What is SWOT analysis?
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. The SWOT analysis framework is a lens through which you can view an entire business, a particular strategy, one of your products or services, or even yourself.
The framework brings together internal and external factors to give you a pretty comprehensive overview of the thing you’re analyzing.
The framework has its benefits, but it’s also got its fair share of detractors and limitations.
In this article, we’ll discuss those benefits and limitations as reported by participants in our 2023 State of SWOT survey.
What are the benefits of SWOT analysis?
46.5% of competitive intelligence professionals turn to SWOT analysis at least once a quarter. 22.3% use the SWOT framework, at minimum, once a month.
But why do almost half of all competitive intelligence practitioners use this simple framework so regularly? What’s the point? What do they get out of it?
Well, we asked them. Here are the main reasons practitioners turn to SWOT analysis:
- To get to grips with new and emerging competitors.
- To kick off the industry research process.
- To inform marketing, competitive, and go-to-market strategies.
- To communicate findings at board meetings in a familiar format.
- To inform positioning when launching a new product.
Here are those five SWOT analysis benefits in some more detail:
1. Getting to grips with new and emerging competitors
A SWOT analysis is a super simple, practical way of getting started with competitive analysis.
Most of the time, when you’re performing competitive analysis, it’s with the express purpose of delivering actionable intelligence to somebody else in the business.
“In the analysis phase, I use SWOT primarily for competitor mapping. You define which area [your competitors] are in and their size, etc. It’s a lot about comparison, and where we stand compared to others in our area.”
~ Fouad Benyoub, Director of Competitive Strategy, Databricks
And, if yours is like most businesses, you're most often delivering to your sales team.
That means battlecards or, at the very least, competitor profiles.
SWOT shows you where a competitor is weak, what they do well, how they might constitute a threat to your own success, and where the opportunities lie for you to win some of their market share in light of all that.
2. It’s a great way of kicking off the industry research process
SWOT isn’t just a great way of getting to grips with a single competitor for the first time. It’s a great way of getting a quick and dirty tactical overview of almost anything. Which makes it great for kicking off industry research.
SWOT’s great at this because it gives you a way of packaging and filtering a wealth of information quickly. When you need a broad overview, you need to work through a ton of information to be sure you capture everything that’s relevant. At the same time, you want to be able to quickly discard what’s not. The SWOT analysis framework gives you a way to do that.
When you’re analyzing new industries and business environments, it pays to get to know their main players. SWOT analysis gives you a template for gathering information on each company’s strengths and weaknesses, as well as the opportunities presented by those industries you might have the resources and capabilities to exploit.
3. It helps marketing, competitive, and go-to-market strategies
As one expert respondent told us in our State of SWOT survey in 2023:
“SWOT analysis is highly valuable when identifying your market position relative to your competition, helping you determine what steps you need to take to address challenges or seize opportunities for growth or correction, [and for]identifying your message and influencing brand perception.”
In other words, SWOT analysis, when applied to your business, can help you come up with all sorts of strategies for improving your situation. First, it helps you understand what exactly your situation is. Its specifics, its dangers, and its opportunities. It helps you understand how you’re likely to fare going up against certain competitors. How your products beat theirs, or vice versa.
All such knowledge is indispensable when it comes to strategic planning, and putting together a long-term strategy for your business, or a medium-term marketing or competitive strategy.
4. It’s a recognizable framework for communicating findings at board meetings
If for no other reason, SWOT analysis is worth using because it’s something everyone recognizes and understands. SWOT analysis has had its place in business school textbooks for decades. Managers great and small would recognize a 2×2 SWOT matrix on a slide from a mile away.
So, just as SWOT is a great way of making sense of a lot of information when you need an overview of something, it’s also a great way of communicating a lot of information to others without overwhelming them.
5. SWOT informs positioning when launching a new product
When you launch a new product, you need to be clear on that product’s value proposition. To put together a value proposition that’s effective, you need a very solid understanding of that product.
That’s true whether you’re in charge of marketing a new product, or of advising how to market that product in relation to a competitive landscape you understand better than anyone else in the business.
Performing SWOT analysis on a product is a great way of bringing yourself up to speed fast. With what the product does well, what it doesn’t do so well, and what gaps exist in the market for you to potentially exploit when you get the positioning right.
Other SWOT analysis benefits include:
- Improving sales win rates.
- Helping executives with strategic decision making.
- Making sell cycle issues more visible.
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What are the limitations of SWOT analysis?
So, SWOT has its benefits. But it’s not all roses.
Amongst the respondents of our 2023 State of SWOT survey, SWOT analysis had its fair share of detractors, who were all too happy to discuss its limitations:
SWOT analysis…
- Is often time-intensive.
- Rarely has existing processes in place to get it done efficiently.
- Often doesn’t get the support it needs from other departments to succeed.
- Is vulnerable to internal biases and blind spots.
1. SWOT analysis is time-intensive
According to the respondents of our 2023 State of SWOT survey, the principal challenge facing those performing SWOT analysis is a lack of time. 48.3% of survey participants selected this as a challenge.
So while you won’t need to go out and buy any fancy tools or software to conduct a SWOT analysis, that’s not to say it’s cheap to run.
Doing a SWOT analysis properly involves pulling a lot of people together from different departments. That means drawing on their time and energy, which constitutes an opportunity cost.
While they’re helping you with your SWOT analysis, they’re not doing something else that could be benefiting the business in other ways.
And, if some of our State of SWOT survey respondents are to be believed, any given SWOT analysis’ return on investment is far from guaranteed.
Possible solutions:
- Prioritize. Don’t try to boil the ocean.
- Automate wherever possible using software, AI, and other tools.
- Collaborate and delegate effectively to make the overall project more manageable.
2. Lack of existing processes
Despite being a seemingly simple framework, most businesses lack an internal process for performing effective SWOT analysis with any regularity. More than one third of respondents to our State of SWOT survey reported this being an issue.
Given the time-intensive nature of SWOT analysis, and how busy most practitioners are, the lack of an existing plug-and-play process for SWOT analysis is an understandable limitation.
Possible solutions:
- Train others by spearheading L&D initiatives focusing on SWOT.
- Prepare by working SWOT into existing processes so it’s performed regularly as a matter of course, rather than another unnecessary extra.
3. Difficult to get buy-in from other departments
As a cross-collaborative exercise, the success of any SWOT analysis depends on getting others, from various teams, bought into the project.
A SWOT analysis meeting, though, isn’t likely to be the most exciting event in a person’s calendar on any given day.
If members from other departments don’t show up for the meeting, or show up and stay quiet, you’ll have a hard time getting enough input for a valuable SWOT analysis.
Without enough input, you’re likely to miss something crucial, resulting in a less than effective outcome for the entire project.
Add to this the difficulty of keeping folks engaged with, and willing to invest time and financial resources in, effecting change as a result of what you find in the initial meeting, and you’ve got another potential challenge.
Possible solutions:
- Demonstrate SWOT’s worth at the end of each successful project to make things easier next time.
- Iterate the SWOT process to incrementally decrease the pull on others’ time even as you increase its effectiveness.
- Scout champions from other teams, especially teams with influence. When someone gets a result, celebrate it to show others why it’s in their best interests to commit to the process.
4. Vulnerable to internal bias and blind spots
SWOT analysis is also vulnerable to blind spots.
When performing a SWOT analysis, most will quite rightly collect input from around their organization. It’s rarer, though, for practitioners to consider pulling in their own customer and field research into the process.
Any organization is at risk of becoming an echo chamber, where input and feedback become homogenous. Even if you ask many different members of your organization for their input, you risk missing weaknesses or biases that have become ingrained in the culture of the business.
Possible solutions:
- Pump new life into your analysis by involving new hires. New hires are an excellent, but often overlooked, source of fresh perspectives.
- Involve your customers without wasting resources by inserting your most up-to-date customer research into the analysis.
State of SWOT Report
Download your copy to learn...
- The five top challenges you face performing SWOT, and how to solve them.
- The best ways to measure success or failure post-SWOT.
- Whether SWOT is falling out of favor in modern businesses.
- The best alternative frameworks and how they compare with SWOT.
- The future of SWOT analysis.
What other analysis frameworks or methods might you want to use instead?
So SWOT can be useful in a lot of ways. But it has its limitations. Just in case you find yourself up against one of these limitations, we thought we’d collate a shortlist of alternative analysis frameworks you might consider using.
Here’s a list of those most highly regarded by the expert respondents of our State of SWOT survey:
- 1. Porter’s Five Forces
- 2. PESTLE analysis
- 3. Win/loss analysis
- 4. VRIO analysis
- 5. Seven P’s analysis
Let’s take a look at some of these in a bit more detail:
Porter’s Five Forces
These are Michael E. Porter’s five forces:
- Threat of industry competition.
- Threat of new entrants.
- Power of suppliers.
- Power of customers.
- Threat of substitute products.
Each of the five forces looks at external factors to the business to determine what might negatively impact your product’s success.
If you wanted, you could combine a Porter’s Five Forces analysis with SWOT to build out a more comprehensive Threats analysis.
PESTLE analysis
When it comes to external factors that could affect your product, brand, or business, you might want to dig a bit deeper than the two-part examination of opportunities and threats that SWOT analysis calls for.
PESTLE analysis focuses exclusively on such external factors, breaking them down into six different categories for you to explore:
PESTLE stands for:
- Political
- Economic
- Social
- Technological
- Legal
- …and Environmental factors.
Even bearing the PESTLE acronym in mind while you’re thinking about the opportunities and threats in your SWOT analysis can go a long way towards making your analysis more comprehensive.
VRIO analysis
While the two alternative frameworks described above pertain to external factors, the VRIO analysis looks instead at how internal factors drive your competitive advantage.
The VRIO analysis asks four key questions. Is your product or service…
- Valuable?
- Rare?
- Inimitable?
- Organized?
The first two points are self-explanatory. Your product is inimitable if it isn’t easily copied or replicated by your competitors. Whether it's “organized” has more to do with the ability of your organization to manage available resources to make the most of the competitive advantage your product or service has.
Download the State of SWOT Report
We had far more questions about SWOT analysis for our survey-takers.
🎯 Which SWOT applications offer the best ROI?
👍 How do you measure the success or failure of a SWOT analysis?
🔮 What does the future hold for SWOT analysis? And how do you overcome its inherent challenges?
Want to dig deeper into the reasons why modern attitudes towards SWOT are the way they are? Want to read the real comments and opinions of practitioners to learn how to improve your own application of strategic frameworks in your business?
Grab your no-cost copy of the report today and upgrade your competitive intelligence toolkit. 🧰
