Benefits of SWOT Analysis

PESTLEanalysis Team
PESTLEanalysis Team
Table of Contents
Table of Contents

SWOT analysis not only organizes information & data but also uncovers competitive advantages that a business can use to gain leverage over its competitors.

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Almost everybody in the business world is aware of SWOT. While a SWOT analysis is mainly used by the management, it can be effectively used for marketing and branding as well. The analysis focuses on identifying the external and internal factors that might affect the future performance of any business. The four factors mentioned in a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) aim to evaluate the balance between the internal resources and capabilities of a company and external possibilities and threats.

SWOT identifies the strategies used for creating a specific business model according to the company’s available resources and capabilities, including the environment in which the company operates. It views positive and negative factors both inside and outside the firm, that affect its success. The analysis helps the company forecast or predict changing trends that benefit the decision-making process of any organization.

Here’s a main overview of SWOT:


Strengths are the qualities that determine the success of any organization. They enable a firm to accomplish its mission. However, in the business world, strengths can either be tangible or intangible. Strengths include the traits and qualities your employees possess and their flair that offers your organization consistency. Strengths of an organization may include huge financial resources, committed employees, and no debt, etc.


You must be aware that weaknesses are the qualities that hinder an organization’s productivity and prevent an organization from accomplishing its mission and reaching its full potential. However, weaknesses are controllable and the magnitude and impact of the damage can be reduced but to do so, you will first have to identify your company’s weaknesses. SWOT is an effective means of not only identifying a company’s weaknesses but providing an opportunity to reverse said weaknesses. Examples of common weaknesses include narrow production range, incompetent employees and lack of funds.


There are countless opportunities that are present in the environment within which the organization operates. Companies can always benefit from such opportunities. The opportunities may arise from the market, competition or technology. Existing opportunities might be the use of new technology, the failure of any one of your competitors, or taking advantage of the company’s existing resources which remain untapped as of yet.


Threats are elements of vulnerability that may jeopardize the reliability and profitability of any business. Threats are inevitable and uncontrollable but they need to be addressed in order to find a viable solution. Some examples of threats include declining industry profits, increasing competition or economic crisis.

Benefits of a SWOT Analysis

Some benefits of performing a SWOT analysis include:


You do not require extensive training nor any form of technical skill for conducting a SWOT analysis. In addition, you don’t require an external consultant. All you need is a staff member who has prior knowledge of business.

Wide Range of Applications

SWOT analysis can be used to conduct competitive analysis, strategic planning or any other study. This is because, through a SWOT analysis, a business can identify any environmental factor that plays a favorable or unfavorable role in any particular objective.

Promotes Discussion

SWOT analysis promotes discussion. It is important that you have your employees on the same page. Every single employee plays an important role in driving an organization to success. Discussing the core strengths and weaknesses of a company helps identify threats and capitalize on opportunities.

Provides Visual Overview

A SWOT analysis is usually presented as a square, each quadrant representing one factor. This visual arrangement provides a quick overview of the company’s position and encourages dialogue. While each quadrant may not be of equal importance, the quick overview helps an organization determine its success and progress, maximizing their strengths and diminishing their weaknesses.

Offers Insight

SWOT can be used to gain insight about the market, giving you a better understanding of your competition. This gives you the opportunity to formulate a plan to craft a coherent and competitive position in the market.

Integration and Synthesis

SWOT analysis gives the analyst the opportunity to integrate and synthesize diverse information, despite it being qualitative or quantitative in nature. SWOT analysis organizes information that is already known, as well as information that has just been acquired or discovered. SWOT analysis deals with a wide diversity of information sources. This makes it easier for a company to transform information diversity from a weakness into a possible strength.

Fosters Collaboration

SWOT analysis fosters collaboration and encourages open information exchange between a variety of functional areas in a firm that would otherwise not collaborate or interact much. It benefits a company when the analysts understand what their counterparts know, think, feel and do. This allows the analyst to solve problems, eliminate disagreements and foster a better working environment.

Other benefits include:

  • SWOT analysis provides an organization a clear view of its strengths, allowing it to build on them and meet business objectives
  • Highlights weaknesses and provides analysts a chance to reverse them
  • Showcases possible opportunities that lie ahead. This gives the firm an opportunity to draft strategic growth plans for the future accordingly
  • Helps an organization recognize possible threats and take necessary measures to deal with them. Companies can introduce new policies and establish growth plans to eliminate any possible threats.
  • SWOT analysis allows a company to create matching and converting strategies
  • SWOT analysis sheds light on the company’s existing resources which may have been ignored or have not been used to their full potential
  • Provides motivation to upgrade business plans
  • SWOT focuses on the skills, capabilities, attitudes, abilities and capacities

Many firms consider SWOT analysis an effective tool for analyzing marketing data and information. The simple and straightforward framework provides a sense of direction and works as a catalyst for the development of future marketing plans. If performed correctly, a SWOT analysis not only organizes information and data but also uncovers competitive advantages that a business can use to gain leverage over its competitors in the market.

Image: © Vinnstock | Dreamstime.com

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