2022 SWOT Analysis: What, Why, and How A Comprehensive Guide with Examples
Updated: Oct 14, 2022
A SWOT analysis is a method of analyzing the way political, economic, social, and environmental features affect a business. This is done by taking four different pieces of data—strengths, weaknesses, opportunities, and threats—along with the weighted significance. Here we'll walk you through an in-depth SWOT analysis example you can use when figuring out where to invest your money and your time.
Table of Contents
What is SWOT Analysis?
A SWOT analysis is a structured technique to analyze the Strengths, Weaknesses, Opportunities, and Threats involved in any project or any business venture. It helps users to know the present status of their business, plan for the future and gain an advantage over competitor's businesses. Developed by American physicist Albert Humphrey (1911-2002) at Stanford Research Institute in California in the late 1950s, SWOT Analysis is one of the oldest ways management teams analyze internal and external factors to systematically evaluate how they can improve performance. In one word we can say this is Marketing Technique.
Why is a SWOT Analysis Important?
1. A SWOT analysis provides valuable information about a company, area, or individual. It can help to identify strengths and weaknesses, as well as opportunities and threats. This information can be used to make decisions about how to improve a situation or take advantage of new opportunities.
2. It can be used in many different situations. For example, it can be used to help plan a new business venture, expand into a new market, or develop a new product. It can also be used to assess an existing business or situation.
3. It is relatively easy to conduct and does not require any special skills or training. All you need is some basic information about the company, area, or individual you are assessing.
4. It can provide valuable insights that would otherwise be difficult to obtain. It can help you see the big picture and make better decisions.
5. It is a flexible tool that can be used in many ways. You can tailor it to your specific needs and objectives.
How is a SWOT Analysis Done?
To do a SWOT analysis, businesses first need to gather information about their Strengths and Weaknesses. This can be done through internal research, such as customer surveys, financial analysis, and employee feedback. Once this information is gathered, it needs to be analyzed to identify any patterns or trends.
After the Strengths and Weaknesses have been identified, the next step is to look at external factors that could impact the business. This includes looking at Opportunities and Threats that come from the market, the economy, Competition, or other sources. For each of these external factors, businesses need to decide if they are something that can be leveraged to help the business grow or if they are a threat that needs to be mitigated.
Follow the following 5 steps:
1. A SWOT analysis is typically organized into four quadrants, with each quadrant representing one of the four elements of the analysis.
2. The first quadrant, labeled "Strengths," represents the internal factors that are working in favor of the organization.
3. The second quadrant, labeled "Weaknesses," represents the internal factors that are working against the organization.
4. The third quadrant, labeled "Opportunities," represents the external factors that are working in favor of the organization.
5. The fourth quadrant, labeled "Threats," represents the external factors that are working against the organization.
Example of SWOT Analysis: Tesla Motors, Inc. (Tesla).
In 2008, Tesla began selling its all-electric car, the Tesla Roadster, which was the first fully electric car sold by a major automaker in the U.S. The company has been profitable since 2013, which is abnormal considering most other start-ups don't make a profit until around year 12. In this article, we aim to study 'Tesla Motors’ using SWOT analysis to evaluate the company’s current situation.
Strengths –
1. Green vehicles depend on electricity. Unique product compared to other major automakers as it doesn't produce any gasoline-powered cars. It’s an innovative company.
2. Instead of depending on third-party leasing or finance firms to get loans for a high-end car or truck, consumers can go directly to Tesla and arrange their lease or purchase plan with their desired term.
3. Covers longer distances with less charging, causes no pollution, and reduces car accidents.
4. A top employer company – One of the best places to work.
Weaknesses-
1. High cost of production.
2. Less charging stations.
3. Shortage of batteries.
4. Lack of high-volume production.
Opportunities-
1. Sales expansion in an untapped market.
2. Less expensive car.
3. Bringing battery production technology in-house.
4. Exploit the air-taxi market.
5. Introduction of the pickup truck.
6. Market confidence in Tesla.
Threats –
1. Extensive competition.
2. Product defects.
3. Disruption of supply due to shortage of materials.
4. High-risk factor due to usage of lithium-ion.
What Should Be Included in a SWOT Analysis?
1. A SWOT analysis should include a clear statement of the company’s overall current strategic situation. This means providing a clear and concise overview of the company’s strengths, weaknesses, opportunities, and threats.
2. It should be specific and focused. This means that it should focus on the most important factors that will impact the company’s ability to achieve its objectives.
3. It should be based on facts and data. This means that all the information included in the analysis should be accurate and up to date.
4. It should be objective. This means that it should not be influenced by personal opinions or biases.
5. It should be kept short and simple. This means that it should only include the most important information.
Conclusion
After reading this article, you should understand what a SWOT analysis is and how it can be used. You also saw an example of how a SWOT analysis can be used to create a marketing plan.
There are many ways that a SWOT analysis can be used. It is a valuable tool for businesses, nonprofits, and even individuals. If you are working on your startup, consider using a SWOT analysis to help you achieve your goals.
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