SWOT Analysis, Definition and Purpose

Table of Content

SWOT analysis is a technique commonly used to assist strategic planning in businesses. 

A strategic plan for progress will usually feel heavy at first but the results will be enjoyed in the future.

Definition of SWOT Analysis

SWOT analysis is a technique that you can use to understand the Strengths, Weaknesses, Opportunities, and Threats you faced to achieve your goals.

This analysis is very useful for use in a wide variety of contexts, whether it includes your organization or your personal life. 

A SWOT analysis' assessment comes from 2 factors, namely: internal factors (Strengths and Weaknesses) and external factors (Opportunities and Threats).

the definition of swot analysis

Purpose of SWOT Analysis

A SWOT analysis can make it easier for you to determine what opportunities you can take advantage of. In addition, by understanding external weaknesses and threats, you can take steps to avoid or deal with them.

In a business context, SWOT assists you in developing a strategy to align your opportunities and strengths/strengths, so that you can effectively differentiate yourself from your competitors, while at the same time helping you reduce the potential threat of failure/loss.

The ultimate goal of a SWOT analysis is very clear, namely; to help your business succeed in the future.

SWOT analysis should not only be used to determine the direction of the entire organization, it can also be used at the product level, marketing plan level, or even project level.

You can even use SWOT analysis to analyze your competitors as a whole as well as their products. 

As previously mentioned, SWOT is not only limited to business use. We can also use it as an achievement assessment for ourselves.

For example; You can use a SWOT analysis to assess how far you have achieved so far. So by analyzing it again, you can create a new business that suits your abilities and desires.

However, you must still adapt the new business plan to the demand opportunities in the market. Not to forget, you also have to pay attention to threats that will hinder or weaknesses that you may have.

Tips for Conducting a SWOT Analysis

We also provide some tips that will be useful to you:

Brainstorming or Delphi Method

To help you collect SWOT data, you can use Brainstorming or the Delphi Method.

Creating a List for Each SWOT Points

Once you have a bullet list for each SWOT, rank the points from most to least important.

This is useful to help you focus your attention on the most urgent factors.

Specific Explanation

Be specific.

Instead of using the phrase “we are cheaper than our competitors”,

It is better to use this sentence,

“On average, our products are 20% cheaper than our closest competitors”.

Compare with Other Analysis Results

Don't just rely on SWOT analysis as the main reference for your business strategic planning. Use other analysis results such as PEST analysis, EPISTEL or STEER analysis.

Read also how we analyze your website's SEO!

SWOT Matrix

You can see the SWOT Matrix from the case example below.

Example: SWOT Analysis of an eBook Retailer Company.

swot matrix

To understand how to do a SWOT analysis more deeply, let's look at the business example above. 

In this example, we will perform an analysis of an eBook Retailer.

Before making a decision, we need to evaluate each analysis result first. The first thing we do is collect data first.

Based on these results, we were able to draw two potential strategies namely;

1. Friendly Prices and Service Quality Improvement.

Focus on friendly prices for customers and improving customer service: introducing telephone-based customer service (call center).

Cross-subsidies by moving the distribution center out of the city center so that operating costs will be much lower.

2. Focus on Products

Focus on eBooks: we recommend maximizing online retail platforms such as websites and e-commerce and aim to promote ads within a certain time. 

Well, that's roughly the results of the SWOT analysis that we can draw.

From the SWOT matrix above, can you suggest other strategies that can be used by these retail companies?

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About Writer.

Rachmat Ananto

Rachmat Ananto

YILD Creative Marketing Co-Founder & CEO. Immersed in the world of customer service for a decade which led him to become a business development and analyst.
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