By Matthew King | Business Planning

May 15

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. It is a term that recurs regularly in business articles. A perfect understanding is needed in successfully running businesses. By definition, Strengths (S) and Weaknesses (W) are considered to be internal factors over which you have some measure of control. While, by definition, Opportunities (O) and Threats (T) are considered to be external factors over which you have essentially no control over.

SWOT Analysis is the most renowned tool for analysis of the overall strategic position of a business and its environment. The key purpose of SWOT analysis is to identify the strategies that will create a business model that will best align an organization’s resources and capabilities to the requirements of the environment in which the firm operates its business.

It is invariably the foundation for evaluating the internal potential and limitations and the probable/likely opportunities and threats from the external environment. It puts into consideration all positive and negative factors inside and outside a business that affect the success of such business. In business planning, SWOT analysis must not be ignored.

Factors of SWOT Analysis

The four factors of SWOT analysis are discussed below:


They are the qualities that enable us to accomplish the business’s mission. Strengths can be either tangible or intangible in nature. They are what you as an individual is well-versed in or what you have expertise in, the traits and qualities your employees possess (either individually, or as a team) and the distinct features that give your organization its consistency.

Strengths are the beneficial aspects of your business or its capabilities, which includes human competencies, process capabilities, financial resources, products and services, customer goodwill and brand loyalty.


They are the qualities that prevent us from accomplishing our mission as well as achieving our full potential. Weaknesses deteriorate influences on the organizational success and growth. They are factors which do not meet the standards we feel they should meet.

In your business, they may be depreciating machinery, insufficient research and development facilities, narrow product range, poor decision-making. The good thing is that weaknesses are controllable. They must be minimized and eliminated.


As external factors, opportunities are presented by the environment within which your business operates. It arises when you can make your business more profitable from what is the obtainable in the environment you find yourself. Your business can gain competitive advantage by making use of opportunities.

You should be careful and recognize the opportunities and grasp them whenever they arise.


They arise when conditions in the external environment jeopardize the reliability and profitability of your business. Threats are uncontrollable factors. When a threat comes, the stability and survival can be at stake. Examples include – unrest among employees; ever changing technology; increasing competition leading to excess capacity.

Its Advantages

Every successful business build on their strengths, correct their weakness and protect against internal weaknesses and external threat, while exploiting opportunities. Therefore, the advantages include –

  1. It is a genuine source of information for strategic planning.
  2. Helps build the strength of a business.
  3. Reverse the weaknesses of a business.
  4. Maximize its response to opportunities.
  5. Overcome organization’s threats.
SWOT Analysis

SWOT Analysis

About the Author

Matthew King is the owner of the Startup Forums, Alkries LLC, and co-owner at TR King Insurance Marketing. Partner at Independent Life Insurance Agent Association, Medicare Training 101, and Final Expense 101. When he's not creating content about running successful businesses here. He's most likely developing processes, diving into SEO, or gaming with his friends and wife.

Skip to toolbar