How to Use a SWOT Analysis for Strategic Planning
By Jibility Co-Founder Chuen Seet
A SWOT analysis is a popular business analysis method that business leaders use to produce a current, high-level understanding of their business. SWOT stands for Strengths, Weakness, Opportunities, and Threats.
Arranged in a 2×2 matrix, a SWOT analysis is easy to create and easy to understand, making it a useful starting point in the strategic planning process. However, a SWOT analysis only presents a static view of a business’s current situation – so we’ll also be exploring how to use a completed SWOT analysis to create a dynamic, actionable strategic roadmap!
Components of a SWOT Analysis
As we mentioned earlier, SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. During a SWOT analysis, you’ll be dividing the internal and external factors that affect your organization into one of these four categories, so it’s important to understand what each category represents.
In a SWOT analysis, strengths represent what your organization already does well. These are the factors that define your brand and give you a competitive advantage. Questions you might ask yourself to define your strengths include:
- In what areas does our business already excel?
- What assets do we already have that will drive our current and future success?
- Why would customers choose our business over a competitor’s?
During the strategic planning process, you will want to create a plan that plays to (and preserves) your strengths, leveraging them to help your organization realize its strategic vision.
Weaknesses are the areas that hold your business back from optimal performance. These are the gaps in your business capabilities that will need to be addressed in order to achieve your goals. During a SWOT analysis, you will want to ask yourself questions to define your weaknesses:
- In what areas does our business struggle to perform?
- Why would some customers choose competitors over our brand?
- What are the gaps in capability that will need to be addressed in order for our business to realize its vision?
A strategic plan should address and mitigate your weaknesses in order to achieve your objectives. Later in the strategic planning process, conducting capability-based planning and utilizing prioritization matrixes can help you define and prioritize business actions to shore up your weaknesses.
Opportunities represent external factors and market conditions that present the biggest potential for growth and future success. Unlike strengths and weaknesses, opportunities provide a forward-looking view of your business. Using the following questions can help you identify opportunities:
- How can we position our company to capitalize on changing market conditions?
- What new technology can we invest in to improve our operations?
- Where can we improve our sales or marketing funnel?
A strategic plan should culminate in a business roadmap that provides an actionable path forward and a defined time horizon for capitalizing on your opportunities.
Threats are the external factors and market conditions that have the potential to diminish your business performance. These are the risks that must be accounted for during the strategic planning process. Threats can be identified by questions such as:
- What market conditions might negatively impact our business?
- How might we lose market share to our competitors?
- How could consumer trends negatively impact our business?
A strategic plan should include actionable steps for mitigating the risks associated with these threats.
Free SWOT Analysis Template
Below is a free SWOT analysis template you can download to help you conduct a SWOT analysis.
How to Use a Completed SWOT Analysis
So, you’ve completed a SWOT analysis of your business…what comes next? Like we mentioned earlier, a completed SWOT analysis gives you snapshot of your business’s current state. But it doesn’t give your organization an actionable, future-oriented plan for addressing your strengths, weaknesses, opportunities, or threats.
However, you can use the insights gained from your completed SWOT analysis to kickstart the strategic planning process. Strategic planning software helps you expand on each component of your completed SWOT analysis and develop a strategic roadmap that enhances your strengths, addresses your weaknesses, capitalizes on opportunities, and mitigates threats.
Unlike a SWOT analysis, a strategic roadmap establishes a bridge connecting your current business conditions to your future goal state, providing an actionable plan for execution!