How to Perform SWOT Analysis

How to Do a SWOT Analysis – Personal and Business – Examples

How to conduct a detailed SWOT analysis for businesses has become a recurring question among business owners. This will not be unconnected with the fact that a SWOT analysis brings objectivity to the table in the examination of how well a business is performing.

By performing a SWOT analysis of any business venture, an attempt is made at examining the performance of the business through objective lenses in order to know how to improve and build upon its successes (in the event that the analysis comes out positive) or to re-strategize through the application of helpful strategies (when the analysis shows negative signs).

But what does the acronym “SWOT” represent? It simply represents the four cardinal standards of measurement of a business’ overall performance which are its Strength, Weakness, Opportunities, and Threats. These four constitute the standard against which vital data gathered from a business are measured. By carrying out the analysis, critical insights regarding key growth indices related to the performance of a business venture are exposed.

What SWOT Represents – 4 Steps of SWOT Analysis

What is a SWOT analysis? Why do you need to carry out a SWOT analysis

The SWOT standard of measurement is split into two groups. These two have both internal and external implications for any business. The “Strengths” and “Weakness” of a business are internal conditions or factors that examine how the internal dynamics of a business either inhibit its growth or encourage it. On the other hand, the “Opportunities” and “Threats” are mainly external.

A SWOT analysis usually makes use of four diagrams, each containing one of the four cardinal tools for measurement of a business’ viability; the Strength, Weakness, Opportunity and Threat.

  1. The Strength

This measures the high points, or the advantages available to the business venture. This is where every positive aspect of the business is outlined. A close examination of the business venture is carried out to ensure that every area of competence the business has is brought to the fore. Some of the factors that may constitute the strength of a business include the quality of its human resources. By human resources, we mean the workforce of the business.


Important areas where their skill set would be beneficial to the growth of the business are highlighted. These are assets to the business because a highly skilled workforce will certainly result in a much more organized and well run business. Other areas of strength may include the available capital, work conditions, the competitive advantage the business has over similar businesses, the depth of its channels of distributions and many other areas.

In summarizing this factor, it is important that a careful analysis of everything that adds value to the business venture is included under the Strengths of the business.

  1. The Weakness

Every business has its area of weakness. However, it is important that the weakness of the business does not outweigh the strengths of the business. This is why the SWOT test needs to be carried out to check for areas of Weakness with the aim of adequately adjusting them. Although this is true, providing a truthful and honest appraisal of a business would help determine if such a business has a future or not. In the event that some adjustments need to be made, it becomes easy to make such adjustments to ensure that areas of weaknesses are fully exposed for necessary actions.

What Constitutes Weakness?

There are several common factors that constitute the weakness of a particular business. It is important that all these areas are captured under the Weakness factor of the business. For many businesses, inadequate funding can constitute weakness. Others include the location, the absence of an effective marketing strategy necessary for the increase in sales and patronage of the business and also any other impediment to the success and effective functioning of the business.

  1. Opportunities

This forms a major reason why the business exists in the first place. By opportunities, we mean external conditions that are highly favourable to the existence and growth of the business. These opportunities may be represented by an increasing demand for your products and services (increased sales), a huge potential for expansion, favourable economic indices, a tax break among several other related events.

Clearly stating the available opportunities your business stands to benefit from is very important. Also, having a clear vision on the road map and time factor for its achievement is necessary for evaluating the effectiveness of a business venture.

  1. Threats

The word threat always connotes a negative meaning. This is also very true in the world of business. Every business has potential threats likely to derail its existence. Although these threats might not be a present reality, they have the potential of surfacing at any time. Taking these threats into account helps to make a detailed analysis that will guide on whether a business is still viable or not. The results of the SWOT analysis greatly helps in providing a roadmap to the business venture.

What Constitutes a Threat?

There are several factors that constitute a threat. Some of these factors include an economic recession, natural disasters as earthquakes, floods, hurricanes, unfriendly government policies, and constant change in government policies. Others include hostile taxation regimes, stiff competition and double taxation among several others. Highlighting these properly will result in an objective SWOT analysis.

Steps of SWOT analysis process in Strategic Management

Having gotten all the information, it will do well to draw a diagram. This allows for easy reference and interpretation. First Draw a square, and split the square into four parts. These parts should contain each aspect of the analysis which are; the Strength, Weakness, Opportunities and Threats. Each of these should form a heading within their respective boxes, arranged according to how they are spelt.

The constituent parts of each of the four cardinal points of measurement should be added, and a proper analysis carried out. It is important to note that after the analysis, if findings reflect a higher positive outcome, then it means the business is on the right path. If not, corrections will have to be made or the business needs to be folded up.

This article has successfully answered the question on how to perform a SWOT analysis. With the information provided, it is strongly believed that a good SWOT analysis will result if carefully followed.

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