SWOT Analysis

Analyzing a Company's Strengths, Weaknesses, Opportunities, and Threats

What is a SWOT Analysis?

A SWOT Analysis is used to study the internal and external environments of a company and is part of a company’s strategic planning process. In addition, a SWOT analysis can be done for a product, place, industry, or person. A SWOT analysis helps with both strategic planning and decision-making. SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats.

 

details of SWOT analysis

 

SWOT Analysis – Internal and External Factors

A SWOT analysis is divided into two main categories: internal factors and external factors.

 

SWOT Analysis

 

Internal:

Internal factors are the strengths and weaknesses of the company. Internal factors include:

 

External:

External factors are the opportunities and threats to the company. Changes in the external environment may be due to:

 

Conducting a SWOT Analysis

To conduct a SWOT analysis, identify the strengths, weaknesses, opportunities, and threats to your company.

 

SWOT Analysis Chart

 

Strengths:

Consider strengths from an internal and consumer perspective.

  • What advantages does your company have?
  • What unique resources that you have that others do not?
  • What is your company’s Unique Selling Proposition?
  • What positive consumer perception does your company have?
  • What low-cost resources do you have access to that others do not?

 

Weaknesses:

Consider weaknesses from an internal and consumer perspective.

  • What does your company not do well?
  • What weaknesses do consumers see in your company?
  • What factors contribute to a weaker brand image?

 

Opportunities:

Consider opportunities from an external perspective.

  • What good opportunities are available in the marketplace?
  • What are some trends that your company can capitalize on?
  • Are there any changes in technology and markets that your company can take advantage of?
  • Are there any changes in lifestyle, social patterns, etc., that your company can take advantage of?

 

Threats:

Consider threats from an external perspective.

  • What obstacles do your company face?
  • What are your competitors doing better than you?
  • Is the change in technology threatening the position of your company?
  • What threats do your weaknesses put you at risk of?
  • Do changes in lifestyle, social patterns, etc., pose a threat to your company?

 

Example of a SWOT Analysis

For example, a SWOT Analysis for McDonald’s stock can be constructed as follows:

 

Strengths:

  • McDonald’s serves customers in more countries than any other competitor in the fast-food industry
  • Significant economies of scale
  • Wide audience reach
  • McDonald’s exercises market power over suppliers and competitors
  • The most recognized brand in the fast-food industry
  • Competitive price

 

Weaknesses:

  • High employee turnover
  • Negative publicity (The perception of McDonald’s as an unhealthy food choice)
  • Not much variation in seasonal products
  • Quality inconsistency due to franchised operations
  • Focus on fast food and not healthier options for consumers

 

Opportunities:

  • Being responsive to social changes to healthier options
  • Business expansion to new parts of the world
  • Allergen-free options and gluten-free food
  • Corporate social responsibility

 

Threats:

  • More health-conscious customers
  • Threat from competitors in different countries
  • Threat of an economic downturn
  • Social change to a more balanced meal

 

Key Takeaways from a SWOT Analysis

A SWOT analysis is a simple and effective framework for identifying strengths, weaknesses, opportunities, and threats that a company faces. It is important to leverage on strengths, minimize threats, and to take advantage of available opportunities. Conducting a SWOT analysis is useful for strategic planning and for determining the objectives of a company.

 

Additional Resources