Want to learn how to do a SWOT analysis with the help of an example? Then you are at the right place. SWOT analysis is a powerful tool used in Lean Six Sigma implementation that helps organizations identify their Strengths, Weaknesses, Opportunities, and Threats.
Whether you are launching a new product, improving business processes, or simply trying to stay ahead of the competition, SWOT analysis can provide you with valuable insights, which enable businesses to make informed decisions and improve their performance.
In the Lean Six Sigma project, SWOT analysis helps you identify the areas of your business that need improvement and prioritizes your efforts accordingly. In this article, we are going to understand SWOT analysis in detail with the help of an example.
We will discuss why to use this tool, when to use it, and how to write an effective SWOT analysis with one example. We will also discuss the advantage & disadvantages of this tool and in the end, we will explore the dos & don’t of this tool. So let’s get started…
What is SWOT analysis?
Have you ever wondered how companies like Amazon, Coca-Cola, and Apple have managed to maintain their success for so long in the market? One of the key reasons behind their success is the use of a powerful tool called SWOT analysis.
SWOT analysis is a strategic planning method that helps organizations identify their internal strengths and weaknesses as well as external opportunities and threats. It is like taking a snapshot of where your company at and determining what you need to do to achieve your company goals.
The main objective of SWOT analysis is to help organizations develop awareness about all the external (opportunities & threats)& internal (strengths & weakness) factors involved in making business decisions.
This is one of the most useful tools for business owners, managers, Lean Six Sigma practitioners, etc. This tool can help you understand your business better, identify areas for improvement, and make informed decisions for growth and success.
Basically, SWOT analysis is 4 box framework you can see that in the above image, there are 2 categories row-wise and then there are 2 categories column-wise.
The row-wise category talks about the two types of factors i.e. internal and external.
- Internal factors – These are the factors over which your organization has control. Strengths and Weaknesses are internal factors.
- External factors – These are the factors over which your organization has little or no control. Opportunities and Threats are external factors.
The column-wise category talks about the two types of factors i.e. helpful and harmful.
- Helpful factors – These are the factors that assist your business success. Strengths and Opportunities are helpful factors.
- Harmful factors – These are the factors that block your business’s success. Weakness and Threats are harmful factors.
Now, let’s see the 4 elements of SWOT analysis one by one so that later you can understand SWOT analysis with one example.
These are the things that your business does exceptionally well. These are the areas where you have a competitive advantage. By focusing on these strengths, you can leverage them to attract customers and expand your business.
These are the areas where your business may struggle. It’s important to identify these areas so that you can address them and improve your business operations or processes.
These are the areas where your business can grow and succeed. It could be a new market to explore, a new product to launch, or a new service to offer. By identifying these opportunities, you can create a roadmap for growth and success.
These are the external factors that could impact your business negatively. It could be a new competitor entering the market, a change in consumer behavior, or an economic downturn. By identifying these threats, you can take steps to mitigate the impact and protect your business.
When you should use SWOT analysis?
- If you want to make an informed decision by understanding your business and the market then you should use SWOT analysis. It is an effective way to analyze your business’s current position in the market and identify areas for improvement.
- If you want to stay ahead of your competitors, then you should use SWOT analysis because it gives you a complete picture of your company’s current state and what you need to do to achieve your company’s goals.
- It can be used at any stage of business, whether you are starting a new company, or your company is already well-established in the market.
- It can be used during business/strategic planning, implementing Six Sigma process improvement projects, and new product development. It can also be used to do market analysis, perform competitor analysis, and while expanding a business in a new market.
How do you write an effective SWOT analysis?
SWOT analysis is like looking into the crystal ball, giving you a glimpse into the future of your business and helping you make informed decisions. Before we discuss the SWOT analysis with an example, let’s understand how to write a SWOT analysis step by step.
1. Assemble your team –
Bring your team member together with collaborators from different sectors or positions. This team needs one group leader who will guide this idea-generation process.
Use group decision techniques like brainstorming, nominal group technique, multi-voting, etc, to create a list of ideas about the company’s current situation.
2. Define the objective of SWOT analysis –
Determine the main objective of your analysis, whether it is to understand the market position of a company, evaluate the potential of a new product, or to assess the overall performance of an industry.
Basically, find out what you want to achieve with this analysis. Because your objective will guide you in focusing your analysis on the right aspect of your business.
3. Gather relevant data –
Collect information about your business from various sources such as market research, customer feedback, financial reports, competitor analysis, and industry analysis.
Research the company, industry, and competition to gather information on the internal strengths, weaknesses, external opportunities, and threats. This information will help you identify different factors that will impact your business or process.
4. List down the strengths –
What sets your business apart from the competition? What are the things that your business can excel at? You need to identify the unique advantages that the company or product has.
Such as a strong brand reputation, a loyal customer base, cutting-edge technology, innovative products, efficient processes, skilled employees, etc.
5. List down weaknesses –
What are the areas where your business could improve? Identify all the limitations that the company or product/processes face, such as limited resources, high cost, poor marketing strategy, outdated technology, inadequate resources, etc.
6. Identify opportunities –
What are the trends in your industry that could benefit your business? Identify all the external factors that could provide growth and success, such as new market trends, the rise of a new market, untapped customer segments, emerging technologies, entry of new competitors, etc.
7. Identify threats –
What are the external factors that could negatively impact your business? Identify all the external challenges that could harm the company or product/process such as increased competition, changes in regulations, changes in the market, entry of new competitors, market downturns, etc.
8. Evaluate SWOT analysis –
Consider the potential impact of each factor on the company or product/process and prioritize the strengths, weaknesses, opportunities, and threats based on their level of importance. This will help you focus your efforts on the most critical areas.
9. Develop a plan of action –
Based on the results of the SWOT analysis, develop a strategy for how to capitalize on the strengths and opportunities, while minimizing the impact of weaknesses and threats.
10. Review and update regularly –
SWOT analysis is not a one-time process, it is a continuously ongoing effort. You should regularly review and update the analysis to ensure that the company or product stays ahead of the competition and stays on track toward its goals.
SWOT analysis example
Now we are going to understand SWOT analysis with an example. Here we are going to do a SWOT analysis of 2 big tech companies i.e. Facebook, and Tesla.
After that, we will do a SWOT analysis of Coca-Cola. These 3 SWOT analysis examples will help you understand this powerful tool practically. Let’s do this one by one.
Example -1: SWOT analysis of Facebook
Facebook is a social media and social networking service company owned by an American company Meta Platforms. This company was founded in 2004 by Mark Zuckerberg with his college roommates. Here I am doing a SWOT analysis with an example of Facebook.
- Strong brand recognition and a massive user base of over 2. billion active monthly users.
- High engagement rates with users spending an average of 38 minutes per day on the platform.
- Diversified revenue streams with advertising, payments, and e-commerce offerings.
- Continuous innovation in features and products such as Facebook metaverse, marketplace, etc.
- Strong acquisitions like Instagram, Whatsapp, and Oculus VR have added value to the platform.
- Privacy concerns and data breaches have led to public scrutiny and criticism.
- Dependency on advertising revenue, making it vulnerable to economic downturns.
- Increasing competition from emerging social media platforms like Tiktok, and Snapchat.
- The negative perception of the platform among some users is due to fake news and hate speech.
- Limited monetization options for smaller businesses and content creators.
- Expansion into emerging markets like India, and Africa where there is a growing demand for social media platforms.
- Continued innovations and development of new products and features to keep up with changing user behavior and preferences.
- Expansion into e-commerce through Facebook marketplace and shops.
- Further integration with other Facebook-owned platforms like Instagram and Whatsapp.
- Growing demand for virtual and augmented reality products could be a potential growth area for Oculus VR.
- Increasing regulatory scrutiny on social media platforms leads to potential legal challenges.
- Economic downturns could lead to a decrease in advertising revenue.
- Rapidly changing technology and user preferences could lead to declining engagement and usage.
- Competition from other social media platforms and alternative forms of entertainment.
- Public perception and trust in the platform could affect user growth and retention.
Example -2: SWOT analysis of Tesla
Tesla is an American multinational automotive manufacturing company that primarily manufactures electric vehicles founded in 2003 and is now owned by Elon Musk. Here I am doing a SWOT analysis with an example of Tesla.
- Innovative technology: Tesla is a leader in electric vehicles and clean energy, which is a growing industry.
- Strong brand: Tesla has a strong brand image and a loyal customer base.
- Supercharger network: Tesla’s supercharger network is expanding globally, making charging more convenient.
- Vertical advantage: Tesla has a vertically integrated business model, which allows it to control the entire production process, from batteries to software.
- First mover advantage: Tesla was one of the first companies to enter the electric vehicle market, giving it a head start over its competitors.
- Production capacity: Tesla has struggled to meet production targets in the past, which has led to delays and missed opportunities.
- High prices: Tesla’s products are often priced higher than its competitors, limiting its appeal to a wider market.
- Limited product range: Tesla only offers a limited range of products mainly electric cars and solar panels.
- Dependence on a single market: Tesla’s revenue is heavily reliant on the US market leaving it vulnerable to economic downturns or policy changes.
- Growing demand for electric vehicles: The global shift towards sustainable energy creates a growing demand for electric vehicles which could benefit Tesla.
- Expansion into new markets: Tesla has an opportunity to expand its presence in emerging markets such as China and India.
- Development of new products: Tesla has the potential to develop new products such as electric trucks, buses, and even planes.
- Partnership with other companies: Tesla can form strategic partnerships with other companies such as energy companies or tech companies, to collaborate on new projects.
- Intense competition: Tesla faces intense competition from established automakers and new players in the electric vehicle market.
- Government regulations: Changes in government regulations and policies could impact Tesla’s operations, such as subsidies for electric vehicles or emission standards.
- Economic downturns: Economic downturns could lead to a decrease in consumer demand for luxury products such as Tesla’s vehicles.
- Technological advances: Advances in technology could disrupt Tesla’s business model such as the development of more efficient batteries or new forms of renewable energy.
Example -2: SWOT analysis of Coca-Cola
Coca-Cola is an American multinational beverage company founded in 1892 by Dr. John Pemberton. One of the oldest and largest cold beverage companies in the world. Here I am doing a SWOT analysis with an example of Coca-Cola.
- Strong brand recognition and reputation.
- Large and loyal customer base.
- Wide distribution network and availability in multiple countries.
- Diversified product portfolio including non-carbonated drinks.
- Effective advertising and marketing strategies.
- High sugar content in products leads to health concerns.
- Dependence on carbonated drinks for revenue.
- Limited ability to respond to changing customer preferences.
- High competition in the beverage industry.
- Negative impact on the environment due to plastic waste.
- Expansion into emerging markets.
- Increasing demand for healthier beverages.
- Offering environmentally friendly packaging solutions.
- Developing new and innovative products to meet changing customer preferences.
- Collaborations and partnerships with other companies in the industry.
- Intense competition from other beverage companies (Pepsi, Thumbs up)
- Changing government regulations regarding sugar and calorie intake.
- Economic downturns and fluctuations in currency exchange rates.
- Increasing health concerns among consumers.
- Impact of COVID-19 on the beverage industry and consumer behavior.
Advantages & Disadvantages
1. Clarity –
SWOT analysis provides a clear overview of your company’s current situation. It helps you identify what your business does well, where it needs improvement, and what opportunities and threats exist in the market.
2. Strategy development –
By understanding your company’s strengths and weaknesses, you can develop a strategic plan that leverages your strengths and addresses your weaknesses. Similarly, knowing opportunities and threats exist in your market allows you to plan your company’s strategy accordingly.
3. Collaborations –
Performing a SWOT analysis is a collaborative effort. By involving your employees, you can gain a better understanding of your company from their perspective and make better-informed decisions.
4. Objectivity –
The SWOT analysis provides an objective view of your business. It’s not based on personal opinions and emotions. It is completely based on actual data/information and what is happening in the market.
1. Limited focus –
The SWOT analysis only provides a snapshot of your business’s current situation. It doesn’t take into account future trends or market changes. (Check out – SWOT analysis templates)
2. Time-consuming –
Creating a SWOT analysis can be a time-consuming process. Gathering all the relevant data and information needed to complete the analysis can take a significant amount of time.
3. Oversimplification –
The SWOT analysis is a simplified tool, and it may not take into account all the complex factors that impact your business.
Do’s & Don’t of SWOT analysis
- Get a diverse group of people (invite different departments, employees, and stakeholders) involved in the analysis. The more perspective you have the more comprehensive your SWOT analysis will be.
- Be honest and objective. Evaluate your strengths, weaknesses, opportunities, and threats objectively without any bias or preconceived notions. No company or product is perfect so don’t be afraid to admit your shortcomings.
- Look at both internal and external factors that impact your business. Your strengths and weaknesses can come from within your company, but so can opportunities and threats.
- Look for opportunities outside your company. Sometimes the best opportunities also come from unexpected places.
- Use SWOT analysis as a guide for effective decision-making, not a complete answer to the problems.
- Review and update your SWOT analysis continuously because your business and market are constantly changing so it is important to keep your analysis up to date.
- Don’t limit yourself to a narrow view. Don’t just focus on your company or your product, consider the wider market like your competitors, and even global trends.
- Don’t overlook weaknesses. Just because something is a weakness now doesn’t mean it can’t be turned into a strength in the future.
- Don’t miss out on threats. Even if something seems small or insignificant, it could turn into a major threat if left unchecked.
- Don’t ignore opportunities. Do not miss opportunities to improve your business by focusing too much on your weaknesses.
- Don’t neglect the importance of your strengths. Your strengths are what set you apart from your competition, so make sure you leverage them first to your advantage.
- Don’t forget the SWOT analysis document once it is created. SWOT analysis is a living document that should be revisited and updated regularly. Don’t just conduct it once and forget about it.
We have discussed a SWOT analysis with an example, which is a valuable tool for businesses to evaluate their strengths, weaknesses, opportunities, and threats. It is the most comprehensive way to examine a situation and determine how to move forward with an informed decision.
In this article, we discussed SWOT analysis in detail along with its application, advantage & disadvantages. I also shared the 10 simple steps to do a SWOT analysis for any industry. After that, we discussed SWOT analysis with one practical example.
In the end, the most important thing I shared i.e. the dos and don’ts you need to consider while conducting a SWOT analysis. Hope this article helped you understand this powerful tool.
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