What are the elements of a SWOT analysis which elements are internal external?

SWOT analysis is a basic tool for developing a strategy. Before you set the schedule for your company’s promotional activities, you need to reflect on a few aspects.

What is SWOT analysis?

SWOT is an acronym for the elements of analysis. The process includes an analysis of your strengths and weaknesses as well as opportunities and threats to your business resulting from the situation on the market. This way you will discover what constitutes the basis of your competitive advantage. During marketing campaigns, it is important to emphasise your opportunities and strengths. After all, you want to show yourself in the best light and make your prospective customers interested in your offer. In order to do that, some key issues need to be thought out.

S in SWOT = Strengths

Strengths are internal factors which are the assets of your company and which can determine your advantage over competition. For instance:

• highly qualified staff
• motivation to work
• wide experience of the management
• knowledge of the industry
• access to cutting-edge technologies
• unique know-how

W in SWOT = Weaknesses

Weaknesses are internal factors that stand in the way of your company’s growth. For example:

• lack of qualified staff
• low motivation of your employees
• little experience of the management
• no access to the latest technology

O in SWOT = Opportunities

Opportunities are external factors (over which the company has no control) that bring benefits to your firm. They increase your chances for success. Factors include:

• high demand for your products or services
• little competition in the industry
• favorable legal conditions

T in SWOT = Threats

Threats are external factors that prevent your company from development or being successful. The most common belong to:

• low demand for your products/services
• high competition
• unfavourable economic law
• presence of a monopolist on the market

What is the purpose of analysing your strengths and weaknesses?

The analysis of your strengths and weaknesses is essential. For starters, you will learn what is your competitive advantage in the technology industry. You will also find out what to work on in the future. Maybe some of the processes are ineffective? Does the service take too much time or expenditure? Or perhaps the problem lies somewhere else?

Above all, it is about drawing conclusions. Determine a set of criteria for evaluation. Make sure you present the outcome in such a way so as to make it possible to compare the statistics of progress or recession in specific areas after implementing some changes.

Action strategy

1. Strengths + opportunities = aggressive strategy, i.e. taking advantage of the strengths of the company.
2. Weaknesses + threats = defensive strategy, that is being set on staying on the market.
3. Strengths + threats = conservative strategy. This is about the situation when the strengths of the company neutralise its threats, e.g. big financial reserves help to survive seasonal stoppages in orders.
4. Weaknesses + opportunities = competitive strategy. In this situation, the key action is to eliminate those elements which do not take advantage of incoming opportunities.

Maria Loades

Educated in Krakow and Vienna, with a working background in Marketing and Event Management gained in St. Petersburg, Paris and London. Maria has a strong interest in marketing and business development with a particular emphasis on visual content marketing. She specialises in marketing strategy and managing Web Design, SEO and Graphic Design projects, both for start-up branding and full-service marketing campaigns.

Maria is a Co-Founder and Managing Partner of Black Cliff Media Ltd., a creative content marketing agency. She speaks fluent Polish, English and German, loves to run, play basketball and tennis. She is married and has two young sons.

To run a successful business, you should regularly analyze your processes to ensure you are operating as efficiently as possible. While there are numerous ways to assess your company, one of the most effective methods is to conduct a SWOT analysis.

A SWOT (strengths, weaknesses, opportunities and threats) analysis is a planning process that helps your company overcome challenges and determine what new leads to pursue.

The primary objective of a SWOT analysis is to help organizations develop a full awareness of all the factors involved in making a business decision. This method was created in the 1960s by Albert Humphrey of the Stanford Research Institute, during a study conducted to identify why corporate planning consistently failed. Since its creation, SWOT has become one of the most useful tools for business owners to start and grow their companies.

“It is impossible to accurately map out a small business’s future without first evaluating it from all angles, which includes an exhaustive look at all internal and external resources and threats,” Bonnie Taylor, chief marketing strategist at CCS Innovations, told Business News Daily. “A SWOT accomplishes this in four straightforward steps that even rookie business owners can understand and embrace.”

When should you perform a SWOT analysis?

You can employ a SWOT analysis before you commit to any sort of company action, whether you are exploring new initiatives, revamping internal policies, considering opportunities to pivot or altering a plan midway through its execution. Sometimes it’s wise to perform a general SWOT analysis just to check on the current landscape of your business so you can improve business operations as needed. The analysis can show you the key areas where your organization is performing optimally, as well as which operations need adjustment.

Don’t make the mistake of thinking about your business operations informally, in hopes that they will all come together cohesively. By taking the time to put together a formal SWOT analysis, you can see the whole picture of your business. From there, you can discover ways to improve or eliminate your company’s weaknesses and capitalize on its strengths.

While the business owner should certainly be involved in creating a SWOT analysis, it is often helpful to include other team members in the process. Ask for input from a variety of team members and openly discuss any contributions made. The collective knowledge of the team will allow you to adequately analyze your business from all sides.

Characteristics of a SWOT analysis

A SWOT analysis focuses on the four elements of the acronym, allowing companies to identify the forces influencing a strategy, action or initiative. Knowing these positive and negative elements can help companies more effectively communicate what parts of a plan need to be recognized.

When drafting a SWOT analysis, individuals typically create a table split into four columns to list each impacting element side by side for comparison. Strengths and weaknesses won’t typically match listed opportunities and threats verbatim, although they should correlate, since they are ultimately tied together.

Billy Bauer, managing director of Royce Leather, noted that pairing external threats with internal weaknesses can highlight the most serious issues a company faces.

“Once you’ve identified your risks, you can then decide whether it is most appropriate to eliminate the internal weakness by assigning company resources to fix the problems, or to reduce the external threat by abandoning the threatened area of business and meeting it after strengthening your business,” said Bauer.

Internal factors

Strengths (S) and weaknesses (W) refer to internal factors, which are the resources and experience readily available to you.

These are some commonly considered internal factors:

• Financial resources (funding, sources of income and investment opportunities)
• Physical resources (location, facilities and equipment)
• Human resources (employees, volunteers and target audiences)
• Access to natural resources, trademarks, patents and copyrights
• Current processes (employee programs, department hierarchies and software systems – like CRM Software and Accounting Software)

External factors

External forces influence and affect every company, organization and individual. Whether these factors are connected directly or indirectly to an opportunity (O) or threat (T), it is important to note and document each one.

External factors are typically things you or your company do not control, such as the following:

• Market trends (new products, technology advancements and shifts in audience needs)
• Economic trends (local, national and international financial trends)
• Funding (donations, legislature and other sources)
• Demographics
• Relationships with suppliers and partners
• Political, environmental and economic regulations

After you create your SWOT framework and fill out your SWOT analysis, you will need to come up with some recommendations and strategies based on the results. Linda Pophal, owner and CEO of consulting firm Strategic Communications, said these strategies should focus on leveraging strengths and opportunities to overcome weaknesses and threats.

“This is actually the area of strategy development where organizations have an opportunity to be most creative and where innovative ideas can emerge, but only if the analysis has been appropriately prepared in the first place,” said Pophal.

SWOT analysis example

Bryan Weaver, a partner at Scholefield Construction Law, was heavily involved in creating a SWOT analysis for his firm. He provided Business News Daily with a sample SWOT analysis template and example that was used in the firm’s decision to expand its practice to include dispute mediation services. His SWOT matrix included the following:

Small (three employees) – can change and adapt quickly.

One staff member has been a part of   mediations but not as a neutral party.

For smaller disputes, mediators don’t work as a team, only as individuals; Scholefield staff can offer anyone the advantage of a group of neutrals to evaluate a dispute.

Most potential clients have a negative impression of mediation, because they feel mediators don’t understand or care to understand the problem, and rush to resolve it.

Resulting strategy: Take mediation courses to eliminate weaknesses and launch Scholefield Mediation, which uses name recognition with the law firm, and highlights that the firm’s construction and construction law experience makes it different.

“Our SWOT analysis forced us to methodically and objectively look at what we had to work with and what the marketplace was offering,” Weaver said. “We then crafted our business plan to emphasize the advantages of our strongest features while exploiting opportunities based on marketplace weaknesses.”

Additional business analysis strategies

The SWOT analysis is a simple but comprehensive strategy for identifying not only the weaknesses and threats of an action plan but also the strengths and opportunities it makes possible. However, a SWOT analysis is just one tool in your business strategy. Additional analytic tools to consider include the PEST analysis (political, economic, social and technological), MOST analysis (mission, objective, strategies and tactics) and SCRS analysis (strategy, current state, requirements and solution).

Consistent business analysis and strategic planning is the best way to keep track of growth, strengths and weaknesses. Use a series of analysis strategies, like SWOT, in your decision-making process to examine and execute strategies in a more balanced, in-depth way.

Additional reporting by Adam C. Uzialko and Nicole Fallon. Some source interviews were conducted for a previous version of this article.

Which components of a SWOT analysis represent the internal elements that are analyzed?

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