swot-analysis

What Is A SWOT Analysis And Why It Is Important

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

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

What is a SWOT analysis?

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

Is a SWOT analysis useful?

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

What are the steps to undertake a SWOT analysis?

The SWOT analysis is comprised of four building blocks:

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

Internal vs. external

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

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

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

Controllable vs. non-controllable

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

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

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

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

1. Strengths

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

2. Weaknesses

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

3. Opportunities

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

4. Threats

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

Amazon SWOT Analysis Example

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

Read more: Amazon Business Model, Amazon SWOT Analysis

Apple SWOT Analysis Example

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

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

Facebook SWOT Analysis Example

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

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

Google SWOT Analysis Example

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

Read more: Google SWOT Analysis

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

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

Netflix SWOT Analysis Example

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

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

Starbucks SWOT Analysis Example

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

Read more: SWOT Analysis Of Starbucks, Starbucks Business Model

Tesla SWOT Analysis Example

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

Read more: Tesla SWOT Analysis, Tesla Business Model

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Published by

Gennaro Cuofano

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

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