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.

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SWOT Analysis Template

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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.

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

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 and 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 into 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 be able to improve your influence over the non-controllable (opportunities and threats).

The classic example is that of Apple which 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 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?

SWOT analysis vs. Gap analysis

The SWOT and Gap analysis are two ways to evaluate a business, but each evaluates a different aspect of the business.

What’s more, the output from one analysis can become the input for the other, and vice versa.

The SWOT analysis evaluates the strengths, weaknesses, opportunities, and threats of a business, while the Gap analysis compares the actual performance of a business unit with its potential performance.

Below we will compare both analyses and list some key similarities and differences:

The SWOT analysis is a tool that is used mostly in long-term strategic planning. The Gap analysis, on the other hand, is more of a short-term initiative.
The SWOT analysis is also far more comprehensive and tends to evaluate virtually every aspect of business operations. In contrast, the Gap analysis is used to identify internal performance deficiencies.
While the focus of the Gap analysis is relatively narrow, it nevertheless encourages businesses to identify the same sorts of opportunities, risks, and threats as those that use the SWOT analysis.

So how exactly are the two analyses related?

Using the Gap Analysis, the business can identify its current and potential state and plan how to bridge the gap.

Many consider the SWOT analysis to be the same gap identification process but in a broader, more external context.

Indeed, while the Gap analysis may be used to improve a human resources process, the SWOT analysis may be more concerned with competitors and market trends.

Ultimately, both can be used in unison to improve the competitiveness and profitability of the company concerned.

The SWOT and Gap analysis are two ways to evaluate a business, with the former evaluating external factors and the latter evaluating internal factors.

As a result, many consider the SWOT analysis to be a similar gap identification tool in broader, more external contexts.

Amazon SWOT Analysis Example

amazon-business-model — Amazon has a diversified business model. In 2021 Amazon posted over $469 billion in revenues and over $33 billion in net profits. Online stores contributed to over 47% of Amazon revenues, Third-party Seller Services, Amazon AWS, Subscription Services, Advertising revenues, and Physical Stores.

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 the Netflix streaming platform has been among the major customers of Amazon AWS cloud infrastructure, while Amazon Prime has been among the competitors of the 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

how-much-is-apple-worth — In 2022, Apple is worth two and a half trillion dollars. Apple generated over $191 billion from iPhone sales, in 2021, which accounted for over 52% of its net sales. Followed by services revenues at $68.4 billion, wearables and accessories at $38.3 billion, Mac sales at $35.2 billion, and iPad sales at $31.86 billion.

apple-business-model — Apple has a business model that is broken down between products and services. Apple generated over $365 billion in revenues in 2021, of which $191.9 came from the iPhone sales, $35.2 came from Mac sales, $38.3 came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $31.86 billion came from iPad sales, and $68.4 billion came from services.

apple-reverse-blade-business-model — It costs Apple $570 to make an iPhone 13 Pro, and the company sells it at a base price of $999 to $1499.

apple-value-proposition — Apple is a tech giant, and as such, it encompasses a set of value propositions that make Apple’s brand recognized, among consumers. The three fundamental value propositions of Apple’s brand leverage the “Think Different” motto; reliable tech devices for mass markets; and starting in 2019, Apple also started to emphasize more and more privacy to differentiate itself from other tech giants.

Costo Swot Analysis Example

Read: Costco SWOT Analysis, Costco Business Model And Strategy

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.

Strengths

Low prices – Costco’s low price strategy is its major strength. But it differs from low-cost competitors like Walmart in that it sells bulk items at low-profit margins in warehouse-style stores. In fact, the average mark-up of Costco products is less than half of the Walmart average and a third of that seen at Home Depot stores.
Membership model – Costco utilizes a subscription business model. In other words, customers who want to shop at the store must buy a membership to do so. What consumers are actually paying for is access to Costco’s ability to use economies of scale to sell goods at low prices. If nothing else, this gives Costco a competitive advantage and a point of difference over other retailers.
No advertising spend – Costco has no budget for advertising, but not because they cannot afford to do so. Former CEO Jim Sinegal noted that he believed advertising was evil and costed huge sums of money that would have to be passed on to consumers. With fewer overheads, this allows Costco to maintain their low-cost business model.

Weaknesses

Limited product selection – although you can buy your breakfast cereal and television at the same time, most Costco stores only carry about 3700 different products. This makes them much less diverse than Walmart (150,000 products) and Target (80,000 products).
Dependence on North America – sales in the US and Canada account for over 80% of Costco’s revenue. It is especially reliant on the single state of California, accounting for 32% of sales. Any number of problems in that state could seriously impact on Costco’s bottom line.
Membership model – one of Costco’s greatest strengths may also be a weakness. The membership model will be too high a barrier for many consumers who are unsure of the benefits or simply cannot be bothered filling out a membership form to buy groceries.

Opportunities

Attracting younger consumers – Costco currently has a customer base skewed toward older baby boomer consumers. Unfortunately, older consumers tend to spend less as they age. To make up for this shortfall in revenue, Costco needs to do more to attract a younger demographic with more purchasing power. The company hopes to do this by offering higher-quality apparel and increasing its organic food selection to cater to health-conscious younger generations.
Expansion – international markets have the potential to increase company revenue, particularly those that offer a higher profit margin than can be found in the United States. China is also a significant growth market, with Costco’s first store in Shanghai having to shut early on opening day because of overcrowding.

Threats

eCommerce – because of Costco’s business model of low-cost goods bought in bulk, it is difficult to see how they could become competitive in the eCommerce sector. Even if Costco executives decide to change their model, Amazon offers similarly low prices and has a better range of products with long-established supply chain networks.
Labour and transport costs – with increasing costs in the United States, Costco’s low-cost model is vulnerable, and any product price increases could alienate loyal customers.
Economic slowdown – during periods of economic uncertainty that result in a recession, consumers may be less likely to buy goods in bulk or indeed pay for the privilege of doing so.

Coca-Cola SWOT Analysis Example

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.

coca-cola-business-strategy — Coca-Cola follows a business strategy (implemented since 2006) where through its operating arm – the Bottling Investment Group – it invests initially in bottling partners’ operations. As they take off, Coca-Cola divests its equity stakes, and it establishes a franchising model, as long-term growth and distribution strategy.

Strengths

High brand equity – in a market dominated by products that look largely the same, Coca-Cola enjoys high brand equity. In 2011, it won Interbrand’s highest brand equity award. More recently, it won the 2019 Effie Index award for the most effective global brand.
Global presence – the Coca-Cola Company has either a product or manufacturing presence in most of the world’s 196 countries. It is the most widely distributed North American product, eclipsing the likes of McDonald’s and Subway.
Economies of scale – of the 60 billion beverages served worldwide every day, Coca-Cola serves 3.2% or 1.9 billion of them. This allows the company to spread its costs over billions of servings across hundreds of brands, making each drink extremely cheap to produce.
Diversified product portfolio – while many associate Coca-Cola with soft drink, the company also owns and distributes over 500 different beverages in markets such as bottled water, fruit juice, sports drinks, and tea and coffee.

Weaknesses

Competition – as successful as Coca-Cola has been, PepsiCo enjoys a similar market share and brand equity. The two companies have been involved in several acrimonious disputes over the years, resulting in negative press and a decrease in brand equity for each.
Soft-drink reliance – although highly diversified, Coca-Cola still relies on soft drinks to drive most of its sales. In fact, sales of “Coke” accounted for 78% of total revenue. This reliance may drive profits down as consumers shift to healthier beverages.
Water management – beverage-centric companies such as Coca-Cola are heavily reliant on water as the main ingredient in their products. Water security and water quality are contentious issues, particularly in the third world. Thus, the company may face challenges in securing enough water to meet demand.

Opportunities

Diversification – with a clear shift away from carbonated drinks, Cola-Cola needs to diversify to maintain revenue. The company has invested heavily in Keurig Green Mountain, a coffee brand, and energy drink Monster. Developing countries with a need for clean drinking water as well as tea and coffee also represent an opportunity for Coca-Cola to diversify.
Supply chain improvement – as a global brand, Coca-Cola’s supply chain is subject to increased transportation and distribution costs. The company has the opportunity to leverage existing soft drink networks to instead move products with a higher profit margin.
Sustainability – as one of the largest manufactures of beverages, Coca-Cola has to accept some responsibility for the pollution arising from single-use plastics. There is scope for Coca-Cola to position themselves as environmentally friendly with innovative, recyclable packaging.

Threats

Competition – as Coca-Cola focuses on distribution and brand visibility, its main competitor PepsiCo is prioritizing an eCommerce presence with a focus on premium products. There is the potential that Coca-Cola has a competitive disadvantage as consumer buying preferences change.
Regulation – healthcare professionals are becoming more vocal about the dangers of sugar-laden drinks and their potential to cause diabetes and heart disease. This, in turn, has led to discussions in government about the introduction of sugar taxes on the soft drinks which are a staple of Coca-Cola’s product range.
Modernization – because of Coca-Cola’s global footprint, they are more susceptible to economic changes in developing countries. In such countries, employees are demanding higher rates of pay as others leave to chase better pay elsewhere. This leaves Coca-Cola understaffed and vulnerable to productivity loss. To some extent, Coca-Cola is also reliant on favorable exchange rates and the cheap and plentiful supply of raw materials to make a profit.

Disney SWOT Analysis Example

Read: Disney SWOT Analysis, Storyboarding, Netflix Business Model

Strengths

Brand recognition – Disney has a prominent position in the entertainment market and indeed in society. Disney owns a large proportion of childhood characters of whom some become children’s role models. In this way, Disney is ever-present as children grow into adults with more purchasing power.
Global reach – Disney reaches a truly global audience because of the universal themes in its entertainment shows that transcend language and culture. It has also established 11 theme parks worldwide to promote awareness of the brand and penetrate new markets.
Diversification – many consumers will be surprised to learn that ESPN and Freeform are also Disney companies. The company has also acquired the rights for all Star Wars and Marvel franchises and their related products.
Brand equity – in general, Disney is perceived as a respectable provider of high-quality goods and services. It does not need to defend or market product quality, and it would be difficult to see another company making a significant dent in Disney’s market share.

Weaknesses

Omnipresence – some believe that Disney’s influence is so vast that the company’s presence has infiltrated almost every aspect of consumer life. This so-called “Disney-ization” is often pervasive and difficult to detect and has negative connotations for some customer relations.
High-cost products and services – consumers are willing to pay for the privilege of owning Disney products because of the company’s brand equity – but only to an extent. Disney amusement parks are notoriously expensive, and its cable channels are often not included in standard cable packages.
Seasonality – Disney’s media networks, amusement parks, and advertising revenue are all impacted by the changing seasons. As a result, Disney has to work harder to attract and retain customers during quiet periods, contributing to the pervasive presence in consumer lives mentioned above.

Opportunities

Diversification through acquisition – in late 2019, Disney acquired 21st Century Fox and its streaming service Hulu. It also gained the rights to National Geographic and 21st Century Fox’s vast library of content. This will allow Disney to diversify its programming reach to children and adults alike.
Movie rights – currently, Turner Broadcasting holds the rights to early Star Wars films. The benefits for Disney gaining the rights to these films would mean it has complete ownership of the franchise.
Changes in media consumption in children – the children of today are more technologically savvy than ever. They are also more empowered about what they watch, with studies showing they spend almost 11 hours a day consuming media across various devices. This represents a huge opportunity for Disney market their content.

Threats

Streaming competition – while Disney enjoys little competition elsewhere, it is very much a late adopter of streaming services. Netflix and Amazon are long-established players in this segment that Disney will find difficult to take market share from.
Anti-technology sentiment – as children become more technologically savvy, their parents are taking an increasingly active role in preserving a child’s innocence by encouraging them to interact in the “real world”. This compromises Disney’s ability to reach children in what is undoubtedly one of their core strategies.
Increased regulatory pressure – changes in consumer trends in media consumption have created many new laws and regulations regarding privacy, data protection, safety, licensing, and distribution. These have the potential to reduce company profits and restrict expansion into new markets.

Ford SWOT Analysis Example

Read: Ford SWOT Analysis

Strengths

Dominant market position – Ford’s biggest market is the United States, where it enjoys a 14.8% market share for cars and light trucks. It is second only to General Motors.
Proven expertise in light commercial vehicles – this leaves Ford in a good position to take advantage of the increasing demand for delivery vehicles as a result of the surge in eCommerce.
Consumer popularity – Ford enjoys a consistent and long-lasting relationship with its customers. For example, the Ford F-Series pickup truck has been the highest selling truck in the USA for a record 41 years straight. Furthermore, the F-series outsold its closest rival by over 200,000 units in 2017.
Research and development – Ford continues to invest heavily in research and development. Powertrain technology, eco-friendly fuel, and improved safety are the focuses of the company. Ford also owns many patents – with over 100 patents alone filed on their pickup trucks.

Weaknesses

Dependence on US markets – Ford has a high dependence on sales derived from the US market. It has little to no exposure in emerging car markets such as China and India, where experts predict the majority of future car sales will originate. Ford has also struggled to make an impact in Europe after initial success there.
Product recalls – approximately 830,000 Ford and Lincoln vehicles were recalled in 2016 because of faulty side door latches, hurting Ford’s brand image. Further recalls occurred in 2019 when over 1.2 million SUVs were found to have suspension problems.
High-cost model – Ford’s relatively high priced vehicles are reflected in its generous employee wage packages. However, this puts it at a competitive disadvantage to its competitors – particularly Asian brands such as Toyota, Mazda, and Hyundai.

Opportunities

Emerging economies – if Ford can manufacture vehicles for Chinese and Indian consumers while still maintaining profits, then this represents an excellent opportunity for company growth.
Green vehicles – as consumers become more concerned with environmentally friendly transport, Ford is well placed with their research and development background to develop cars to fill this market.
Ride-sharing – because of Ford’s reputation for producing fuel-efficient engines, it is also well placed to take advantage of the demand for ride-sharing services such as Uber and Lyft.

Threats

New competitors – the growing presence of foreign car companies in the USA is cause for concern. Volkswagen and Toyota, in particular, are challenging Ford’s long-held status as the maker of the most popular pickup truck. Mercedes and Nissan are also offering vans that compete with similar Ford offerings.
Changes in consumer preferences – like all automotive manufacturers, Ford faces an uncertain future. The shift toward alternative fuels is a matter of when not if. There is also an increasing trend away from privately owned cars toward public transport.
Changes in legislation – several European countries have taken steps to restrict carbon emissions, particularly in the wake of the Volkswagen emissions scandal. Other countries where Ford does business are also setting stricter standards, such as Australia, Japan, Taiwan, and South Korea.

Facebook SWOT Analysis Example

history-of-facebook — Starting as a social experiment, at Harvard University, back in 2004, Facebook quickly expanded to reach over 1 million monthly active users by the end of the same year. By early 2005, Facebook was already present in 800 college networks. By 2012, as Facebook got ready for its IPO, the company reached over a billion monthly active users.

history-of-whatsapp — Founded in 2004 by former Yahoo! employees Brian Acton and Jan Koum, it eventually sold to Facebook for $19 billion. It entered into the Facebook Inc. empire, headed by Mark Zuckerberg together with Facebook and Instagram. As a result, WhatsApp is transitioning into a Super App, or a horizontal mobile platform where users can do anything from communication to payments.

Google SWOT Analysis Example

Read more: Google SWOT Analysis

how-does-google-make-money — Google (now Alphabet) primarily makes money through advertising. The Google search engine, while free, is monetized with paid advertising. In 2021 Google’s advertising generated over $209 billion (beyond Google Search, this comprises YouTube Ads and the Network Members Sites) compared to $257 billion in net sales. Advertising represented over 81% of net sales, followed by Google Cloud ($19 billion) and Google’s other revenue streams (Google Play, Pixel phones, and YouTube Premium).

what-is-google-tac — The traffic acquisition cost represents the expenses incurred by an internet company, like Google, to gain qualified traffic – on its pages – for monetization. Over the years Google has been able to reduce its traffic acquisition costs and in any case, keep it stable. In 2021 Google spent 21.75% of its total advertising revenues (over $45.56 billion) to guarantee its traffic on several desktop and mobile devices across the web.

McDonald’s SWOT Analysis

mcdonalds-business-model — McDonald’s is a heavy-franchised business model. In 2021, over 56% of the total revenues came from franchised restaurants. The long-term goal of the company is to transition toward 95% of franchised restaurants (in 2020 franchised restaurants were 93% of the total). The company generated over $23 billion in revenues in 2021, of which $9.78 billion from owned restaurants and $13 billion from franchised restaurants.

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-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. Leveraging on a streaming platform, Netflix generated over $29.6 billion in 2021, with an operating income of over $6 billion and a net income of over $5 billion.

Nike SWOT Analysis

nike-vision-statement-mission-statement — Nike’s vision is “to bring inspiration and innovation to every athlete in the world.” While its mission statement is to “do everything possible to expand human potential. We do that by creating groundbreaking sport innovations, by making our products more sustainably, by building a creative and diverse global team and by making a positive impact in communities where we live and work.”

Microsoft SWOT Analysis Example

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.

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.

Target SWOT analysis

Strengths

Diverse product range

Target positions itself as both a supermarket and department store and thus stocks a diverse variety of food and general merchandise. The company also customizes the specific product assortment of each store based on its location.

Core product categories include food and beverage, apparel, baby, household essentials, home décor, toys, electronics, beauty, party, school, and office supplies, sports, and entertainment.

Private label success

Around 33% of the products sold by Target are private label brands. The company frequently partners with other brands or designers to develop limited-edition collectibles that strike the correct balance between style and affordability.

These collectibles also form part of a differentiation strategy that separates the company from competitors such as Walmart.

Weaknesses

Lack of international presence

Target is an established corporation that has operated in one shape or form since 1902. However, the company lacks the strong international presence of major players such as Walmart, Amazon, and Costco.

Target did expand into Canada in 2011 but withdrew just four years later. The failed exercise ended with a net loss of $2 billion.

Grocery prices

In a 2016 Business Insider comparison of grocery prices, it was found that Target was up to 15% more expensive than Walmart (particularly for fresh produce). Other comparisons made in 2019 and 2021 reported similar results.

To some extent, however, this weakness can be offset by Target’s diverse range of products and depends on what the customer has in their shopping basket.

Opportunities

RedCard and Target Circle programs

The Target RedCard Program enables members to save 5% on their purchases with a branded debit card, credit card, or reloadable account. Target Circle is a separate rewards program with access to exclusive deals and other perks with over 100 million members.

In both cases, Target has the opportunity to increase the membership of these programs to collect more data on customer purchase behavior.

Small format stores

Target’s traditional department stores occupy a lot of floor space and tend to be unsuited to densely populated urban areas. To serve customers in these areas, the company introduced small-format stores that are approximately 33% the size of a full-size, 133,000-square-foot store.

Since floor space is limited, the company is very deliberate about how each small-format store is stocked. It also considers the composition of the community and what other businesses are located nearby. For example, a small-format store in a busy tourist precinct will sell different products than one in a suburb with predominantly young families.

Threats

Competition

Target has several strong competitors in an industry characterized by slim margins and frequent disruption. The lack of international presence and an only recently developed eCommerce system has further impacted the company’s competitiveness.

Market concentration

Target’s complete reliance on the United States market makes it vulnerable to macroeconomic factors such as inflation and recession. As recently as July 2022, the company announced a 90% decline in profits as inflation caused consumers to cut back on nonessential items.

Inflationary pressures also impacted Target’s inventory management, with around $15.1 billion in unsold merchandise taking up valuable space in its warehouses.

Tesla SWOT Analysis Example

Read more: Tesla SWOT Analysis, Tesla Business Model

Uber SWOT Analysis Example

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

Samsung SWOT Analysis Example

Read: Samsung SWOT Analysis

TOWS Matrix As Alternative To The SWOT Analysis

The four strategy combinations of a TOWS Matrix:

Strengths/Opportunities (SO)

In this quadrant of the TOWS Matrix, a business must assess its strengths on a case-by-case basis to determine if it can use them to capitalize on opportunities. For example, a car manufacturer operating in a luxury car market (opportunity) with a strong R&D culture (strength) may design a feature-packed line of premium vehicles.

Strengths/Threats (ST)

Here, the business should assess each strength based on its ability to counteract or avoid external threats. Returning to the car manufacturer example, unfavorable exchange rates (the threat) may be counteracted by the company using its R&D expertise to build a factory in a country with a better-valued currency.

Weaknesses/Opportunities (WO)

In the WO quadrant, an organization must determine how its weaknesses can be eliminated or offset by external opportunities. For example, inexperience in dealing with foreign labor unions (weakness) can be overcome by hiring managers with the relevant experience (external opportunity).

Weaknesses/Threats (WT)

In the final strategy combination, the business assesses each weakness and threat and determines if they can be avoided. The car manufacturer with little experience operating in foreign markets (weakness) can avoid entering that market altogether. Another maker with a heavy reliance on a single car model (weakness) can reduce the threat of competition by developing a range of different models.

Personal SWOT Analysis

Create a SWOT diagram with four boxes. Each box represents:

Strengths – what skill set do you bring to the table? Consider your qualifications, experience, achievements, personal skills, and any industry contacts or leads.
Weaknesses – what are your professional bad habits or shortcomings? Do you struggle with public speaking or do you tend to call in sick often? What skills or qualifications are lacking or have expired? In identifying weaknesses, be honest and thorough. Each weakness represents an avenue for potential growth.
Opportunities – who are the movers and shakers in your industry and how can you position yourself in front of them? What trends can you foresee? Will these trends create job vacancies?
Threats – what are the obstacles you are currently facing? How is your role or broader industry changing? Could automation or increased competition affect your job security? Threats also take the form of ambitious or vocal colleagues who have the potential to outcompete you for promotions.