What is SWOT Analysis?
SWOT analysis is a business tool with a broad variety of potential applications in work and personal life. A SWOT analysis diagram is formed by a two-by-two grid. Each quadrant has an outline of the subject's strengths, weaknesses, opportunities, and threats.
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WHEN TO USE SWOT ANALYSIS
SWOT analysis can be high-level or granular, and help the creator pinpoint both internal and external factors. This type of diagram becomes more useful when you take what you’ve learned and apply it in the real world. It is vital to have a clear question in mind when performing a SWOT analysis. By making the inquiry more specific, you will unearth weaknesses in a plan, budget, project, or goal you might not have otherwise. SWOT can be useful at the beginning of a project, or when your team has hit a roadblock.
These are some examples of when you could use SWOT to tackle a problem:
- Expanding into a new market: Your business has found a large degree of success selling a product or service in your home country. Now you are looking to expand overseas. What strengths does this product bring to the table, and what drawbacks are there to this expansion? While the opportunities may look golden, the threats, in terms of new competitors or regulations, may not be obvious without in-depth scrutiny.
- Website redesign: You’ve run the data to see where your site is succeeding, but do you know where you fail? Threats to your business can pop up daily in a fast-paced digital world—are you prepared to manage competition?
- A new business idea: That bookstore or yoga studio you’ve wanted to open for ages may sound ideal now, but have you looked at the costs and benefits more concretely? Doing a SWOT analysis can organize your thoughts and make it more likely that you will succeed going forward.
- Investment opportunity: Whether it’s buying shares in a company, buying new hardware for your firm, or even investing in your personal gadget collection, analysing the strengths and weakness of your potential acquisition can help prevent buyer’s remorse. Performing side-by-side SWOT diagrams for each investment you’re considering can help the right choice stand out.
- Potential partnership: A SWOT analysis is a useful tool for examining personal compatibility. If you’re contemplating joining forces and going into business with a colleague, have you outlined factors that could threaten your business? Are you both on the same page about what opportunities there are in your market? Even romantic couplings can benefit from this process.
- Applying to college or graduate programs: While the typical college entrance essay paints a rosy picture of the applicant, knowing your own weaknesses is important for academic success. A lower GPA could be boosted by excellent test scores, and fewer extracurricular activities can be explained by the need to support a family.
HOW TO FILL OUT YOUR DIAGRAM
Once you’ve opened a diagram, how do you proceed? Thinking strategically now will save you time down the road. For example, here's how you can focus on the Opportunities quadrant to fill out the diagram:
- Opportunities are external. In contrast to Strengths, this category should focus on factors outside yourself or your business. A large budget is an opportunity, while good financial sense would be a strength.
- Opportunities should be specific. “High demand for books” may be true, but is probably not a definite reason to open a bookstore in your area. “Third-largest market in the state” gives you something more solid to grapple with.
- Opportunities should be realistic. SWOT doesn’t do much good if you inflate your opportunities and discount your threats. Take a critical eye to your bullet points. How will you translate each point to reality?
SWOT analysis was invented in the 1960s by a management consultant named Albert Humphrey at the Stanford Research Institute. Previously, corporate planning had not met with much success. Fortune 500 companies needed a way to produce long-term planning that was executable and reasonable. Humphrey and his research team proposed the SWOT model to bring accountability and objectivity to the planning process, and it has been popular ever since.
Albert Humphrey advocated performing SWOT analysis on specific criteria, such as products, process, customers, distribution, finance, and administration. SWOT analysis has only grown in popularity since it was invented, as demonstrated by the Google Books Ngram search below.
How to Make a SWOT Analysis Diagram in Lucidchart
Lucidchart is an online diagramming tool with several business and personal templates for SWOT diagrams. Starting with a SWOT analysis template lets you stop fiddling with menus and start planning.
- Register for a Lucidchart account.
- Navigate to My Documents.
- Click Create > New Document, then choose Standard under Templates.
- In All Categories, select SWOT Analysis.
There is a variety of color schemes, preloaded bullet points, and the ability to share your diagram online or in print. These features all contribute to Lucidchart being the top choice for performing SWOT analysis.
With Lucidchart, you can easily create great-looking SWOT diagrams and other specialized charts, right in a web browser. Try a pre-made SWOT template today!