If used correctly, SWOT analyses can provide volumes of information about the circumstances that an organization or venture finds itself in. One of the handy benefits of using a SWOT analysis (as opposed to other business analysis tools) is its inherent simplicity — all there is to do is list the Strengths, Weaknesses, Opportunities and Threats, and you’ll find yourself with plenty of worthy insight.
However, it’s not always so simple. This is true especially when you are unsure what specifically fits into each of the S, W, O, T categories. For that reason, we’ve decided to write this series of articles about each of the letters in the acronym, including what they mean and what they include.
This article is the fourth installment in the series, and will be focusing on the definition and examples of Threats in SWOT analysis. If you haven’t already, be sure to familiarize yourself with Strengths, Weaknesses, and Opportunities first.
T is for Threats: Definition
In business analysis, Threats are anything that could cause damage to your organization, venture, or product. This could include anything from other companies (who might intrude on your market), to supply shortages (which might prevent you from manufacturing a product).
Threats are negative, and external. This mean that threats do not benefit your company, but there is nothing you can do to stop them from coming about.
Threats are like opportunities in that you cannot change their frequency, or purposefully bring them about, but you can still choose how to approach them and deal with them.
Threats: Why include them?
Unforeseen threats can mean horrible things for any company, which is why it’s essential to take them into account in SWOT analysis. Thankfully though, if you can predict them, it’s possible to reduce their impact, or avoid them entirely.
Examples of Threats in SWOT Analysis
What follows is some both general and specific examples of threats that might appear in SWOT analyses.
- The introduction of a better alternative for an impersonal product: if a company has been selling the same product for years, without ever making any effort to interact with their customers and build trust, then the introduction of a better alternative could be called a threat. This is because a portion of the company’s current market could switch to the alternative, causing them to lose out on profits.
- New laws for parody artists: if new laws were to state that parodying popular entertainment (in the form of art) for commercial purposes is illegal, then this would certainly be a big threat to those whose careers rely on the practice.
- New entrants in mobile tech for Apple: Apple’s mobile products have long been the go-to choice for many consumers. However, many companies, such as Samsung, Huawei, and Sony, have been introducing viable alternatives to the iPhone and iPad. If these products gain much traction, Apple will find themselves losing a “piece of the pie”.
- The rise of cheaper energy drinks for Redbull and Monster: many new energy drinks have begun stacking up on shelves across the globe — and they are often cheaper than household names like Redbull and Monster. This could be considered a threat as price-conscious consumers might start switching to the cheaper options.
- More mobile-friendly social networks for Facebook: companies like Snapchat and Beme have taken a new approach to social networking, with a focus on the accessibility of mobile phones. Snapchat has already replaced Facebook in plenty of social scenarios, but if this continues it could mean disaster for the multibillion dollar company.
For more examples, see our complete SWOT analyses available here.
In conclusion, threats are a negative, external occurrence which should be included in every good SWOT analysis. Taking them into account can help in making the best decisions, and not doing so can cause sudden damage. In today’s dynamic markets, every company (include the biggest ones) faces a number of different threats.