SWOT analysis using SWOT diagrams or matrices is a key part of any business planning or analysis.
SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors and opportunities and threats are external factors. A SWOT diagram analyzes a project or business venture by focusing on each of these factors. It typically consists of four boxes, one for each area, but the exact shape may vary depending on the design.
SWOT diagrams can be especially useful when trying to decide whether or not to embark on a certain venture or strategy by visualizing the pros and cons. By clearly outlining all positives and negatives of a project, SWOT analysis makes it easier to decide whether or not to move forward.
How to Create a SWOT Analysis
- Determine the objective. Decide on a key project or strategy to analyze and place it at the top of the page.
- Create a grid. Draw a large square and then divide it into four smaller squares.
- Label each box. Write the word "Strengths" inside the top left box, "Weaknesses" inside the top right box, "Opportunities" within the bottom left box, and "Threats" inside the bottom right box. These are titles, so they should be distinguished from the rest of the text using either color or font size. SmartDraw offers several SWOT diagram templates designed to make construction quick and easy.
- Add strengths and weaknesses. Add factors that affect the project to the applicable boxes. Components of a SWOT analysis may be qualitative and anecdotal as well as quantitative and empirical in nature. Factors are typically listed in a bullet form.
- Draw conclusions. Analyze the finished SWOT diagram. Be sure to note if the positive outcomes outweigh the negative. If they do, it may be a good decision to carry out the objective. If they do not, adjustments may need to be made, or else the plan should simply be abandoned.