A SWOT analysis is a structured strategic planning framework that evaluates four dimensions of a business, project, or decision: Strengths (internal positive factors), Weaknesses (internal negative factors), Opportunities (external positive factors), and Threats (external negative factors). It is used to inform strategy by mapping internal capabilities against the external environment.
A strength is internal · something your organization currently has or does well. An opportunity is external · something in the market or environment you could take advantage of. A strong brand is a strength. A competitor exiting a market is an opportunity. The internal/external distinction is the most important rule in SWOT analysis. Mixing them up produces a confusing and unusable output.
Three to five items per quadrant is ideal for most purposes. Fewer than three suggests insufficient analysis. More than seven suggests a lack of prioritization · not everything is equally important. Force yourself to rank items within each quadrant and keep only the most significant. A SWOT with 15 items per quadrant tells you nothing actionable.
A SWOT produces the inputs to a strategy. The most useful next step is a TOWS matrix: map your strengths against opportunities (SO strategies · how do you use strengths to capture opportunities?), strengths against threats (ST strategies · how do strengths protect against threats?), weaknesses against opportunities (WO strategies · how do you overcome weaknesses to capture opportunities?), and weaknesses against threats (WT strategies · what must you fix urgently?).
Annually as a minimum, and whenever a significant external change occurs · a new competitor entering your market, a regulatory change, a shift in customer behavior, or a major internal change like a new product launch or leadership change. A SWOT that is more than 18 months old is usually too outdated to inform real decisions.
Its main limitation is that it describes a situation and leaves the decision to you. A review of strategy work at 50 UK companies looked at the SWOTs consultants prepared for more than 20 of them. The lists averaged over 40 factors, the wording was vague, nothing was prioritized and no one checked whether the points were true. Most telling, nobody used the outputs in the later stages of the strategy work. To avoid the same trap, check each item against evidence, phrase it specifically enough to act on, and agree in advance which decision the SWOT is meant to inform. Source: Terry Hill and Roy Westbrook, SWOT Analysis: It's Time for a Product Recall, Long Range Planning (1997).