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SWOT Analysis: Identifying Operational Strengths, Weaknesses, Opportunities, and Threats, Study Guides, Projects, Research of Economics

Texas A&M University (A&M)Economics

An overview of SWOT analysis, a strategic planning tool used to evaluate the internal strengths and weaknesses of an operation and the external opportunities and threats it faces. examples of how to identify and address weaknesses, opportunities, and threats, as well as creating operational plans based on the analysis.

Typology: Study Guides, Projects, Research

2021/2022

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S.W.O.T. Analysis
Identifying Your Strengths, Weaknesses, Opportunities, and Threats
A SWOT analysis is a term used to describe a tool that is effective in identifying your Strengths
and Weaknesses, and for examining the Opportunities and Threats you face. While it is a basic,
straightforward model, it has been a popular business practice for many years because it helps
provide direction and serves as a basis for the development of business plans. It accomplishes
this by examining the strengths (what an operation does well) and weaknesses (what an operation
does not do well) in addition to opportunities (potential favorable conditions for an operation)
and threats (potential unfavorable conditions for an operation). Once completed, the SWOT
analysis can help determine if the information indicates something that will assist the operation
in achieving its objectives (a strength or opportunity), or if it indicates an obstacle that must be
overcome or minimized to achieve desired results (weakness or threat).
Why is the SWOT Analysis so Popular?
The SWOT analysis has been a popular business tool for many years. While business planning
does require some time and knowledge, most planners agree that a SWOT analysis should be
completed at the beginning of the planning process. Here are a few reasons why performing a
SWOT analysis has been a popular planning activity.
• While not an easy task, performing a SWOT analysis does not require any special
training, software, or skills. The only requirement for performing a SWOT analysis is
being truly honest about your own operation.
• Most managers and workers have expertise in areas that are not known by other members
of the group. Organizing the expertise in a SWOT analysis helps in making informed
decisions and provides better results.
• A SWOT analysis provides a brief but complete summary of the operation.
• While the finished results are important, the process of building a SWOT analysis is
almost as valuable. Often times when a SWOT analysis is performed, all people involved
with the operation become more aware of the performance and goals of the operation.
• Finally, completing a SWOT analysis allows you to immediately see where you can take
action to improve your weak areas, capitalize on your strengths and opportunities, and
defend against threats.
What are the elements of a SWOT Analysis?
The SWOT analysis stands for the analysis of internal strengths and weaknesses of an operation
and external opportunities and threats to the operation. Below is a description of each of these
elements that should be considered when performing a SWOT analysis.
Bennett, Blake, Stan Bevers, Rob Borchardt, and Brenda Duckworth. Department of Ag Economics, Texas Cooperative Extension, Texas A&M
University. May 2003.
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S.W.O.T. Analysis

Identifying Your Strengths, Weaknesses, Opportunities, and Threats

A SWOT analysis is a term used to describe a tool that is effective in identifying your S trengths and W eaknesses, and for examining the O pportunities and T hreats you face. While it is a basic, straightforward model, it has been a popular business practice for many years because it helps provide direction and serves as a basis for the development of business plans. It accomplishes this by examining the strengths (what an operation does well) and weaknesses (what an operation does not do well) in addition to opportunities (potential favorable conditions for an operation) and threats (potential unfavorable conditions for an operation). Once completed, the SWOT analysis can help determine if the information indicates something that will assist the operation in achieving its objectives (a strength or opportunity), or if it indicates an obstacle that must be overcome or minimized to achieve desired results (weakness or threat).

Why is the SWOT Analysis so Popular?

The SWOT analysis has been a popular business tool for many years. While business planning does require some time and knowledge, most planners agree that a SWOT analysis should be completed at the beginning of the planning process. Here are a few reasons why performing a SWOT analysis has been a popular planning activity.

  • While not an easy task, performing a SWOT analysis does not require any special training, software, or skills. The only requirement for performing a SWOT analysis is being truly honest about your own operation.
  • Most managers and workers have expertise in areas that are not known by other members of the group. Organizing the expertise in a SWOT analysis helps in making informed decisions and provides better results.
  • A SWOT analysis provides a brief but complete summary of the operation.
  • While the finished results are important, the process of building a SWOT analysis is almost as valuable. Often times when a SWOT analysis is performed, all people involved with the operation become more aware of the performance and goals of the operation.
  • Finally, completing a SWOT analysis allows you to immediately see where you can take action to improve your weak areas, capitalize on your strengths and opportunities, and defend against threats.

What are the elements of a SWOT Analysis?

The SWOT analysis stands for the analysis of internal strengths and weaknesses of an operation and external opportunities and threats to the operation. Below is a description of each of these elements that should be considered when performing a SWOT analysis.

Bennett, Blake, Stan Bevers, Rob Borchardt, and Brenda Duckworth. Department of Ag Economics, Texas Cooperative Extension, Texas A&M University. May 2003.

Strengths The first element of a SWOT analysis describes the strengths of an operation. These strengths include what an operation does well, and should be viewed from both your point of view as well as the point of view of people with whom you come in contact. In some cases, an organization’s strengths are obvious, for example, being a low cost producer. In other cases, it is a matter of perspective, for instance our product is of high quality. It is important to note that operations that are in a bad position also have strengths. Whether or not these strengths are adequate should be determined through further analysis.

Weaknesses The other internal element of the SWOT analysis describes the weaknesses of an operation. Examining weaknesses include identifying what an operation does not do well. As with the strengths, weaknesses should be examined from both your perspective and from the perspective of those outside your operation. It is also possible for weaknesses to be obvious such as a limitation of resources or be more of a perspective issue such as a lack of teamwork. All operations, regardless of size or profitability have weaknesses. How badly these weaknesses will affect the operation should be left to further analysis.

Opportunities The first external element of the SWOT analysis is opportunities. The opportunities include any favorable situation in the business’s environment that the operation may realize gains from. These could range from diversification and the use of new technologies to market trends and relationship developments. It is important to note that all operations have some opportunities: identifying these opportunities is the sign of a good analyst.

Threats The final element of the SWOT analysis is the external threats that the operation faces. Regardless of size or profitability, all operations face threats. These threats could range from lower international prices to key relationships that are not going well. Whatever the threat, the operation should have a plan in place to resolve the problem.

How do I complete a SWOT Analysis?

There is no fixed way of completing a SWOT analysis. The manager of the operation (or whoever else will be using the analysis) should be comfortable with and understand the analysis. The objective of the analysis should always be to place the business in a position where the manager can determine a strategy for the future to improve its overall performance or maintain it if the results are favorable. Below is a set of questions for each of the elements that will assist you in completing a SWOT analysis for your operation. Like all lists, these are incomplete. You may not answer every question listed and may even have a few additional questions that you would like to address. However, you can use these questions as a starting point for your SWOT analysis.

  • Can quality of operations, products, and inventory management be improved without incurring serious costs?
  • Can I create a competitive edge over my competitors?
  • Is there an opportunity to demand better prices from suppliers?
  • Is there an opportunity to receive higher prices for production?
  • Can profitability be increased through the production of other commodities?
  • Can the operation get cash flows that are more predictable? If yes, how?
  • What can I do that I am not currently doing to improve my operation?
  • What new governmental policies or programs are available?
  • What interesting social patterns, population profiles, lifestyle changes, etc are occurring that could benefit my operation?
  • What are interesting local events that might be used to benefit my operation?

Threats

  • Have there been any significant changes in the industry in which you operate?
  • What obstacles do you face?
  • What is your competition doing?
  • Are there any, or do you anticipate new competitors in your market?
  • Are there any new regulations in your industry making it difficult to be profitable?
  • Is changing technology threatening your profitability?
  • Is the operation keeping up with technological changes?
  • Have margins been under pressure?
  • Are international competitors taking market share?
  • What other changes in the market could damage the profitability of the operation?
  • Do you have bad debt or cash-flow problems?
  • Are employees adequately trained and motivated?
  • Is the operation producing too many different commodities?
  • Could any of your weaknesses seriously threaten your operation?

Once all strengths, weaknesses, opportunities, and threats of your operation have been listed, the information should be combined so that strategies can be developed. Examine the weaknesses, opportunities, and threats facing the operation and draw up plans to take advantage of the opportunities, counter the threats, and improve the weaknesses. Pay close attention to strengths of the operation that may help you achieve your plans. The strategy chosen will depend on the original goals and objectives of your operation, but the whole process will certainly give an overall look at the current position of your operation.

Completing a S.W.O.T Analysis

Lesson Plan

I. Goals

A. The participant will understand the need for examining the strengths,

weaknesses, opportunities, and threats facing their operation.

B. The participant will be able to complete a S.W.O.T. analysis for their

operation.

II. Lesson Highlights

A. S.W.O.T. analysis is an acronym for examining the internal strengths

and weaknesses of an operation and the external opportunities and

threats faced by an operation.

B. Performing a S.W.O.T. analysis helps provide direction and serves as

a basis for the development of business plans.

C. It accomplishes this by examining the operation’s:

1. Strengths (what an operation does well)

2. Weaknesses (what an operation does not do well)

3. Opportunities (potential favorable conditions for an operation).

4. Threats (potential unfavorable conditions for an operation).

D. Once completed, the SWOT analysis can help determine if the

information indicates something that will assist the operation in

achieving its objectives (a strength or opportunity), or if it indicates an

obstacle that must be overcome or minimized to achieve desired

results (weakness or threat).

2. Weaknesses

a. What does your operation not do well (production,

marketing, etc)?

b. What do others see as your weaknesses (production,

marketing, etc)?

c. What should you avoid?

d. What are the least profitable enterprises?

e. What is the market share of your organization?

f. Is your marketing/advertising effective?

g. Is the operation “wondering”?

h. What is the biggest expense of the operation?

i. Will the operation be able to stand price decreases?

j. Why do customers not buy from you?

k. What relevant resources do you need?

l. Do your employees perform at their best?

m. Are there incentives in place to reward your employees

for good work?

n. Does your operation manage its inventories efficiently?

3. Opportunities

a. What new technologies are available that the operation

can use to lower costs?

b. What market trends am I observing?

c. What new relationships could I develop?

d. Are there new business strategies that I could use in my

operation?

e. Can quality of operations, products, and inventory

management be improved without incurring serious

costs?

f. Can I create a competitive edge over my competitors?

g. Is there an opportunity to demand better prices from

suppliers?

h. Is there an opportunity to receive higher prices for

production?

i. Can profitability be increased through the production of

other commodities?

j. Can the operation get cash flows that are more

predictable? If yes, how?

k. What can I do that I am not currently doing to improve

my operation?

l. What new governmental policies or programs are

available?

m. What interesting social patterns, population profiles,

lifestyle changes, etc are occurring that could benefit my

operation?

n. What are interesting local events that might be used to

benefit my operation?

4. Threats

a. Have there been any significant changes in the industry

in which you operate?

b. What obstacles do you face?

c. What is your competition doing?

d. Are there any, or do you anticipate new competitors in

your market?

e. Are there any new regulations in your industry making it

difficult to be profitable?

f. Is changing technology threatening your profitability?

g. Is the operation keeping up with technological changes?

h. Have margins been under pressure?

i. Are international competitors taking market share?

j. What other changes in the market could damage the

profitability of the operation?

k. Do you have bad debt or cash-flow problems?

l. Are employees adequately trained and motivated?

m. Is the operation producing too many different

commodities?

n. Could any of your weaknesses seriously threaten your

operation?

IV. Review Questions

A. What are the internal factors analyzed during a S.W.O.T analysis?

Answer: Strengths and Weaknesses.

B. What are the external factors analyzed during a S.W.O.T analysis?

Answer: Opportunities and Threats.

Strengths Worksheet

List all the Internal Strengths of the Operation (Use additional Pages if Necessary)

Question Number Question^ Answer S 1

S 2

S 3

S 4

S 5

S 6

S 7

S 8

S 9

S 10

S 11

S 12

S 13

Opportunities Worksheet

List all the External Opportunities of the Operation (Use additional Pages if Necessary)

Question Number Question Answer O 1

O 2

O 3

O 4

O 5

O 6

O 7

O 8

O 9

O 10

O 11

O 12

O 13

Threats Worksheet

List all the External Threats of the Operation (Use additional Pages if Necessary)

Question Number Question Answer T 1

T 2

T 3

T 4

T 5

T 6

T 7

T 8

T 9

T 10

T 11

T 12

T 13

S.W.O.T. Analysis

Identifying Your Strengths, Weaknesses, Opportunities, and Threats

Overheads

√ S.W.O.T. analysis is an acronym for examining the internal strengths

and weaknesses of an operation and the external opportunities and

threats faced by an operation.

√ Performing a S.W.O.T. analysis helps provide direction and serves as

a basis for the development of business plans.

√ It accomplishes this by examining the operation’s:

1. Strengths (what an operation does well)

2. Weaknesses (what an operation does not do well)

3. Opportunities (potential favorable conditions for an

operation).

4. Threats (potential unfavorable conditions for an

operation).

√ Once completed, the SWOT analysis can help determine if the

information indicates something that will assist the operation in

achieving its objectives (a strength or opportunity), or if it indicates an

obstacle that must be overcome or minimized to achieve desired results

(weakness or threat).

√ There is no fixed way to complete a S.W.O.T. analysis.

1. The manager of the operation (or whoever else will be

using the analysis) should be comfortable with and

understand the analysis.

2. The objective of the analysis should always be to be in

a position where you can determine a strategy for the

future to improve your operation’s overall performance

or maintain it if the results are favorable.

√ Some general questions to answer to assist in completing a S.W.O.T.

analysis (note: not all questions may be answered, and more questions

may be added).

1. Strengths.

a. What does your operation do well (production,

marketing, etc)?

b. What do other people see as your strengths

(production, marketing, etc)?

c. What are the major sources of your operation’s

revenue and profit?

d. What is the major focus of your operation?

e. What is the market share of your organization?

f. Is your marketing/advertising effective?

g. Why did you decide to start your operation?

i. What were the motivating factors and

influences?

ii. Do these factors still represent some of your

strengths?

h. Why do your customers buy from you?

i. What differentiates your operation in the market?

j. What have been your most notable achievements?

k. What relevant resources do you have?

l. Is the moral of your employees high?

m. Are there incentives in place to reward your

employees for good work?

3. Opportunities

a. What new technologies are available that the

operation can use to lower costs?

b. What market trends am I observing?

c. What new relationships could I develop?

d. Are there new business strategies that I could use

in my operation?

e. Can quality of operations, products, and inventory

management be improved without incurring

serious costs?

f. Can I create a competitive edge over my

competitors?

g. Is there an opportunity to demand better prices

from suppliers?

h. Is there an opportunity to receive higher prices for

production?

i. Can profitability be increased through the

production of other commodities?

j. Can the operation get cash flows that are more

predictable? If yes, how?

k. What can I do that I am not currently doing to

improve my operation?

l. What new governmental policies or programs are

available.

m. What interesting social patterns, population

profiles, lifestyle changes, etc are occurring that

could benefit my operation?

n. What are interesting local events that might be

used to benefit my operation?

4. Threats

a. Have there been any significant changes in the

industry in which you operate?

b. What obstacles do you face?

c. What is your competition doing?

d. Are there any, or do you anticipate new

competitors in your market?

e. Are there any new regulations in your industry

making it difficult to be profitable?

f. Is changing technology threatening your

profitability?

g. Is the operation keeping up with technological

changes?

h. Have margins been under pressure?

i. Are international competitors taking market

share?

j. What other changes in the market could damage

the profitability of the operation?

k. Do you have bad debt or cash-flow problems?

l. Are employees adequately trained and motivated?

m. Is the operation producing too many different

commodities?

n. Could any of your weaknesses seriously threaten

your operation?