How to use SWOT analysis
SWOT analysis is a tool that can help business leaders navigate their organization’s journey to success. Learn to strategically plan with SWOT analysis on edX.
By: Shelby Campbell, Edited by: Valerie Black
Published: June 20, 2025
Your team is ready for growth. What are the next best steps to ensure your organization can withstand challenges and seize opportunities? Complete a SWOT analysis to inform your strategic planning process.
Learn how to use SWOT analysis and navigate strategic business planning with business courses on edX.
What is a SWOT analysis?
A strengths, weaknesses, opportunities, and threats (SWOT) analysis is a tool that helps businesses assess the market landscape and create strategic plans for operations. Stanford University researchers developed SWOT analysis in the 1960s and 1970s to help organizations create actionable strategic plans.
This analysis framework aims to guide employees in identifying the internal and external factors affecting their organization. To perform SWOT analyses, business leaders determine which elements of their business and competition align with each SWOT characteristic. They can then create plans to capitalize on advantages and mitigate the risks.
Internal analysis: Strengths and weaknesses
The first half of the SWOT process involves internal analysis — an examination of the factors and resources within your organization's control.
Step one: Strengths
You can start the SWOT analysis process by determining your organization's strengths. Consider the following questions and answer with quantitative and qualitative strengths:
- What is working well and contributing to success?
- What advantages does my organization have over its competitors?
- What resources does our organization have at its disposal?
For example, your strengths may include a positive corporate culture that contributes to increased productivity and reduced employee turnover.
Step two: Weaknesses
The next step involves assessing how your organization can improve. To do so, consider the following questions:
- What is stopping my organization from progressing?
- What does the target audience want that our organization doesn't provide?
- What resources is my organization lacking?
For example, organizational weaknesses may include an understaffed or underfunded marketing department that can't keep up with competitors' efforts.
External analysis: Opportunities and threats
The final steps of the SWOT process involve external analyses. While your organization can't control these influences, you can prepare for them with a strategic plan.
Step three: Opportunities
The opportunities portion of the SWOT analysis involves reviewing the external influences that could benefit your organization. To determine your organization's opportunities, ask the following questions:
- What market forces can positively influence progress?
- What does our target audience want that our competitors don't provide?
- What changes in the business landscape can we use to grow?
For example, companies that gain followers from a social media trend may recognize an opportunity to retain those new customers after the trend dies down.
Step four: Threats
The SWOT process ends with an assessment of threats to your organization's growth and success. You can recognize these negative influences by asking the following questions:
- What social, political, or economic trends impede growth?
- What changes in competition negatively impact your organization?
- What shifts in the market, labor, and resources detract from our goals?
For example, your company may offer a unique product that initially dominated the market share. However, as the popularity of the product rose, more companies started offering alternatives, reducing your business's market share.
Sample SWOT analysis
Scenario: Your small business accounting firm is at a turning point — if you grow any bigger, you'll have to expand operations and hire new employees. But what is the best path forward? You and your team complete a SWOT analysis to help you develop a strategic plan.
To accurately assess your SWOT attributes, start by evaluating the stakeholders who impact your business's growth. In the above scenario, stakeholders may include clients, employees, investors, suppliers, and partners.
SWOT analyses also require an honest evaluation of your business's attributes. Think outside of financial benchmarks — What does overall success look like for your business, and what contributes to and detracts from it?
Strengths
- Highly skilled, longtime employees
- Loyal, satisfied local customer base
- Available bookkeeping services
Weaknesses
- A relatively small advertising budget compared to competitors
- Fewer accounting services than biggest competitor provides
- Higher labor costs than competitors
Opportunities
- High local brand recognition and word-of-mouth recommendations
- One of few small business accounting firms in your area
- Ability to leverage online technology can allow you to expand into new locations and work with online businesses
Threats
- A new firm in your locale investing heavily in advertising
- Fewer new small businesses in your area due to online retail and economic trends
- More online accounting and bookkeeping options taking market share that was previously local
After your SWOT analysis is complete
Once your team has completed a SWOT analysis, you can begin creating a strategic plan that mitigates threats, counters weaknesses, and capitalizes on strengths and opportunities.
In the above scenario, for example, your small business accounting firm is extremely locally successful. But you want to grow your business, which requires a fresh strategy. Using the answers to your SWOT analysis, you can devise action items for creating a path to growth:
- Adopt remote work technology
- Hire new, early-career employees
- Create an in-house training program with your most experienced employees
- Invest in advertising in your target region
- Work with a social media marketing agency
- Include customer testimonials in your marketing materials
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