What is a SWOT analysis? Meaning, benefits and when to use one.

What is a SWOT analysis?

A SWOT analysis is a framework used to identify strengths, weaknesses, opportunities, and threats for businesses or projects. It can be used to evaluate your competitive position in the industry and help develop strategic planning.

This type of self-assessment looks at both internal and external factors, along with current and future potential.

Elements of a SWOT analysis.

Within the four elements of a SWOT analysis, the strengths and weaknesses cover internal factors of the business. Meanwhile, the opportunities and threats look externally to consider factors that could impact the business positively or negatively.

Let’s look at these elements more closely:

Strengths.

SWOT analysis strengths detail what your business does well. This includes the tangible and intangible positives and achievements that separate you from the competition. For example, a strong brand identity, effective marketing and excellent customer service.

Weaknesses.

Weaknesses are the things you need to work on, or the inefficiencies preventing you from performing at your highest level and achieving your goals. This could be anything from a weak brand identity to low engagement on social media or insufficient supply chains.

Opportunities.

Opportunities in SWOT analysis refer to beneficial external factors that could give your company a competitive advantage. An example can be if a product starts to trend on TikTok. Businesses should look for ways to turn opportunities like this into ongoing strengths.

Threats.

Threats are external factors that could potentially have a negative impact on your brand. Examples can include increasing competition or the loss of access to a key ingredient or source for a product. To combat this, businesses can put contingency plans in place to address and mitigate these potential issues.

It's a good idea to regularly perform a SWOT analysis to stay aligned with how your business could increase profits and mitigate risks. Use templates from Adobe Express to record the results of your SWOT analysis.

Example SWOT analysis of a company.

So, what might a SWOT analysis actually look like in action? In this example, we’ve focused on an independent London coffee shop. Take a look at its potential strengths, weaknesses, opportunities and threats.

Strengths:

• Location: Situated in the heart of a busy London street, the coffee shop is located in an area with high foot traffic. This means increased exposure and a greater chance of more customers.
• Layout: There is seating for 20 people and a large counter for multiple employees to serve multiple customers with take-away beverages.
• Independent brand: As an independent coffee shop, many customers are drawn to the unique offerings and ability to adapt the menu. Many customers choose to support local businesses over big chains.

Weaknesses:

• Weather and foot traffic-reliant: If it rains, foot traffic is reduced, and sales can sometimes halve.
• Limited seating capacity: The coffee shop is cosy, encouraging customers to stay for long periods. However, this isn’t always ideal as it only seats 20 people, and the owners want to encourage a somewhat rapid customer churn to make more sales.

Opportunities:

• Community engagement: The cafe can work with local businesses to create special offers and promote each other, encouraging more customers into the shop.
• Loyalty rewards scheme: Apps, stamp cards or other similar reward schemes offer customers rewards for brand loyalty, encouraging them to return.
• Catering services: Diversified portfolios can broaden horizons, so a high-street coffee shop can also offer catering for events and office deliveries.

Threats:

• Competition: In London, the coffee shop market is oversaturated. There are thousands of competitor chains and independent shops all competing for space.
• Economic factors: When the economy dips, many customers may reduce their daily coffee spend, impacting profits.
• Supply chain disruptions: Reliance on suppliers puts businesses at risk of not receiving the ingredients they need to make products. Or, worse, using poor-quality ingredients that prevent customers from coming back.

Ready to conduct your own SWOT analysis?

Check out the in-depth guide on how to do a SWOT analysis with the help of Adobe Express. Whether you’re a small business that’s just starting out or you’re doing research for a client considering a rebrand, follow the seven simple steps to carry out the process of analysing your organisation.

Once you’ve completed your own SWOT analysis, you can use one of the business reports templates to help structure your findings. Draft efficient reports ready to be shared with different stakeholders in your business.

When to use a SWOT analysis.

A SWOT analysis can be useful in a range of circumstances – from business strategy to personal development.

Here are a few examples of the types of scenarios where a SWOT analysis can be used:

• Starting a business
• Rebranding a business or product
• Assessing business performance
• Identifying areas for improvement
• Problem solving
• Recognising strengths
• Product evaluation
• Competitor research
• Personal development – in the workplace or outside it
• Decision making
• Strategic planning
• Workshops
• Generating new ideas
• Identifying brand opportunities
• Recognising risks.

SWOT Analysis advantages and disadvantages.

Before you conduct a SWOT analysis – whether for your business or your personal development – you should consider its pros and cons. These will help you decide whether it’s a suitable and effective framework for your plans.

Advantages of a SWOT analysis.

• It’s a simple framework to work with, especially if you use a template
• Helps you understand your strengths and weaknesses
• Encourages strategic thinking
• Can help senior management identify high-performing employees, as well as staff that need more training
• Allows businesses to identify future threats and combat them with contingency plans
• Can help to identify opportunities for future success
• It can be used for almost every business.

Disadvantages of a SWOT analysis.

• Data can be biased as it’s conducted by the business or owner themselves
• The framework can be oversimplified – leading to the use of insufficient data
• Data can be based on assumption, so may be incorrect
• The framework must be applied regularly to be effective.

Customisable SWOT analysis examples.

The SWOT analysis can have a pretty standard format. However, some businesses may want to focus on particular aspects of their findings. For example, if a big opportunity is emerging, then this should be highlighted in the analysis as it can drive the business strategy and goals.

You can turn your SWOT analysis and other business analysis results into steps that your teams need to take to improve your business. This could be in the form of an infographic, research poster or a SWOT analysis presentation. Whatever format you choose, make sure the information is consumable, has a context, and makes sense to your audience.

You can use Adobe Express to customise your templates so that the key takeaways really stand out. Create a visually compelling design that highlights your competitive strategy. But remember, doing the SWOT process is only half the work, so be sure to put those key takeaways on display to remind you and your team of the results.