Every company operates in a constantly changing environment. Technology evolves, consumer habits change, and new players emerge. To make informed decisions and build an effective strategy, it is important to honestly assess the current state of affairs.
This is where SWOT analysis comes in handy—a method that helps you see the whole picture: what the company does best, where there are gaps, what opportunities the market offers, and what you need to protect yourself from.
You may intuitively feel that things are going well, but without systematic analysis, it is difficult to understand why competitors are taking away some of your customers or what trends will help increase profits. SWOT analysis structures this information and shows what to rely on when planning.
For example, a small online store may find that its advantage in fast delivery is losing value due to the emergence of marketplaces offering same-day delivery—and adjust its strategy in a timely manner.
What is SWOT analysis?
SWOT analysis is a proven strategic planning method that helps companies and entrepreneurs understand the current situation and develop an action plan. The tool allows you to systematize information about internal business resources and the external environment.
The method is simple: specialists collect and structure data on factors that influence the company’s development. Based on this information, it becomes clear where to go next and what steps to take. Imagine looking at your business from a bird’s eye view—you see not individual problems or successes, but a complete picture of what is happening.
The history of the method began in the 1960s. Researcher Albert Humphrey was working on a large-scale project for Fortune 500 companies. The task was ambitious—to understand why corporate strategies so often fail. During the research process, the idea of analyzing business in four dimensions was born.
The term was first used publicly in 1963 at a Harvard Business School conference, when Professor Kenneth Andrews presented a new approach to business planning. Since then, the method has gained popularity around the world. Today, it is used not only by international corporations such as Apple and Coca-Cola, but also by small cafes, startups, and non-profit organizations.
The results of the analysis are presented in the form of a SWOT matrix — a table consisting of four squares, each of which corresponds to a specific area:
Strengths — Your trump cards and competitive advantages. Everything that helps you stand out in the market and attract customers. For example, a restaurant can be proud of its signature cuisine from a world-renowned chef, an IT company — of its team of developers with unique expertise, a clothing store — of its exclusive contracts with designers. Think about why customers choose you: maybe you have the fastest delivery in town or the only service center in the region with warranty service.
Weaknesses — internal problems and limitations that hinder growth. Honesty with yourself is important here. Perhaps you have an outdated CRM system that causes customer requests to be lost. Or maybe your warehouse is located far from your main points of sale, which increases logistics costs. Perhaps your team lacks a marketer, and promotion is done on a whim. Recognizing your weaknesses is the first step toward eliminating them.
Opportunities — external factors and trends that can be used for development. These are things happening around you that can be beneficial. For example, the government has launched a program of preferential lending for small businesses — an excellent opportunity to upgrade equipment. Or a new residential complex with 5,000 apartments is planned in your area — potential customers for your grocery store. Keep an eye on changes in legislation, demographic trends, and technological innovations.
Threats are external risks that could harm your business. These include factors that you cannot control but must take into account. Your raw materials supplier has warned of a 30% price increase. Changes in legislation require costly product certification. Knowing the threats allows you to prepare in advance and minimize losses.
What is SWOT analysis for?
You can conduct a SWOT analysis to:
Assess the current situation. The method works like a navigator—it shows where the company is right now. You get a detailed picture: what is working well, where there are problems, what resources are available. For example, the owner of a fitness club may find that despite having excellent trainers and equipment, they have a weak customer retention system — people buy memberships but do not renew them. This is a starting point for change.
Set priorities. When you see all the factors in one matrix, it becomes clear what to tackle first. A small web studio may find that their main problem is the lack of a portfolio of large projects, which makes it difficult to attract serious clients. This means that it is worth focusing on getting your first significant case, even if it means working with minimal profit. The right priorities save time and resources.
Consolidate advantages. Every weakness can be turned into an opportunity for growth. A bakery with a limited range of products can focus on exclusivity—producing only five types of cakes, but perfecting them. An electronics store with high prices can strengthen its expert support and become a premium boutique for discerning customers. SWOT helps to find such opportunities for transformation.
Assess risks and anticipate difficulties. In day-to-day work, it is easy to overlook impending problems. A furniture manufacturer may not notice the gradual rise in timber prices until faced with a sharp jump in production costs. SWOT analysis forces you to look at the bigger picture and see trends that could become critical in six months’ time. Forewarned is forearmed.
Develop a strategy for action. Analysis turns scattered observations into a clear plan. A startup with an innovative food delivery app sees its strengths (fast interface, smart logistics) and understands how to use them against its competitors’ weaknesses (slow websites, confusion with orders). A concrete strategy emerges: focus on speed and simplicity in marketing, attract customers who are tired of the complex interfaces of large services.
What are the advantages of conducting a SWOT analysis?
Simplicity. You don’t need to be a marketing expert or have an MBA to conduct a SWOT analysis. The methodology is so straightforward that even a novice entrepreneur can handle it. No complicated calculations, special programs, or expensive software are required—all you need is a sheet of paper, a whiteboard, or a regular Excel spreadsheet. You already have all the necessary information at your fingertips: sales data, customer reviews, and observations of competitors.
Versatility. The method works for any business—from freelance copywriters to international corporations. It doesn’t matter if you sell handmade jewelry on Instagram or manage a chain of car dealerships. SWOT is equally effective for B2B and B2C, for manufacturing and services, for online and offline businesses.
Comprehensiveness. SWOT provides a panoramic view of the situation. You can simultaneously see what is happening inside and outside the company, what your strengths are, and where your weaknesses lie. It’s like a medical examination for your business—you check all systems at once. A restaurant owner will see not only problems with staff turnover, but also new opportunities due to the opening of a business center in the neighborhood, growing demand for delivery, and the threat from a new competitor.
Structure. Chaotic thoughts and observations are organized into a clear system. What used to be intuitive guesses become specific points in the matrix. The owner of an online English school may feel for months that something is wrong, but only SWOT will show that the problem lies in the outdated platform for lessons, while there is an untapped opportunity — the growing demand for corporate training.
Are there any disadvantages to the SWOT analysis method?
Lack of real figures. SWOT provides a general picture, but not specific metrics. You will understand that customer service is a weak point, but the method will not tell you that the response time to a request is 48 hours instead of an acceptable 2 hours. After the analysis, you will have to dig deeper: collect statistics, perform calculations, and test hypotheses.
Subjectivity. The results depend on who conducts the analysis. If a business owner does a SWOT analysis alone, they may overestimate their achievements and overlook obvious problems. A sales manager will look at things through the lens of customer service, while an accountant will focus on finances. To get an objective picture, involve different employees or even external consultants. Brainstorm with your team to hear different points of view.
The need for constant data updates. SWOT is a snapshot, not a video. It captures a moment in time, but the market continues to change. A competitor has launched a new product, legislation has changed, new technology has appeared — and the analysis is already outdated. Update your SWOT at least once a year, and in dynamic industries — every 3-6 months. Treat it like a regular car inspection.
Lack of priorities. The method will reveal a dozen strengths and just as many problems, but it will not tell you where to start. You may have an excellent product (strength), logistics problems (weakness), a growing market (opportunity), and a new competitor (threat). What is more important—improving delivery or defending against the competitor? SWOT will not provide an answer. You will have to rank the factors yourself according to importance and urgency.
Types of SWOT analysis
Express analysis is a quick way to assess the situation here and now. It is suitable when you need to make an urgent decision and there is no time for in-depth research. You focus on obvious advantages and clear problems to find quick ways to improve. The main advantage of the express option is speed and clarity. In just one evening, you get a clear picture: these are our strengths, we rely on them; these are the problem areas, they need to be improved. Ideal for startups, small businesses, or situations where the market is changing rapidly.
Consolidated analysis is a thorough study focused on long-term planning. Here, you don’t just record the current situation, but also make forecasts, analyze trends, and study competitors in detail. This approach takes time — from several weeks to months. But you get a solid foundation for strategic decisions. Suitable for medium and large businesses, launching new directions, and entering new markets.
Mixed analysis is the golden mean for those who need both speed and depth. You start with a quick overview, then delve deeper into more important areas, and finish with a cross-analysis of all factors. The result is a detailed roadmap for action. You know exactly which strengths to use against which threats and which opportunities will help close the gaps. This method is especially effective when preparing for important changes: rebranding, changing your business model, or merging companies.
How to conduct a SWOT analysis correctly?
Creating a SWOT analysis is not as easy as it may seem at first glance. It is not enough to simply sit down and start filling in the four squares of the matrix — it is important to lay the right foundation so that the results really help in developing your business. To do this:
Define your goals
Start with a specific task—why do you need this analysis right now? Without a clear goal, you risk getting vague results that are difficult to apply in practice. The goal determines the focus of the research and the depth of detail.
For example, if you plan to launch a new product line, the analysis will focus on production capacity, team competencies, and target audience response. If the goal is to optimize costs, the focus will be on financial indicators, process efficiency, and opportunities for savings.
Specific goals make analysis targeted. Instead of the abstract “improve business,” set measurable goals: “find ways to increase the average check by 20%” or “define a strategy to defend against a new competitor.” This approach will help you immediately understand what information to collect and which experts to involve.
Assemble a team and brainstorm ideas.
One person sees the company through the prism of their experience and position. An accountant will notice financial risks, but may overlook customer service issues. A marketer will talk about market trends, but will not know about technical limitations in production. To get an objective picture, assemble a team of representatives from different departments.
Organize a brainstorming session where each department presents its vision of the situation. Have managers discuss current projects with their subordinates in advance: what is going according to plan, where difficulties arise, and what new opportunities are emerging.
The sales manager will talk about customer requests and competitor activities. The IT specialist will point out technological capabilities and limitations. The HR director will share information about human resources potential and problems with recruiting specialists.
Select a template
The right template turns chaotic ideas into structured information. The classic option is a 2×2 table, where each square corresponds to a SWOT category. This format helps you visually grasp the whole picture and not miss any important details during the discussion.
The traditional layout seems logical: internal factors (those you control) are placed at the top, while external factors (those that influence you from outside) are placed at the bottom. Positive elements are grouped on the left, negative ones on the right. The result is an intuitive diagram: the upper left corner represents your strengths, the lower right corner represents potential external problems.
You can adapt the template to specific tasks. For a detailed analysis, add subsections to each square: for example, in “Strengths,” highlight the product, team, and finances separately.
For visual learners, color coding is a good option: use green to mark factors with high impact, yellow for medium impact, and red for critical impact. Some companies use advanced templates with additional columns to assess the probability or degree of impact of each factor.
Form conclusions and implement them
A completed matrix is just the beginning. Now you need to turn a set of facts into a working strategy. Analyze the connections between the squares: can your strong development team (S) help you quickly adapt to new market demands (O)? Can your growing customer base (S) compensate for your outdated IT infrastructure (W)?
Move from analysis to action. Make a specific plan with measurable goals. Instead of “improve service,” write “reduce support response time from 24 to 2 hours by the end of the quarter.” Assign people to be in charge of each area—have the sales manager take care of key clients and the marketer focus on standing out from the competition.
Share the results with the entire team. Hold a general meeting where you present the main conclusions and explain how they will affect the work of each department. Create a simple infographic with 3-5 key priorities — hang it in the office or send it out via corporate email. Employees need to understand the big picture and their role in implementing the strategy.
Set benchmarks. Check the initial results after a month, and adjust the plan if necessary after three months. SWOT is a living tool that needs to be updated as the situation changes. If a competitor has gone public or legislation has changed, review the relevant sections of the matrix and adapt your strategy.
Common mistakes when conducting a SWOT analysis
The apparent simplicity of SWOT analysis can sometimes be misleading—it seems impossible to make a mistake. But even with such a straightforward tool, companies manage to get useless results. Below, we will examine typical mistakes that turn a useful method into a waste of time and learn how to avoid them.
Not enough specifics
General wording kills the practical value of analysis. When vague phrases such as “strong brand” or “poor economic situation” appear in the matrix, it is impossible to work with them. How can you measure brand strength? What exactly is wrong with the economy? Without answers to these questions, you will not be able to develop an action plan.
Better this way:
Instead of “high-quality product” — “the return rate is 0.3% compared to the market average of 2%.”
Instead of “weak marketing” — “website conversion rate of 0.8%, which is three times lower than the industry standard.”
Instead of “loyal customers” — “average customer lifetime value of 22,000 hryvnia, 65% of buyers make repeat purchases within six months.”
Specific figures and facts transform SWOT from a philosophical reflection into a working document that can be used to approach investors or plan a budget.
Distribution of factors into incorrect groups
Confusing internal and external factors is a classic mistake made by beginners. An entrepreneur happily lists “economic growth in the country” as one of the company’s strengths, even though this is an external opportunity. Or they list “a shortage of qualified personnel on the market” as one of the weaknesses, even though this is an external threat.
Tip: Check each factor with a simple question: “Can I influence this?” Can you hire new employees or fire ineffective ones? This is an internal factor (S or W). Can you change the government’s tax policy? This is an external factor (O or T).
Analysis is conducted, but not implemented
The most unfortunate mistake is to spend time conducting a SWOT analysis and then filing it away. Many managers conduct SWOT analyses just to tick a box in their business plan or report to the board of directors. The matrix is beautifully designed, the presentation is shown, everyone is satisfied—and that’s where the work ends.
What should you do? Turn each square of the matrix into specific tasks with deadlines:
S (strengthen your advantage). Do you have the fastest delivery in town? Make this your main message in your advertising, add a delivery time counter to your website, and launch a promotion called “Late delivery — free pizza.”
W (fix the problem). Are customers complaining about long wait times for support responses? Implement a chatbot for typical questions, hire an additional employee during peak hours, and set KPIs for response speed.
(take advantage of the opportunity). Does the government subsidize the purchase of domestic software? Prepare the documents to receive the subsidy, select the appropriate solutions, and calculate the savings.
T (protect yourself from risk). Is your main supplier hinting at a price increase? Find two alternative suppliers and build up a safety stock of the most important materials.
Assign responsibilities and establish checkpoints—without this, even the best analysis will remain nothing more than a pretty picture.
Example of using SWOT analysis
Let’s see how the methodology works in practice. As an example, we will conduct a SWOT analysis for the regional network of HealthyLife fitness clubs with three gyms in a city with a population of over a million.
The club’s strengths: a team of certified trainers with medical training, a modern ventilation and air purification system (especially relevant after the pandemic), a convenient mobile app for recording and tracking progress, private parking for 50 cars at each gym, and flexible membership options — from single sessions to unlimited annual memberships.
Weaknesses: only 30% of exercise equipment has been updated in the last 5 years, no swimming pool or sauna (competitors have these), weak social media presence—only 3,000 followers, high turnover of administrators (they change every 3-4 months), one of the gyms is located on the outskirts, where there is little public transport.
Opportunities: growing interest in healthy lifestyles among office workers aged 25-40, launch of corporate programs for companies (B2B segment), trend toward personalized online training, construction of a new residential complex with 2,000 apartments near one of the gyms.
Threats: an international chain of fitness clubs plans to open in the city in six months, rent rates will increase by 25% from the new year, customers will migrate to budget gyms due to a decline in household income, and home workouts and fitness apps are growing in popularity.
Based on the analysis, the network developed four areas of development:
We leverage our strengths for growth (S+O). Our trainers’ medical expertise is our trump card for corporate clients. We plan to create special “Office Health” programs with exercises for the back and neck. We offer companies packages of 50-100 passes with a 30% discount. We hold free master classes in business centers. We are launching online consultations with trainers via the app — additional income without increasing space. The target audience from the new residential complex will receive a welcome bonus: the first month at half price.
We protect ourselves from competitors (S+T). The international network is strong, but we know our city better. We plan to create a club for regular customers with special privileges: priority registration, free nutrition consultations, discounts at partner sports equipment stores. We fix prices for existing customers for a year in advance. We use parking as a competitive advantage — international chains often don’t have it.
We solve problems by leveraging opportunities (W+O). External trends will help us address our weaknesses. Instead of investing in an expensive swimming pool, we plan to launch new group programs, such as yoga for pregnant women and classes for seniors. We are hiring an SMM specialist and launching challenges on Instagram, where our target audience is active. We are converting a problematic hall on the outskirts into a specialized martial arts center — less competition, higher loyalty.
We minimize double problems (W+T). When weaknesses meet threats, protection is needed. We plan to negotiate with the landlord for a gradual increase in rent instead of a sharp jump. We are upgrading the most popular exercise machines first — treadmills and weight machines. We are creating a mentoring program for administrators to reduce turnover. We are launching a budget line of “Fitness Minimum” memberships — gym only, no group classes — to retain budget-conscious customers.
