SWOT stands for Strengths, Weaknesses, Opportunities and Threats, and a SWOT analysis examines these factors for a given business, project, or personal objective. The idea is to define an objective and then use the analysis to determine what internal and external factors may support or hinder that objective. Strengths and weaknesses represent the internal factors affecting an individual or organization, while opportunities and threats constitute external, environmental factors. A SWOT analysis helps to measure risks and rewards while also identifying the key factors related to accomplishing the stated objective. If done effectively, a SWOT analysis should lead to a strategy for dealing with negative factors while maximizing strengths and opportunities. The more precise your SWOT analysis, the easier it will be to create an action plan for accomplishing your objective.
A SWOT analysis can be used as part of business planning, market analysis, project management, organizational change, individual development or any situation requiring strategic planning to reach an objective. This broader external analysis may be relevant depending on the size of the business and type or scope of project under consideration, but a simple SWOT analysis can be helpful for any size of business. And since the analysis considers both internal and external factors, it’s an opportunity for businesses to take an honest look at what they can handle and which strategies or operations need to change.
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