What is a SWOT analysis
Also known as: SWOT matrix, strengths weaknesses opportunities threats
SWOT analysis is a planning technique that organizes, in a four quadrant matrix, a company's or project's internal strengths and weaknesses and the external environment's opportunities and threats. The acronym stands for strengths, weaknesses, opportunities and threats. Its value lies less in the lists and more in crossing the quadrants against each other.
A neighborhood language school builds its matrix. Strengths: permanent teachers and small classes. Weaknesses: an old website and no online classes. Opportunities: local companies looking for English training for their teams. Threats: cheap language apps.
Crossing the quadrants, a plan emerges: use small classes and permanent teachers (strengths) to sell packages to local companies (opportunity), with in person classes apps cannot offer (response to the threat). The website weakness becomes the first task, because that is how companies will find the school.
The four quadrants
| Origin | Example | |
|---|---|---|
| Strengths | Internal, the company controls it | Experienced team, known brand, low cost |
| Weaknesses | Internal, the company controls it | Slow processes, weak online presence |
| Opportunities | External, from the market | New demand, a competitor leaving, a change in law |
| Threats | External, from the market | New competitor, rising costs, changing habits |
Where it came from
According to Wikipedia, in 1965 three researchers at the Stanford Research Institute's long range planning service, Robert Stewart, Otis Benepe and Arnold Mitchell, wrote a report with a version of the idea called SOFT. The same year, Harvard professors published a business policy textbook with a similar analysis.
Some credit Harvard with the invention, but Wikipedia notes that this version has been called an academic urban legend. The SWOT acronym already appeared in the title of an article in 1972.
How to cross the quadrants
- Strengths with opportunities: where to attack, using what the company does well.
- Strengths with threats: how to defend with what you already have.
- Weaknesses with opportunities: what to fix so you do not miss the chance.
- Weaknesses with threats: what to avoid, because that is where the company is most exposed.
How to make a SWOT that is useful
- Define the goal first: is the analysis for a product, a market or the whole company?
- Use facts and data, not just leadership's opinion.
- Listen to customers and frontline staff, who see strengths and weaknesses leadership does not.
- Be specific: quality is not a strength; 24 hour delivery in the region is.
- Finish with actions, owners and deadlines.
Common mistakes
- Confusing an opportunity with an action: hiring salespeople is not an opportunity, it is a decision.
- Huge lists with no priorities.
- Doing the analysis once and never looking at it again.
- Stopping at the matrix, without crossing the quadrants or deciding anything.
Frequently asked questions
What is a SWOT analysis?
A planning technique that organizes internal strengths and weaknesses and external opportunities and threats in a four quadrant matrix.
What does SWOT stand for?
Strengths, weaknesses, opportunities and threats.
What is the difference between internal and external factors in SWOT?
Strengths and weaknesses are internal, under the company's control. Opportunities and threats are external, coming from the market and environment.
Who created SWOT analysis?
Its origin is debated. Wikipedia records a 1965 Stanford Research Institute report with a version called SOFT and a Harvard textbook from the same year with a similar analysis.
What should I do after the SWOT matrix?
Cross the quadrants to define where to attack, defend, fix and avoid, and turn that into actions with owners and deadlines.
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Rodrigo Fávaro
Founder of ROO3, a marketing and technology agency in São José do Rio Preto, Brazil. Builds AI products running in production (Tobia, gerar.app, Pense Mercado) and maintains the AI Benchmark, a public ranking of AI models.
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