Benefits and limitations of SWOT analysis

A SWOT (strengths, weaknesses, opportunities and threats) analysis can help you identify and understand key issues affecting your business, but it does not necessarily offer solutions. You should be aware of the limitations as well as the benefits of a SWOT analysis before you decide to conduct one. Knowing what you can reasonably expect to achieve will make the SWOT analysis more useful for your business, and will save you time. Ultimately, you must be prepared to spend the time to review your SWOT analysis and use it to determine the best way forward in your business.

Benefits of SWOT analysis

The main advantages of conducting a SWOT analysis is that it has little or no cost - anyone who understands your business can perform a SWOT analysis. You can also use a SWOT analysis when you don't have much time to address a complex situation. This means that you can take steps towards improving your business without the expense of an external consultant or business adviser.

Another advantage of a SWOT analysis is that it concentrates on the most important factors affecting your business. Using a SWOT, you can:

  • understand your business better
  • address weaknesses
  • deter threats
  • capitalise on opportunities
  • take advantage of your strengths
  • develop business goals and strategies for achieving them.

Limitations of SWOT analysis

When you are conducting a SWOT analysis, you should keep in mind that it is only one stage of the business planning process. For complex issues, you will usually need to conduct more in-depth research and analysis to make decisions.

Keep in mind that a SWOT analysis only covers issues that can definitely be considered a strength, weakness, opportunity or threat. Because of this, it's difficult to address uncertain or two-sided factors, such as factors that could either be a strength or a weakness or both, with a SWOT analysis (e.g. you might have a prominent location, but the lease may be expensive).

A SWOT analysis may be limited because it:

  • doesn't prioritise issues
  • doesn't provide solutions or offer alternative decisions
  • can generate too many ideas but not help you choose which one is best
  • can produce a lot of information, but not all of it is useful.

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Last reviewed
September 29, 2014

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