SWOT analysis – introductory guide with examples

A SWOT analysis is a decision-making tool that lets you zoom in on a specific aspect of your business to gain a clearer overview and make informed decisions. Whether you’re sense-checking your marketing strategy or discussing the potential of a new product idea, a SWOT analysis will help you make decisions.   

In this guide, we’ll take a closer look at what a SWOT analysis is and what it can be used for. You’ll also get a step-by-step guide and an example. 

What is a SWOT analysis? 

A SWOT analysis is a strategic method a company can use to identify the internal and external factors that could play a decisive role in the success of its product, strategies, etc. 

SWOT is an abbreviation that stands for Strengths, Weaknesses, Opportunities, and Threats. 
 

As a business owner, you probably have a good understanding of your company’s strengths and weaknesses. Nonetheless, a SWOT analysis almost always leads to new insights that will increase the chances of getting more out of a strategy or project. 

When is the SWOT analysis used? 

The SWOT model is typically used when a company needs to make an important decision, such as launching a new product, making major changes to a website, or expanding into a new market. 

If you run a small- or medium-sized business, the model is particularly useful if you are considering scaling up. For example, if you have planned to launch a completely new product category in your online shop, you can carry out a SWOT analysis before launching the category and investing in marketing.

This way, you ensure that you make decisions that are most likely to benefit your business and that you don’t overlook any internal or external opportunities and obstacles. 

How to do a SWOT analysis 

There’s various ways to set up a SWOT analysis, but the most important thing is to identify strengths, weaknesses, opportunities, and threats, and to ensure this leads to concrete solutions and actions.  

Here is a suggestion for a simple five-step process. 

Step 1: Set a goal 

Start by setting a clear goal. Do you want to launch a new product, make changes to your website, or target a new audience? You’ll benefit the most from your SWOT analysis with a concrete goal in mind.  

For example, if your goal is for your company to be more visible online, you can focus on strengths and weaknesses related to SEO, content, performance, web design, and web accessibility. 

Step 2: Gather data 

Once you’ve set a goal, you can start gathering the data you need to conduct your analysis. This may include results from market research, competitor analysis, customer feedback, tracking data from Google Analytics, and overviews of current market trends.

Step 3: Consider internal and external factors 

After gathering the relevant data for your goal, you can start looking at internal strengths and weaknesses, and external opportunities and threats. Here, we’ve based our example on a small business wanting to launch a new eco-friendly cleaning product in their online shop. 

Internal strengths and weaknesses 

To identify important internal strengths and weaknesses, it can be useful to ask the following questions:  

• Strength: What is the biggest advantage of the product? Example: it meets a real need in the target audience. 
• Strength: What already works well for the company? Example: we have a strong brand with loyal customers and a good amount of social proof. 
• Weakness: Does the product have any drawbacks? Example: it’s very different from our other products and is more expensive to produce. 
• Weakness: What doesn’t work so well in our online shop? Example: the website loads too slowly. 

External threats and opportunities 

To identify external threats and opportunities, the following questions can be asked: 

• Opportunity: Are there new target groups we can reach? For example, a younger age group or people who prioritise sustainability. 
• Opportunity: What marketing activities can we try? For example, video marketing or a new social platform. 
• Threat: How many competitors offer the product? 
• Threat: Are we complying with current legislation? For example, if the product is to be marketed as sustainable or organic.  

Of course, many more questions can be added here. If you have a team, it’s highly beneficial if everyone contributes different suggestions for strengths, weaknesses, opportunities, and threats, so you can get various perspectives. 

Step 4: Plan based on strengths and weaknesses 

Base your planning on the internal and external factors identified in step 3. Here, the goal is to figure out how your company can best capitalise on strengths and opportunities, address weaknesses, and handle potential threats. 

Returning to the example above, one problem for the online shop was the slow loading speed. This can make some customers impatient, which could lead to new visitors abandoning their carts, even though they were interested in the product. This weakness can be addressed by optimising the website’s speed before launching the new product. 

Go through strengths, weaknesses, opportunities, and threats one by one and note suggestions for addressing negative aspects. Also, add ideas for how to best utilise positive aspects to your company’s advantage. Prioritise resolving the most critical weaknesses and take advantage of the opportunities that will have the biggest impact on whether the project or strategy succeeds. 

Step 5: Finalise your strategy 

The final step in the SWOT analysis is to compile the findings and suggestions into a concrete strategy. Create an overview of the improvements you will prioritise, describe how you will address any legal challenges, what new technical solutions need to be implemented, and how you will compete with rivals.  

The final strategy should act as a quick guide, showing all steps toward the project’s goal while considering strengths, weaknesses, opportunities, and threats. 

SWOT analysis example 

To better illustrate how the SWOT model can be used by many different businesses, we’ve put together an example using a fictional hair salon. The salon is considering offering eyelash extensions. 

• Strengths: The salon has many loyal customers and skilled staff. 
• Weaknesses: No one on the team has expertise in applying eyelash extensions, so a course will be necessary. The new service must be added to the website, but the staff has no time to write content for the page. 
• Opportunities: Many customers are asking for eyelash extensions, and by offering this service, the salon could attract a broader audience and earn more from existing customers. 
• Threats: A competing hair salon nearby already offers eyelash extensions. Additionally, it will cost a significant amount to train one or more team members to gain the necessary expertise.  

After completing the SWOT analysis, the hair salon decides on the following strategy: 

• Addressing weaknesses: Two of the salon’s stylists will attend a course to gain the necessary expertise. It turns out that the website builder the salon uses has a built-in AI writing assistant that can generate a text about the new service in no time. This means they don’t need to pay someone to write the content and add it to the website. The money saved can be used for the eyelash extension course.  
• Utilising strengths: Since the salon already has a loyal customer base, they can market the new service in the salon through signage and by informing customers directly.  
• Leveraging opportunities: Once the text about the new service is added to the website, it will be possible to attract new customers looking for this service.  
• Dealing with threats: Even though the local competitor offers the same service, they haven’t built a loyal customer base yet. Therefore, the salon can easily sell the new service and may even attract some of the competitor’s customers by offering a welcome discount on their first visit. 

Pitfalls and limitations of the SWOT analysis 

The SWOT model has many advantages but also several limitations and pitfalls that are important to be aware of. One of them is the risk of overlooking the complexity of certain factors. Additionally, it’s easy to overlook weaknesses in your own project or to underestimate them. Therefore, it is recommended to involve several, preferably external, people in the SWOT analysis as they will typically be less likely to miss critical weaknesses. 
 
In some cases, it’s also essential to be prepared for the fact that a SWOT analysis might show that a project should be significantly changed before being implemented because the weaknesses outweigh the strengths.

Continuous analysis of performance 

Moreover, it’s recommended to carry out ongoing analyses to ensure that the project is progressing as planned. For example, if you’ve added a new landing page as part of marketing a new service, it is essential to track user behaviour on the page, such as with Google Analytics, as it can provide valuable new insights that were not available at an earlier stage. 

Make better business decisions with SWOT analysis 

By using the insights from a SWOT analysis when making important decisions about your company’s development, you can improve the chances of your projects’ success. Being aware of the model’s potential pitfalls allows you to conduct a highly useful analysis that results in a growth-promoting strategy where key internal and external factors are managed in the best possible way.