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.

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, And 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 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 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


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 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 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 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


Costo Swot Analysis Example

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

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.

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.


  1. 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.
  2. 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.
  3. 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.


  1. Limited product selection – although you can buy your breakfast cereal and a 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).
  2. 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.
  3. 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. 


  1. 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.
  2. 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.


  1. 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 modelAmazon offers similarly low prices and has a better range of products with long-established supply chain networks. 
  2. 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.
  3. 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

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

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.


  1. 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.
  2. 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.
  3. 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.
  4. 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.


  1. 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.
  2. 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.
  3. 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.


  1. 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.
  2. 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.
  3. 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.


  1. 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.
  2. 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.
  3. 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

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


  1. 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.
  2. 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.
  3. 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.
  4. 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.


  1. 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.
  2. 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.
  3. 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.


  1. 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.
  2. 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. 
  3. 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.


  1. 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.
  2. 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.
  3. 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

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


  1. 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.
  2. 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.
  3. 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.
  4. 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.


  1. 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.
  2. 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.
  3. 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.


  1. 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.
  2. 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.
  3. 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.


  1. 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.
  2. 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. 
  3. 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

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 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.
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’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

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 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.

McDonald’s SWOT Analysis


Nestlé SWOT Analysis Example

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 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’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 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.

Nike SWOT Analysis


Microsoft SWOT Analysis Example

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’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

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 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

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 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

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


Samsung SWOT Analysis Example

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

TOWS Matrix As Alternative To The SWOT Analysis

The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.

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

The SWOT analysis is commonly used as a strategic planning tool in business. However, it is also well suited for personal use in addressing a specific goal or problem. A personal SWOT analysis helps individuals identify their strengths, weaknesses, opportunities, and threats.

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.

Other connected frameworks

Porter’s 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.

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.

Balanced Scorecard

First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.

Blue Ocean Strategy 

A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

Scenario Planning

Businesses use scenario planning to make assumptions on future events and how their respective business environments may change in response to those future events. Therefore, scenario planning identifies specific uncertainties – or different realities and how they might affect future business operations. Scenario planning attempts at better strategic decision making by avoiding two pitfalls: underprediction, and overprediction.

Some more business frameworks

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.

Comparable Analysis Framework

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

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).

Revenue Streams 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.

Read Next: SWOT AnalysisPersonal SWOT AnalysisTOWS MatrixPESTEL AnalysisPorter’s Five Forces.

Other business resources:

Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a 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 The FourWeekMBA Flagship Book "100+ Business Models"

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