How To Conduct a SWOT Analysis in 5 Steps (With Example)

By Indeed Editorial Team

Updated August 25, 2022 | Published April 17, 2020

Updated August 25, 2022

Published April 17, 2020

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

When an organization wants to evaluate its overall effectiveness, it might use a SWOT analysis. It identifies strengths, weaknesses, opportunities and threats using an objective approach. Implementing this approach can help an organization optimize its operations and excel within its industry. 

In this article, we explain what a SWOT analysis is, discuss why it's a helpful business tool and provide steps for conducting one for an organization.

Key takeaways:

  • A SWOT analysis evaluates a company's strengths, weaknesses, opportunities and threats.

  • Companies use SWOT analyses to determine if their operations are sustainable or if a single project is viable.

  • Many professionals use SWOT analyses before they set team or organization goals to ensure they work toward appropriate milestones.

What is a SWOT analysis?

A SWOT analysis is a technique that analyzes strengths, weaknesses, opportunities and threats. Many professionals apply this framework to entire organizations to determine if their current operations are sustainable over the long term, but it's also applicable to single departments or projects to determine their viability. The strengths and weaknesses portions identify internal components that affect a company such as intellectual property, location and employees. The opportunities and threats focus on external factors such as the cost of raw materials and consumer buying trends.

Related: Purpose of a SWOT Analysis


Why is the SWOT analysis effective?

The SWOT analysis is a fundamental component in business planning because it's an effective tool for:

  • Providing a systematic way of identifying internal and external factors affecting business

  • Giving companies insight as to where to focus growth efforts

  • Presenting businesses a solid foundation on which to develop new business strategies

  • Helping companies look outward at their competitors and customers

  • Allowing organizations to determine whether new projects are viable and the pros and cons of implementing them

Related: How To Create a SWOT Analysis for Nonprofits in 8 Steps


How to conduct a SWOT analysis

The following are steps to conduct a SWOT analysis for an organization:


1. Choose a facilitator

Organizational leaders typically carry out SWOT analyses and rely on other team members to conduct a thorough evaluation. Leaders ensure they represent various departments and consider all relevant factors. Some companies may also choose to include external members such as customers and stakeholders when conducting SWOT analyses. External facilitators are especially important if the organization has the resources to hire one, as their unbiased input produces more accurate results. The more diverse perspectives present throughout the analysis, the more comprehensive it is.

Related: SWOT Matrix: Definition, Benefits and Uses (With Example)


2. Identify strengths

Once you have chosen the analysis's facilitator and participants, the next step is to brainstorm the organization's strengths. Common strengths to consider include innovation, leadership, productivity and quality of products or services. Keep track of all suggestions made regarding strengths.

Some questions to consider include:

  • What are your positive qualities?

  • What achievements have you made?

  • What helps you accomplish goals?

  • What resources do you have?

  • What are your specialties?

  • What sets you apart from others?

Related: How To Create SWOT Analysis in Word


3. Determine weaknesses

While identifying a company's strengths can be easy, determining weaknesses may be more challenging. Recognize that you may be hesitant to identify shortcomings and open the organization to criticism. You can gather insight from stakeholders, team members and customers to understand where the organization might be lacking. You can also gather more objective data by analyzing profit margins and evaluating whether teams meet their quotas.

Some examples of questions to consider include:

  • Internally, what makes it challenging to achieve goals?

  • What are your areas for improvement?

  • What helps you accomplish goals?

  • What are you lacking (resources, technology, people, etc.)?

  • What do you need to tackle long-term goals?

Related: SWOT Analysis Guide (With Examples)


4. Analyze opportunities

The strengths and weaknesses can help you identify lucrative opportunities. For instance, if the organization is marketing particularly well to a certain audience, you can allocate a greater advertising budget to capitalize on these consumers. If an evaluation of weaknesses concludes that marketing to a different audience is unsuccessful, you can cease this campaign and redistribute the budget accordingly. Other examples of potential opportunities include new technology, lowered costs and expansion into new markets.

Here are some example questions to include:

  • What products, services or information are popular with your audience?

  • Are there external resources you can use to achieve goals?

  • Can you benefit from any current economic or market trends?

  • What technology will be popular in the future?

  • How do stakeholders view your brand, product or service?

Related: Ultimate Guide to Strategic Planning


5. Identify threats

While threats are similar to weaknesses, they usually haven't directly impacted the organization yet. Their presence can cause stress on team members, making it important for you to identify them and develop plans to mitigate or eliminate their potential effects. Threats to consider include a declining market, emerging competitors or new regulations that affect your production or overhead.

Here are examples of questions you can ask to identify threats:

  • Is market health expected to be bad or turbulent?

  • Is your brand, product or service losing relevance?

  • Do competitors have a certain edge over you?

  • How does your audience, industry or market view the organization?

  • What could put the organization at risk?

  • Are there potential new competitors on the horizon?

Related: Threats in a SWOT Analysis: Definition and Examples


Example of a SWOT analysis

The following is an example of a SWOT analysis you can use as a reference when performing your own. This analysis is based on a fictional local cafe:

STRENGTHSWEAKNESSES
- Unique menu that changes seasonally- Limited marketing and advertising budget
- Locally sourced foods- Prices are marginally higher than chain restaurants
- Popular among locals- Small staff due to limited budget
- Located in a highly trafficked area in town
OPPORTUNITIESTHREATS
- Possible growth through the use of food delivery technology and apps- Business changes drastically based on the season
- Locally sourced foods are steadily increasing in popularity- Increased development of chain restaurants in the area
- Local farmers are willing to provide ingredients at lower cost if bought in bulk

Explore more articles