swot-analysis

What Is A SWOT Analysis And Why It Is Important

A SWOT Analysis is a framework used for evaluating the business‘s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

Read: Business Models Guide, Business Strategy: Examples, And Case Studies, And Tools

What is a SWOT analysis?

The SWOT analysis is a framework and matrix used for evaluating a business‘s Strengths, Weaknesses, Opportunities, and Threats with the objective of making informed strategic decisions.

Is a SWOT analysis useful?

A SWOT analysis is an effective exercise to get to know a business and look at it from several angles. However the business world is highly unpredictable, thus the SWOT analysis is useful as long as it promotes action, or it prevents actions that might lead to the business going in the wrong direction. 

What are the steps to undertake a SWOT analysis?

The SWOT analysis is comprised of four building blocks:

  • Strengths: what are the key assets, resources, and value propositions that give you a competitive edge and promote substantial growth?
  • Weaknesses: what resources, assets, or value propositions are lacking or preventing the growth of the business?
  • Opportunities: based on the context, what are some available opportunities that can unlock the growth of the organization?
  • Threats: based on the context, what threats might jeopardize the business in the future?

Internal vs. external

One thing to notice about the SWOT analysis is how it can be broken down in:

  • Internal factors: strengths and weaknesses are strictly tied to your business are internal factors that matter for the growth or decline of the organization.
  • And external factors: opportunities and threats are external, market, or industry-driven factors that matter for the growth or decline of the organization.

Therefore, while performing a SWOT analysis it’s critical to keep this distinction in mind.

Controllable vs. non-controllable

Another element of the SWOT analysis is how those same building blocks can be broken down in controllable and non-controllable:

  • Controllable: strengths and weaknesses which are primarily internal-driven are also the building blocks that an organization can control more easily in the short-term.
  • Non-controllable: opportunities and threats, as they are primarily driven by the market or industry are harder to control in the short-term.

However, the more as a business you grow or limit the controllable building blocks (strengths and weaknesses) the more you might able to improve your influence over the non-controllable (opportunities and threats).

The classic example if that of Apple who worked hard to improve its brand, by creating new hit products that defined whole new industries thus, creating opportunities that didn’t exist before and by posing new threats to those players who operated according to new rules.

1. Strengths

What are the key assets, resources and value propositions that give you a competitive edge and promote substantial growth?  

2. Weaknesses

What resources, assets or value propositions are lacking or preventing the growth of the business?

3. Opportunities

Based on the context, what are some available opportunities that can unlock the growth of the organization?

4. Threats

Based on the context, what threats might jeopardize the business in the future?     

Amazon SWOT Analysis Example

amazon-swot-analysis
Amazon is among the most diversified business model in the tech industry. The company is well-positioned to dominate e-commerce further. And while its online stores have tight profit margins, Amazon still unlocks cash for growth, while consolidating its dominance in the cloud and grabbing new opportunities like voice.

Read more: Amazon Business Model, Amazon SWOT Analysis

amazon-q2-2020

cash-conversion-cycle-amazon
The cash conversion cycle (CCC) is a metric that shows how long it takes for an organization to convert its resources into cash. In short, this metric shows how many days it takes to sell an item, get paid, and pay suppliers. When the CCC is negative, it means a company is generating short-term liquidity.
coopetition
Coopetition describes a recently modern phenomenon where organizations both compete and cooperate, which is also known as cooperative competition. A recent example is how Netflix streaming platform has been among the major customers of Amazon AWS cloud infrastructure, while Amazon Prime has been among the competitors of Netflix Prime content platform.
amazon-case-study
Amazon runs a platform business model as a core model with several business units within. Some units, like Prime and the Advertising business, are highly tied to the e-commerce platform. For instance, Prime helps Amazon reward repeat customers, thus enhancing its platform business. Other units, like AWS, helped improve Amazon‘s tech infrastructure.

Apple SWOT Analysis Example

apple-swot-analysis
Apple can leverage a strong consumer brand and set of successful products as a strength. Yet the company is still too reliant on the iPhone as a primary revenue stream. Though Apple is working to open up new markets as an opportunity, it has to make sure to sustain its stores’ sales.

 

Read more: Apple Business Model, Apple SWOT Analysis, Apple Distribution, Apple Business Strategy

apple-business-growth-2020

Costo Swot Analysis Example

costco-swot-analysis
Costco is a large American multinational corporation with a focus on low-cost, membership-only retail warehouse clubs. Costco is the 4th largest retail operator in the world, operating 785 warehouses in 10 different countries. Indeed, it has enjoyed rapid success growing from zero to $3 billion in sales within six years.

Read: Costco SWOT Analysis, Costco Business Model And Strategy

costco-business-model
With a substantial part of its business focused on selling merchandise at the low profit-margin, Costco also has about fifty million members that each year guarantee to the company over $2.8 billion in steady income at high-profit margins. Costco uses a single-step distribution strategy to sell its inventory.

Coca-Cola SWOT Analysis Example

coca-cola-swot-analysis
Coca-Cola is the market leader of the soft drink industry. It is also the most widely recognized brand, with a Business Insider study revealing that a staggering 94% of the world population recognizes the red and white logo. However, Coca-Cola faces significant challenges with increasingly health-conscious consumers and less access to water resources.

Read: Coca-Cola Business Model, Coca-Cola Distribution Strategy, Coca-Cola SWOT Analysis

coca-cola-vs-pepsi-business-model
Both companies have massive scale. With Coca-Cola over $35 billion revenue, compared to PepsiCo over $63 billion. Where Coca-Cola has a large chunk of revenues in Europe, Middle East, and Africa. PepsiCo has its primary operations in the US. Coca-Cola is the largest beverage company in the world. PepsiCo got diversified between beverages and food, where food represented 53% of its revenues in 2017. Both companies have massive distribution strategies and nonetheless the size, they have a relatively quick decision-making process. That is critical as both companies top into consumer habits, therefore need to be fast in adapting to them. Both companies also spend massive resources on demand generation via marketing activities.

Disney SWOT Analysis Example

disney-swot-analysis
It would be hard to argue the case for a more recognizable entertainment brand than Disney. Disney is of course synonymous with Walt Disney, but it was Walt and his brother Roy who started the company in 1923 in Burbank, California. Disney content is now broadcast on over 100 channels in 34 different languages across the globe.

Read: Disney SWOT Analysis, Storyboarding, Netflix Business Model

Ford SWOT Analysis Example

ford-swot-analysis
Founded in 1903 by Henry Ford and is the fifth-largest family-owned company in the world. Ford is a globally recognized brand in the automotive industry for a couple of reasons. First, Henry Ford is well-known as the inventor of the production line and thus the modern automobile industry. Today, Ford has also maintained relevance as the seventh-largest car manufacturer worldwide, selling a range of passenger cars, trucks, and vans.

Read: Ford SWOT Analysis

Facebook SWOT Analysis Example

facebook-swot-analysis
Facebook, with its products, with its strong appeal, and consumer brand has a solid business model, threatened in the last years by privacy concerns, which open up the way to potential regulation to break up the company. If that will not happen, Facebook will have the chance to expand to define other markets like VR.

Read more: Facebook SWOT Analysis, Facebook Business ModelFacebook WayFacebook Advertising Machine Explained

facebook-q2-2020
Facebook is an attention-based business model, which revenues primarily come from advertising (over 98% as of June 2020). The US and Canada represent the markets with the highest monetization power, together with Europe. Other markets, like Asia-Pacific, are important in the coming years, yet they have a lower monetization bandwidth as of June 2020. Mobile is the highest growing advertising segment in terms of revenues. Instagram is the strongest product in terms of users and revenues. The overall stability of the Facebook business model in the coming years will highly depend on its ability to retain users’ engagement on the platform, and better monetize other markets, beyond the US and Canada. Facebook income was reduced in Q2 2020, by the payment of the FTC fine for $5 billion. Facebook is expanding in India, with an investment of $5.7 billion in Reliance Jio Platforms, the largest media group in India.
how-does-whatsapp-make-money
Founded in 2009 by Brian Acton, Jan Koum WhatsApp is a messaging app acquired by Facebook in 2014 for $19B. In 2018 WhatsApp rolled out customers’ interaction services. WhatsApp might be transitioning toward a set of features from video chats to social commerce that might transform WhatsApp into a Super App.

Google SWOT Analysis Example

google-swot-analysis
Google’s strength is its strong consumer brand. The company is grabbing new opportunities by opening up industries like voice search and consolidating in industries like the cloud. As a weakness, its revenues primarily come from advertising. A primary threat is the quick change of search and potential intervention by regulators.

Read more: Google SWOT Analysis

how-does-google-make-money
Google has a diversified business model, primarily making money via its advertising networks that, in 2019, generated over 83% of its revenues, which also comprise YouTube Ads. Other revenue streams include Google Cloud, Hardware, Google Playstore, and YouTube Premium content. In 2019 Google made over $161 billion in total revenues.

Read more: Google Business Model, How Google Makes Money, Google’s Other Bets

google-q2-2020
Google remains the core product for the Alphabet’s business model. The search engine made over $55 billion in the first six months of the year 2020. The video search engine (YouTube) made $7.8 billion in advertising revenues. This does not include the membership revenues which are composed of Google’s revenues. Google search and Google network members’ revenues slightly decreased in the first six months of 2020, compared to 2019. (get a detailed report to see what caused the decrease). The segments that grew were YouTube Ads, Google Other revenues (comprising purchases in Google Play Store, Hardware, and YouTube Subscriptions). Other bets also decreased, while Waymo, one of the other Google’s bets, finalized another important round of investment. In July 2020, Alphabet committed $4.5 billion to invest in India’s Reliance Jio Platforms. The Indian media giant. This is in line with the Alphabet’s strategy to create a strong presence in India. It was also an important move to compete with Facebook’s prior investment, a few weeks before.

Nestlé SWOT Analysis Example

nestle-swot-analysis
Nestlé is a large multinational food and beverage manufacturer with more than 2000 brands spread across 197 countries. Some of Nestlé’s well-known brands include Nescafe, Kit-Kat, Purina, Aero, Butterfinger, Maggi, and Haagen-Dazs. Originally a producer of infant food in 1867, it is now considered to be the world’s largest food manufacturer.

Read: Nestlé SWOT Analysis, Nestlé Business Model

Nestlé is a powerhouse of consumer brands spanning across baby foods, bottled waters, powdered drinks, cereals, coffee, drinks, pet-care, and more. The company made almost $92 billion in 2018, with high margins on its powdered and liquid beverages (coffee, cocoa, and malt beverages and tea categories).

Netflix SWOT Analysis Example

netflix-swot-analysis
Netflix is among the most popular streaming platforms, with a subscription-based business model. The brand, platform, and content are strengths. The volatility of content licensing and production are weaknesses. The streaming market is a potential blue ocean. Inability to attract and retain premium members, and its fixed long-term costs are threats to its business model.

Read more: Netflix SWOT Analysis, Netflix Business Model, Netflix Profitability, Binge-Watching

netflix-vision-statement-mission-statement
Netflix’s core mission, strategy, and vision are that of “improving its members’ experience by expanding the streaming content with a focus on a programming mix of content that delights members and attracts new members.”
netflix-business-model
Netflix is a subscription-based business model making money with three simple plans: basic, standard, and premium, giving access to stream series, movies, and shows. The company is profitable, yet it runs on negative cash flows due to upfront cash paid for content licensing and original content production.

Microsoft SWOT Analysis Example

microsoft-swot-analysis
Samsung was founded in South Korea in 1938 by Lee Byung-Chul. Originally a trading company, it took Samsung 22 years to become the fully-fledged electronics company that most people recognize today. Indeed, the company is a leader in technological innovation through telecommunications, electronics, and home appliances.

Read: Microsoft SWOT Analysis, Microsoft Business Model

microsoft-mission-statement
Microsoft’s mission is to empower every person and every organization on the planet to achieve more. With over $110 billion in revenues in 2018, Office Products and Windows are still the main products. Yet the company also operates in Gaming (Xbox), Search Advertising (Bing), Hardware, LinkedIn, Cloud, and more.

Starbucks SWOT Analysis Example

swot-analysis-of-starbucks
Starbucks is a global consumer brand with direct distribution, recognized brands, and products that make it a viable business. Its reliance on the Americas as a primary operating segment makes it a weakness. At the same time, Starbucks faces risks related to coffee beans price volatility. Yet the company still has global expansion opportunities.

Read more: SWOT Analysis Of Starbucks, Starbucks Business Model

starbucks-business-model
Starbucks is a retail company that sells beverages (primarily consisting of coffee-related drinks) and food. In 2018, Starbucks had 52% of company-operated stores vs. 48% of licensed stores. The revenues for company-operated stores accounted for 80% of total revenues, thus making Starbucks a chain business model

Tesla SWOT Analysis Example

tesla-swot-analysis
Among the most recognized car manufacturers, Tesla is valued more than the combined market capitalization of GM and Ford. While the company’s direct distribution is a strength, its lack of financial viability is a weakness. Competition is a future threat. However, if Tesla defines a new market for car manufacturing its potential growth will be massive.

Read more: Tesla SWOT Analysis, Tesla Business Model

tesla-business-model
Tesla is vertically integrated. Therefore, the company runs and operates the Tesla’s plants where cars are manufactured and the Gigafactory which produces the battery packs and stationary storage systems for its electric vehicles, which are sold via direct channels like the Tesla online store and the Tesla physical stores.

Uber SWOT Analysis Example

uber-swot-analysis
Headquartered in San Francisco, California, Uber started as a peer-to-peer ridesharing platform. In more recent times, the company has moved into food delivery, rental cars, and bike-sharing. In one form or another, Uber now has a presence in over 900 cities worldwide.

Read: Uber SWOT Analysis, Uber Business Model, Uber Eats Business Model, Uber Liquidity Network

liquidity-network-effects

Samsung SWOT Analysis Example

microsoft-swot-analysis
Samsung was founded in South Korea in 1938 by Lee Byung-Chul. Originally a trading company, it took Samsung 22 years to become the fully-fledged electronics company that most people recognize today. Indeed, the company is a leader in technological innovation through telecommunications, electronics, and home appliances.

Read: Samsung SWOT Analysis

Other business frameworks

Ansoff Matrix

ansoff-matrix
You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived by whether the market is new or existing, and the product is new or existing.

BCG Matrix

bcg-matrix
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.

Comparable Analysis Framework

comparable-company-analysis
A comparable company analysis is a process that enables the identification of similar organizations to be used as a comparison to understand the business and financial performance of the target company. To find comparables you can look at two key profiles: the business and financial profile. From the comparable company analysis it is possible to understand the competitive landscape of the target organization.

Growth Matrix

growth-strategies
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).

Porter’s Five Forces

porter-five-forces
Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces

Revenue Streams Matrix

revenue-streams-model-matrix
In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.

Other business resources:

Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which target is to reach over two million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get in touch with Gennaro here

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