What Is SWOT Analysis?

SWOT Analysis is a simple yet powerful framework used to assess a business or project by breaking it into four components:

👉 Strengths (Internal)
👉 Weaknesses (Internal)
👉 Opportunities (External)
👉 Threats (External)

It helps teams understand their current position and make informed strategic decisions.

Why SWOT Analysis Matters

• Gives an easy, structured view of the business
• Highlights what to build on vs what to fix
• Identifies external growth opportunities
• Surfaces risks and threats early
• Useful for quick diagnosis, planning, and decision-making
• Often used at the start of strategy cases

SWOT forces clarity before action.

The SWOT Breakdown (Core Structure)

1. Strengths (Internal Factors)

What gives the company an advantage?

Questions to ask:

• What do we do better than competitors?
• What are our unique capabilities?
• What assets/resources are valuable?
• What do customers love about us?
• Where do we outperform financially?

Examples:

• Strong brand loyalty
• Patented technology
• Low-cost manufacturing
• Large distribution network
• High customer satisfaction

Strengths support competitive advantage.

2. Weaknesses (Internal Factors)

What internal limitations hold the company back?

Questions to ask:

• Where are we inefficient?
• What capabilities are missing?
• What complaints do customers have?
• Where are competitors better?
• What processes are outdated?

Examples:

• Poor retention
• Weak product differentiation
• High operational cost
• Limited geographic presence
• Talent or capability gaps

Weaknesses are areas to improve or mitigate.

3. Opportunities (External Factors)

Which external trends or conditions can the company leverage?

Questions to ask:

• Which new markets can we enter?
• Are consumer needs changing?
• Are there technology trends we can use?
• Are competitors exiting markets?
• Are there partnership/acquisition opportunities?

Examples:

• Growing demand in Tier-2 cities
• Rising income levels
• Untapped customer segments
• Digital adoption
• Under-served niches

Opportunities fuel future growth.

4. Threats (External Factors)

Which external forces could harm the business?

Questions to ask:

• Are new competitors entering?
• Is the industry slowing down?
• Are regulations changing?
• Is consumer behavior shifting?
• Are supply chain risks increasing?

Examples:

• Aggressive new entrants
• Economic slowdown
• Substitutes gaining popularity
• Raw material price hikes
• Regulatory restrictions

Threats help in planning defensive strategies.

How to Apply SWOT Analysis (Step-by-Step)

1. Gather internal data

Financials, customer feedback, operational metrics, capabilities.

2. Map strengths and weaknesses

Be honest and objective — avoid bias.

3. Analyze external environment

Use PESTEL, market research, and competitor insights.

4. Map opportunities & threats

Focus on real and impactful external factors.

5. Prioritize the most important points

Not all SWOT items matter equally — highlight the top 3–4.

6. Develop strategy from SWOT

Use the four strategy types:

• S–O Strategy: Use strengths to capture opportunities
• W–O Strategy: Fix weaknesses to capture opportunities
• S–T Strategy: Use strengths to defend against threats
• W–T Strategy: Minimize weaknesses to reduce risk

SWOT → clear strategic decisions.

Mini Example: SWOT Case

Company: Online grocery delivery startup

Strengths:

• Fast delivery (30 minutes)
• Strong app experience

Weaknesses:

• High delivery cost
• Limited warehouse capacity

Opportunities:

• Rising adoption in Tier-2 cities
• Partnerships with FMCG brands

Threats:

• Competitors offering heavy discounts
• Fuel price volatility

SWOT-Based Strategy:

• Use strong delivery capability (S) to expand same-day service (O)
• Reduce delivery cost (W) by optimizing routes (T)

Common Mistakes to Avoid

• Creating a long, irrelevant list
• Mixing internal and external factors
• Being too generic (“competition is strong”)
• Not linking SWOT to actual recommendations
• Treating SWOT as standalone (should be used with 3Cs, PESTEL, etc.)

A useful SWOT is short, specific, and tied to strategy.

Where SWOT Is Used

• Strategy planning
• Business diagnosis
• Product launches
• Market entry
• Startup pitch decks
• Competitive analysis
• Case interviews

SWOT is simple — but powerful when done right.