Making the right decisions with the SWOT matrix

The SWOT Analysis, or SWOT Matrix, is an essential tool in business strategy : for building a company’s strategy or a project’s strategy. It is also widely used in marketing. But did you know that you can also use it in your personal life?

Indeed, it is a powerful diagnostic method to help you determine the right strategic direction to take. The advantage of this problem-solving tool is that you can apply it autonomously and successfully if you have the right method. In this article, you’ll discover everything you need to know about the SWOT analysis and how to conduct a good analysis.

Definition of SWOT: what is SWOT analysis? 

The term “SWOT” breaks down as follows:

• S for Strengths,
• W for Weaknesses,
• O for Opportunities,
• T for Threats.

The SWOT analysis is a strategic analysis tool aimed at establishing an overall diagnosis of the current situation of a company, a division, a department, or a project. It helps identify which lever or business strategy to activate to achieve a goal.

The SWOT analysis is presented in the form of a table.
This table consists of 4 boxes (1. Strengths, 2. Weaknesses, 3. Opportunities, 4. Threats) allowing you to identify the strengths and weaknesses of a company or project in its environment. These are important points to identify as they provide an internal and external diagnosis and help reposition the company or project if necessary.

SWOT matrix table

Point of attention on SWOT and PESTEL: two complementary but different strategic analysis tools

When discussing SWOT, the PESTEL analysis is often mentioned. It is another method that also provides an overall view of the situation and helps make decisions accordingly.

The difference between SWOT and PESTEL is that PESTEL focuses solely on the external challenges of your project. On the other hand, SWOT performs both an internal and external diagnosis. PESTEL is, however, more precise and comprehensive for external analysis. Indeed, under this acronym lie 6 different angles of analysis: Political, Economic, Sociological, Technological, Environmental, and Legal.

It can be interesting to use both SWOT and PESTEL as the two tools combined will give you a richer view of your context and the actions to be taken.

Why conduct a SWOT matrix?

The SWOT analysis provides solutions and areas for improvement in the short and medium term.

• The analysis provides an overview of the current situation
• It suggests trajectories to follow for the future, in the short and medium term

Another benefit is that if you understand how to conduct a good SWOT analysis, you will see that this problem-solving method is easy to apply. It will quickly give you a clear picture of your situation without spending much time, unlike other more complex methods.

When to conduct a SWOT analysis?

The SWOT analysis is developed before a project.

In the business world, you can use it, for example, to find the competitive advantage of your company or project, to identify areas for improvement or development opportunities.

Companies can also use the SWOT analysis during their strategic planning. The SWOT matrix allows them to question the issues they need to address and the response they wish to adopt.

Other use cases

The other use cases of the SWOT analysis are diverse: preparation of a business plan, questioning of a business model, development of a strategy, etc.

SWOT is also used in marketing to understand the competitive environment in which a company, brand, or product operates.

SWOT in marketing helps define the basis of its marketing strategy and develop an action plan in line with its context.

How to conduct a good SWOT analysis?

To conduct a good SWOT analysis, it is essential to understand what you need to put behind the four words: strengths, weaknesses, opportunities, and threats. Indeed, one of the complicated steps is knowing how to identify the strengths and weaknesses of a company but also its threats and opportunities. Discover our tips and the right questions to ask to fill in the SWOT table just below

Understanding your internal environment by identifying strengths and weaknesses:

Strengths and weaknesses only concern the internal resources and capabilities of the company. They do not apply to external events that could impact the company or project.

• A “strength” is a characteristic specific to your company or project that gives you an advantage over others.
  For example, the ability to innovate or highly qualified employees are strengths inherent to the company and do not depend on the surrounding environment.
• A “weakness” for a company is an internal characteristic that puts it at a disadvantage compared to others. For instance, low brand awareness is a weakness that concerns only the company or a product itself as it indicates a failure in the company’s communication strategy.

To help you in your reflection, ask yourself these questions:
What sets us apart from the competition?
What are our strengths that others do not have?
What is holding us back internally?
What could we improve?

Understanding your external environment by identifying opportunities and threats

Opportunities and threats concern everything outside the company or project that could impact it. Opportunities and threats can be identified through competition, politics, or technology, for example.

• An “opportunity” is an element of the environment that could be exploited by the company or project. For example, a new consumer behaviour or innovations in production chains can be opportunities to seize. .
• A “threat” is an element of the environment that could cause problems. A threat could be a new competitor, but it could also be a necessary technological evolution or unfavourable legislation.

To help you in your reflection, ask yourself these questions:
What is in the market that we are not doing?
How can we improve our weaknesses with available resources?
What are the upcoming trends in our sector?
What are the strategies of our competitors? ?

At Ad Valoris, we have created our own SWOT table filled with concrete examples :

What are the steps to conduct a SWOT analysis?

The approach we adopt to perform a SWOT analysis is carried out in three steps:

Step 1: identify and classify internal and external data impacting the organisation

This is what we saw previously. Internal data will feed Strengths and Weaknesses, and external data will feed Threats and Opportunities.

All you have to do is create your own SWOT table and fill it in to get your internal and external diagnosis.

Step 2: select and prioritise these data

This involves retaining the data that have the most impact on your organisation, those that will most influence decisions, and those that must absolutely be included in your strategy. For example, the opportunities to prioritise are those that will bring the most benefit to your organisation and seem the most probable and accessible given your strengths. Similarly, analyse threats in light of your weaknesses to identify those that would most negatively impact your organisation and have the highest probability of occurrence.

Step 3: exploit the data

Once the SWOT matrix is constructed, it is a matter of exploiting the data by identifying strategic axes. This is where you will make your diagnosis. As a reminder, examples of questions to ask at this stage are: how to consolidate the strengths of my organisation? How to reduce my weaknesses and secure myself against threats? How to develop opportunities? Etc.

Now, we will give you 4 essential tips to succeed in your SWOT analysis.

4 tips to succeed in your SWOT analysis:

1) Be concise, go to the essential

The interest of a SWOT analysis is to present an overall view of a situation. We therefore advise constraining the format to a maximum of one page by prioritising the data of the analysis.

2) Update your analysis regularly 

A SWOT analysis is not fixed in time. It represents an analysis at a given moment. You must be aware that the internal or external environment can evolve rapidly and that this will necessarily impact your analysis. Do not hesitate to conduct regular monitoring of your market or to regularly question your customers, employees, and suppliers to consolidate your analysis.

3) Define the most appropriate scope for your analysis

The classic mistake is to consider that the SWOT analysis must be carried out only at the level of the “entire” company. We invite you instead to consider as the scope a strategic business area that has its own characteristics (key success factors, resources and skills, etc.).

4) Exploit your analysis to the maximum

The value of the SWOT matrix lies mainly in your ability to exploit it correctly. Once constructed, ask yourself how to consolidate your strengths, mitigate your weaknesses, secure yourself against threats, and seize opportunities. Be action-oriented.

To conclude, discover below in our video the example of Paul, the owner of a seafood restaurant who must use the SWOT analysis to face the 2020 health crisis.

This video is in French. To watch it in English, please turn on subtitles in YouTube settings.

To go further

Thanks to the proposed SWOT method, you are able to create your own diagnosis of the situation. You will be ready to ask yourself the right questions and develop the best strategies for your company.

Want to know more? Find in our practical SWOT guide (in PDF format) everything you need to master the SWOT method perfectly. The SWOT PDF guide includes:

• A complete SWOT definition
• Explanation of the four quadrants: strengths, weaknesses, threats, and opportunities
• Numerous examples of SWOT analysis to understand how to conduct a SWOT HR, a SWOT Marketing, SWOT management, or a SWOT business
• An automatic SWOT generator, even more efficient than a SWOT template!
• Complementary models to the SWOT tool such as PESTEL analysis

It’s up to you to conduct your SWOT analysis!

Ad Valoris Team

4 characteristics of SWOT Analysis

1. Definition of SWOT Analysis
   The acronym “SWOT” stands for: Strengths (Strengths), Weaknesses (Weaknesses), Opportunities (Opportunities), and Threats (Threats). It is a strategic analysis tool aimed at establishing an overall diagnosis of the current situation of a company or project. It helps identify the levers or strategies to activate to achieve a goal. The SWOT analysis is presented in the form of a table with four boxes to identify the strengths and weaknesses of a company or project in its market.
2. Difference between SWOT and PESTEL
   PESTEL is another strategic analysis method that focuses solely on the external factors of a project, whereas SWOT performs both an internal and external diagnosis. PESTEL analyses six different angles: Political, Economic, Sociological, Technological, Environmental, and Legal. The combined use of SWOT and PESTEL provides a more comprehensive view of the context and actions to be taken.
3. Importance of SWOT analysis
   It provides an overview of the current situation and suggests future trajectories in the short and medium term. It is useful for identifying a company’s competitive advantage, areas for improvement, development opportunities, and for developing strategic planning.
4. Methodology for a good SWOT analysis
   Identify the internal strengths and weaknesses of the company or project.
   Recognise the external opportunities and threats that may have an impact.
   The SWOT analysis process involves three steps: identifying and classifying internal and external data, selecting and prioritising this data, and utilising the data to develop strategic axes.