If possible, the entire leadership team should be involved in the SWOT analysis in order to have a comprehensive look into the company and the competitive environment and business landscape.

BREAKING DOWN THE SWOT ANALYSIS PROCESS

While we know what SWOT stands for, let’s take a more detailed look into each element of a SWOT analysis and how to perform the analysis on your organization or project.

Strengths

Strengths refer to things that your company does well. They are the internal, positive attributes that help your business stand out from the competition.

They include internal resources and tangible assets that help the business achieve its goals.

Some of the questions you might ask yourself to help you identify your organization’s strengths include:

  • What are we good at? Is it customer relationships? Are we good at coming up with innovations?
  • Which of our business processes work well?
  • What is our biggest source of financial growth? Is it a certain product? A certain customer segment?
  • What are our competitive advantages over our competition?
  • What do our customers love about our products?
  • Where does majority of our customer growth come from?
  • What resources do we have access to that our competitors do not?
  • What is our unique selling proposition?
  • What are our brand’s most positive attributes?
  • What physical assets do we have? Is it equipment, cash, technology, customers, or patents?

Weaknesses

Weaknesses are the negative factors that make it harder for your business to achieve its goals.

They include things that your company lacks, resource limitations, things that your competitors do better than you, an unclear unique proposition, and so on.

Weaknesses are things you need to improve in order for your business to remain competitive. Some questions you might ask yourself to help you identify your organization’s weaknesses include:

  • What are we not good at?
  • What does our business need in order to be competitive?
  • Do we have any skill gaps in our team?
  • Which business processes do we need to improve?
  • Are there any tangible assets, such as money or equipment, that our business is lacking?
  • Is our location the most suitable in order for us to achieve success?
  • What is our biggest financial weakness?
  • What do our customers complain about the most? Where do they say they would like to see us improve?
  • Why do customers stop buying from us?
  • What are the biggest bottlenecks in our sales funnel?

Opportunities

Opportunities are the factors within your business environment that, if taken advantage of, can lead to improved business performance.

Some questions you might ask yourself to help you identify your organization’s potential opportunities include:

  • Are there trends in the market that might encourage customers to buy more of the type of products we are selling?
  • Are there any forthcoming changes to regulations that might make it easier for our organization to do business?
  • Is there an upcoming event that our organization can take advantage of to improve its business?
  • What is the biggest opportunity we can take advantage of to grow the business? Is it introducing a new product? Going after a new market?
  • Are there any upcoming technological innovations that will make it easier for us to do business?
  • Are there some tools or resources that we are not taking advantage of or that we are not using to full capacity?
  • What changes can we introduce to our products and processes in order to improve our business performance?
  • In what way can we make our advertising resonate better with our target customers?
  • Are there emerging forms of advertising that we can take advantage of?
  • Do we expect any positive change within your external business relationships (vendors, partners and customers) that might have a positive impact on our business?

Threats

Threats refer to any external factors that might make it difficult for you to do business or even threaten the existence of your business.

Threats include things like emerging competitors, changing government regulations, changing customer attitudes towards your company or industry, negative media coverage, and so on.

Understanding any potential threats to your business helps you to come up with contingency plans for dealing with the threats in case they occur, before they occur.

Some questions you might ask yourself to help you identify your organization’s potential threats include:

  • Are there any potential competitors that might enter the market?
  • Are there market trends that might negatively impact the business?
  • Are there any upcoming technological changes that might disrupt our business model or even our entire industry?
  • Are there any upcoming regulatory changes that might negatively impact our business or our industry?
  • Will we be able to continue getting your raw materials from your suppliers at favorable prices?
  • Are there any changes to consumer behavior and attitudes that might have a negative impact on our business?
  • Are there economic changes, such as a recession, that might make it difficult for your customers to continue buying your products?
  • Are your employees satisfied? Is there anything that might lead to a high turnover within your organization?
  • Is there a risk of political changes, such as war or instability, that might affect your ability to do business?
  • Is there anything you are doing within your business that could potentially fail?

The questions listed in the above section are just a way to help you dig deep into your organization and business environment and identify your business’ strengths and weaknesses and any potential opportunities and threats.

Of course, the questions might change depending on your business and industry.

To make it easier for you to get started with your SWOT analyses, below are three real life examples of SWOT analyses from some of the biggest companies in the world. Going through them will make it easier for you to come up with ideas that might be more relevant to your business.

EXAMPLE ONE: NIKE

Nike is an American multinational corporation that focuses on the design, manufacture and sale of sports and leisure footwear and apparel. It is also the biggest sports shoe brand in the world.

Below is Nike’s SWOT analysis for 2018.

Strengths

Strong brand image – Nike is the biggest brand in the sports footwear and apparel category. Its brand is associated with ethical and customer centric business, high quality and stylish products and innovation. Nike’s is the most valuable brand in the sports apparel industry, with a brand value of 28 billion.

Excellent marketing capabilities – Nike has an innovative, well-crafted marketing strategy, coupled with a big marketing budget. The company spent $3.3 billion on marketing in 2017. This allows Nike to remain ahead of the competition.

Financial strength – Nike has a lot of financial clout compared to its competitors. The company grew its revenue to $34.4 billion in 2017, representing a 6% increase from the previous year.

Global presence – Nike has a presence all over the world, with 790 stores and factories outside the United States.

Large distribution network – Nike has a wide and well managed distribution network, working with over 500 suppliers across 42 countries.

Weaknesses

Overdependence on US Market – Despite its wide global presence, Nike is still very dependent on its US market, which accounted for about 46% of its revenue in 2017.

Increasing expenses – The increasing competition in the sports footwear and apparel market has resulted in an increase in Nike’s marketing expenses.

Opportunities

Digitization – For Nike to retain its position as the biggest sports wear brand, it needs to invest even further in digital marketing and ecommerce. As more and more people continue shifting to online shopping, investing in these areas can significantly increase the company’s growth and profits.

Acquisitions – The company also has potential to grow even faster by acquiring companies in related fields.

Global expansion – Nike’s ecommerce websites are currently available in 45 countries only. The company has room to grow even further by expanding to even more countries, particular in the Asian region, which is one of its fastest growing markets.

Changing customer attitude – More and more people are becoming conscious of their health and trying to adopt healthier lifestyles. This means that the global market for sports and lifestyle brands will grow, presenting an opportunity for Nike to further grow its sales.

Manufacturing revolution – The manufacturing revolution has brought with it an increasing focus on 3D printing and new, innovative materials. This presents an opportunity for Nike since it has the potential to improve the manufacturing and production process.

Threats

Currency fluctuations – Being a global company, the fluctuation of foreign currencies against the US dollar negatively affects Nike’s earnings.

Increased competition – There is increasing competition from other sportswear brands, such as Adidas and Under Armour. This has forced Nike to invest more heavily in marketing and operations.

Growing marketing and HR expenses – The increasing competition and the continued growth of the company have increased its marketing and HR related costs.

Legal issues – There are increasing industry ethics and standards that the company has to comply with. Compliance to these standards can increase costs for the company, while failure to comply can hurt the company’s reputation.

EXAMPLE TWO: STARBUCKS

Starbucks is the world’s largest coffee chain, with a presence in 75 countries and a revenue of $22 billion in 2017.

The company operates franchised stores situated in high-traffic, high-visibility locations. Below is Starbucks SWOT analysis for 2018.

Strengths

Superior financial performance – Starbucks experienced superior financial performance in 2017 as a result of great operating efficiency and growth, both financial and physical. The superior financial performance gives investors confidence in the company and allows it to make speculative investments.

Fast growing presence in China – Starbuck’s store network in China has grown very rapidly, from 570 stores in 2011 to 2936 stores in 2017, which are more than those of all its competitors combined. With China being the second fastest growing market, Starbucks is well positioned to conquer the Chinese market.

Strong brand image – Starbucks has a strong brand image that is associated with premium products, ethical business and a customer centric focus.

Premium quality coffee – The company goes to great lengths to get the best coffee beans from the best coffee producers, which allows Starbucks to provide coffee beverages that are way better than its competitors.

Customer loyalty – Starbucks has built a strong brand image, which has in turn led to a very high level of customer loyalty.

Weaknesses

Little focus on marketing – Since its founding, Starbucks relied on publicity and work of mouth marketing rather than huge marketing campaigns. While it has recently started focusing more on marketing, its marketing expenditure remains low compared to competitors.

High overhead – Starbucks’s high operating expenses limit its profitability. The company spent more than 83% of its entire revenue in 2017 on operating expenses.

Premium pricing – Due to its premium pricing strategy, Starbucks has a limited customer base.

Opportunities

Digital marketing – Digital technology provides an exciting opportunity for Starbucks to engage with customers and market the brand even better. By taking advantage of digital technology and AI, Starbucks can engage better and establish a deeper connection with customers, leading to increased customer satisfaction.

Growing Asian market – The rapidly growing Asian markets present a lot of opportunity for Starbucks. The brand is investing in capturing huge portions of the Chinese and Indian markets.

Mobile technology – Smartphone penetration is increasing around the world and more and more people are depending on their phones for shopping and payments. Incorporating the use of mobile apps can lead to increased revenue and profits for the brand.

Acquisitions and partnerships – Acquisition of smaller food and beverage brands and partnerships with other brands also presents an opportunity for Starbucks to grow even faster.

Threats

Increasing competition – There has been increasing competition in the beverage industry. Starbucks also faces competition from other fast food brands that are do not focus exclusively on beverages. This has led to Starbucks increasing its marketing expenditure.

Increasing overhead costs – Starbucks increasing operating costs are resulting in a decline in the company’s income.

Changing customer trends – People are becoming more aware of health concerns and are looking for healthier beverages. This is a threat to beverage companies like Starbucks since they might have to change their menu to incorporate the new customer preferences.

Regulatory pressure – Businesses with an international presence are subjected to higher legal and regulatory pressures, which lead to compliance expenses and difficulty in international expansion.

EXAMPLE THREE: FACEBOOK

Facebook is the world’s largest social media platform. What started as a college project now enjoys over 2 billion users and is worth an estimated $138 billion.

Below is Facebook’s SWOT analysis for 2018.

Strengths

Leading social media network – Facebook is the leading social media network, popular among individual users, businesses and other groups. Facebook keeps the platform engaging and attractive for users by introducing various features to the platform.

High number of users – Facebook has over 2.3 billion users, which is more than a third of the world’s entire population. This huge number of users gives Facebook a very significant competitive advantage over its competitors.

One of the leading online advertising businesses – While Facebook falls behind companies like Google when it comes to online advertising, it is still one of the leaders in this area. The company generated a revenue of close to $40 billion from online advertising in 2017.

Owns multiple platforms – In addition to the Facebook platform, Facebook Inc. also owns several other social media platforms, including Instagram, WhatsApp, Messenger and Oculus. This gives the company reach an even wider reach.

Excellent human resource management – Facebook is one of the best companies to work for. It pays its staff well and has policies that provide its staff with numerous opportunities for growth. This has helped Facebook attract some of the best talent in the world.

Research and development – To keep its platform attractive and engaging for users and remain technologically ahead of its competitors, Facebook invests heavily in research and development. In 2017, Facebook spent about $7.8 billion in research and development.

Weaknesses

User privacy concerns – Lately, Facebook has been under a lot of fire due to its user data policies. This has led to a decline in Facebook’s popularity, resulting in the company missing some of its revenue targets.

Tainted reputation – In addition to user privacy concerns, Facebook’s reputation has also been tainted by concerns over fake news and breeches like the Cambridge Analytica scandal.

Management issues – Most of Facebook’s problems, including the user privacy concerned, are directly linked to the company’s management problem.

Opportunities

Diversification – Through its other platforms, Facebook has the opportunity to diversify its business and increase its sources of revenue.

Acquisitions – Already, Facebook has made several acquisitions. The company still has the potential to increase its revenue by acquiring even more technology startups.

New user segments – Facebook user base mostly comprises of young to middle age people. By targeting older users and adding extra features that make the platform attractive to businesses and institutions, Facebook can tap into additional user segments and increase its number of users and revenue.

Threats

Competition – Facebook is facing a lot of competition from other tech companies such as Google, Amazon, Apple and Microsoft.

Regulations – Due to the user privacy concerns and the Cambridge Analytica scandal, Facebook has been forced by governments to become more accountable and transparent.

Operational costs – Facebook growth has led to an increase in its operational costs, mostly due to the increased demand for data centers and technical infrastructure.

WRAPPING UP

A SWOT analysis is a useful tool for evaluating your business’s current performance and its future potential.

By now, with the help of the examples provided above, you should be able to conduct a SWOT analysis for your business or project.

Remember that the SWOT analysis is a strategic planning model. This means that after you are done conducting the SWOT analysis, you should use it to come up with a strategy for your business.

To do this, ask yourself how you can capitalize on your strengths, how to improve on your weaknesses, how to take advantage of your opportunities and how to protect yourself from threats.

SWOT Analysis Examples

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