A SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is a tool frequently used in the business world but also applicable in other applications in life. The following will detail business applications, but it is easily adapted for other uses. The major benefit of the tool is that it effectively helps the user to quantify key competencies of the organization as well as areas in need of improvement.

Typically a SWOT analysis is performed using a box separated into four quadrants. Each of the quadrants is assigned to address the Strengths, Weaknesses, Opportunities, and Threats facing the organization.

The upper left quadrant usually represents the Strengths. The Strengths are defined as the internal factors that give the organization a competitive advantage. Strengths can include internal processes that have been perfected, positive attributes of the employees, resources unique to the organization, and intellectual capital.

The upper right quadrant usually represents Weaknesses. The Weaknesses are defined as the internal factors that might be holding the organization back from realizing its full potential. Weaknesses can include lack of controls or processes, poor morale among employees, and a deficit in resources or intellectual capital.

The lower left quadrant typically represents Opportunities. The Opportunities are defined as the external factors that present upside for the organization. Included in the opportunities are items such as positive competitive factors, market or economic conditions, stakeholder support, and technology

The lower right quadrant typically represents Threats. The Threats facing an organization are defined as the external factors that have the ability to limit the advancement of the organization. Potential threats include, negative competitive factors, market or economic conditions, and criticism of the organization.

When combined the Strengths and Weaknesses, or the upper half of the box, encompass all of the internal factors that characterize the company. These are things that the company can directly influence. The Opportunities and Threats, or the lower half of the box, encompass all of the external factors in the environment in which the company operates. These are things which the company may or may not be able to directly influence. The left side of the box captures all of the positive factors while the right side captures all of the negative factors that the company must consider.

Once complete, it is important to analyze the work done in the SWOT exercise to identify next steps. SWOT analyses are typically used in planning or strategic decision making. As such the key learnings coming out of the SWOT process should be used to implement the next-steps for the organization based on the organizations overall strategy and goals.

Finally, it is important to keep reviewing and updating the SWOT analysis. Market factors are constantly changing and as the organization implements changes identified in the early stages of the process, internal factors can change too. In order for the process to be most effective, it is important to remain engaged in the process and use it continuously as a tool for improving organizational performance.

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