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?
- Is a SWOT analysis useful?
- What are the steps to undertake a SWOT analysis?
- Internal vs. external
- Controllable vs. non-controllable
- Amazon SWOT Analysis Example
- Apple SWOT Analysis Example
- Costo Swot Analysis Example
- Coca-Cola SWOT Analysis Example
- Disney SWOT Analysis Example
- Ford SWOT Analysis Example
- Facebook SWOT Analysis Example
- Google SWOT Analysis Example
- Nestlé SWOT Analysis Example
- Netflix SWOT Analysis Example
- Microsoft SWOT Analysis Example
- Starbucks SWOT Analysis Example
- Tesla SWOT Analysis Example
- Uber SWOT Analysis Example
- Samsung SWOT Analysis Example
- TOWS Matrix As Alternative To The SWOT Analysis
- Other connected frameworks
- Some more business frameworks
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.
What are the key assets, resources and value propositions that give you a competitive edge and promote substantial growth?
What resources, assets or value propositions are lacking or preventing the growth of the business?
Based on the context, what are some available opportunities that can unlock the growth of the organization?
Based on the context, what threats might jeopardize the business in the future?
Amazon SWOT Analysis Example
Apple SWOT Analysis Example
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.
- 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.
- 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).
- 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.
- 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.
- 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
- 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.
- 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.
- 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.
- 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
- 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.
- 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.
- 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.
- 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
- 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.
- 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.
- 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.
- 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
Google SWOT Analysis Example
Read more: Google SWOT Analysis
Nestlé SWOT Analysis Example
Netflix SWOT Analysis Example
Microsoft SWOT Analysis Example
Starbucks SWOT Analysis Example
Tesla SWOT Analysis Example
Uber SWOT Analysis Example
Samsung SWOT Analysis Example
Read: Samsung SWOT Analysis
TOWS Matrix As Alternative To The SWOT Analysis
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.
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.
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).
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.
Other connected frameworks
Some more business frameworks
Other business resources:
- What Is Business Model Innovation
- What Is a Business Model
- What Is A Heuristic
- What Is Bounded Rationality
- What Is Business Development
- What Is Business Strategy
- What is Blitzscaling
- What Is a Value Proposition
- What Is a Lean Startup Canvas
- What Is Market Segmentation
- What Is a Marketing Strategy
- What is Growth Hacking
- Amazon SWOT Analysis