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SWOT analysis

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What is SWOT analysis?

SWOT analysis is a strategic planning tool used to identify and evaluate an organization’s internal strengths and weaknesses, as well as external opportunities and threats. The acronym SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This framework provides a structured way to assess a company’s current position, inform decision-making, and guide strategy development.

Key takeaways

1
Holistic assessment

SWOT analysis covers both internal (strengths and weaknesses) and external (opportunities and threats) factors, offering a comprehensive view of an organisation’s environment.

2
Strategic clarity

It helps organizations understand what they do well, where they need improvement, what external trends they can exploit, and what risks they face.

3
Versatile application

SWOT can be used for organizations, projects, products, or even personal development.

4
Visual simplicity

Results are often presented in a four-quadrant matrix for easy comparison and prioritization.

Why SWOT analysis matters?

A SWOT analysis matters because it gives businesses a clear, structured view of their strengths, weaknesses, opportunities, and threats, enabling better strategic planning, informed decision-making, and improved agility to respond to changes and challenges in the market.

How to conduct a SWOT analysis

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1
Assemble a diverse team

Include representatives from different departments or stakeholders for a well-rounded perspective.

2
Identify strengths and weaknesses

Focus on internal factors such as resources, capabilities, and processes.

3
Analyze opportunities and threats

Examine external factors like market trends, competition, and regulatory changes.

4
Prioritize and strategize

Rank the most critical factors and develop strategies that align with your findings.

5
Implement and monitor

Assign responsibilities, set timelines, and regularly review and update the analysis to stay relevant.

Impact on business and planning

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Guides long-term and short-term business strategies

Identifies unique strengths to emphasize in the marketplace.

Highlights threats and weaknesses to address proactively

Directs focus and investment to high-impact areas

Impact on financial statements

Real-world examples

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Case study: Small retailer SWOT analysis

 

Strengths: Personalized customer service, unique product offerings

Weaknesses: Limited marketing budget, outdated technology

Opportunities: E-commerce expansion, local partnerships

Threats: Intense competition, changing consumer preferences

Frequently asked questions about SWOT analysis?

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To provide a structured assessment of internal and external factors affecting an organization, guiding better decision-making and strategy.
A diverse team from across the organization, sometimes including external stakeholders, for a comprehensive view.
Regularly-at least annually or whenever significant changes occur in the business environment.