SWOT analysis – how to use SWOT analysis

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SWOT

What is SWOT analysis?

SWOT analysis is a tool for auditing an organisation and its environment. It is the first stage of planning and helps marketers focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. While strengths and weaknesses are internal factors, opportunities and threats are external factors (Needham et al, 1995).

How to use SWOT analysis?

SWOT analysis is a brilliant business tool. Both organisations and people can apply it in a number of contexts. For example, one can carry out a personal audit by using SWOT  in order to plan for an appropriate career plan. Companies conduct SWOT analysis for many purposes. For example, SWOT can clearly guide a company to decide whether it should go to a new market or not. Similarly, it can help the company to decide whether it should develop a new product or not.

The following is a brief SWOT analysis of McDonald’s.

Strengths

McDonald’s has been in the market for a long time, hence extensive market knowledge

Loyal customers

Operating in 121 countries across the globe

Weaknesses

The company was criticised for a lack of salad in its products

High staff turnover

Opportunities

New geographical markets

New products development

Threats

Competitors such as Burger King, KFC etc

It is very important to understand that SWOT should not be conducted for the sake of conducting it. Organisations should carry it out in order to obtain the information necessary to make decisions. Therefore, honesty is a very vital element in conducting a successful SWOT analysis. Many analysts argue  that it should be conducted in relations to the competitors (where possible).

To sum-up, SWOT is a simple yet useful framework for analyzing organizations’ strengths, weaknesses, opportunities and threats that they face. However, it is worth mentioning that SWOT analysis alone may not sometimes be enough to address some of the challenges facing a company. Therefore, companies can use some other models e.g. PESTEL, BCG Matrix, and Benchmarking in line with SWOT to obtain the maximum results.

The article publication date: 12 February 2017

References/further reading

Needham et al. (1995) Business for Higher Awards, 1st edition, Heineman Educational

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Author: M Rahman

M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.