Albert Humphrey and his colleagues developed a tool called the SWOT analysis, and it initially focused on only four main aspects. Yes, that is true. The concept of the 5th element in it is not standard. It used to be just the (S)trengths, (W)eaknesses, (O)pportunities, and the (T)hreats.
However, in recent studies, according to some authors, the central point of all four quadrants is the fifth element, which they named ‘Actionable Strategies.’
Apparently, this is just a conceptual variation, not a formal component, but scholars have argued that this extra step is very useful in turning your ideas into real plans, making the whole analysis more practical. Let’s dig in more about this new addition.
The 5 Elements of SWOT Analysis Explained in Detail
If you haven’t skipped the introduction, you must have gone through what the initials SWOT stand for. However, for anyone who still doesn’t understand the foundation of Albert’s genius tool, below is a quick recap in the form of a table. We hope this breakdown makes it digestible.
| Letter | Meaning | Description |
| S | Strength | What you or your business does well (skills, resources, advantages) |
| W | Weakness | Areas that need improvement (gaps, limitations, or challenges) |
| O | Opportunity | External chances to grow (trends, demands, or untapped markets) |
| T | Threat | External risks (competition, market shifts, and obstacles that could harm) |
Importance of the Tool in Business Planning
Once you have understood what each initial in S-W-O-T denotes, here is what is next important to understand: the purpose. Yes, the purpose behind working on this tool. There has to be one.
Otherwise, why would any CEO, a manager, or even a sole entrepreneur spend time filling out the four quadrants? Have a look at the incredible benefits yourself, and then you will understand why everyone from startup founders to corporate strategists, and even loan business plan writers, needs to use this analysis tool.
- It helps create a tactical plan by aligning the firm’s assets with its competitive environment.
- With a clear view, you can lead better, set realistic goals, and make informed decisions.
- It helps in identifying and capitalizing on external opportunities that may be overlooked.
- By identifying potential risks, you can come up with mitigation and contingency plans.
- The tool also brings internal weaknesses to the front, getting them addressed promptly.
- The detailed comparison of the 4 elements helps a business gain a competitive edge.
- It keeps the precious resources from being wasted on the wrong priorities.
Learning How You Can Start a SWOT Analysis Today
We know the benefits might have overwhelmed you a bit, so to help you recover from those lengthy sentences, here is the world’s easiest way of systematically getting your answers through the analysis tool. Believe us, you will be delighted to learn this simple approach. The first step is to draw a grid with four boxes and fill it according to the key below.
- Top left: Strengths
- Top right: Weaknesses
- Bottom left: Opportunities
- Bottom right: Threat
It should look something like this. The matrix also holds the list of things that exist in each quadrant.
Once you have it right, you need to fill in the spaces in each quadrant by asking simple questions to yourself. Such as:
- What are we great at?
- Where do we struggle?
- What’s happening in the market?
- What could go wrong?
There is ‘Always’ a Catch
The answers, however, won’t come easily. You will have to do painstaking research for it. For example, review industry reports, customer feedback, competitor websites, market trends, and internal performance data.
When you have all the answers, simply fill in each box honestly and use real examples to support every claim. You can also look for patterns or match strengths to opportunities because this can help you in planning how to fix your firm’s weaknesses.
However, if you are new to this approach, it is better to search for business plan writers near me. These services assign experts to you, who make the analysis so effortless because of their broad experience in the industry.
Understanding the 5Th Element of the SWOT
So far, we have learnt that this tool was introduced to look at four key areas at the same time. Namely, they are a company’s strong suits, limitations, opportunities, and fears.
But just listing them regularly is NOT enough. The real magic happens when you start connecting the dots, as this is when ideas pop up and strategy-making becomes painless.
To be exact, the ‘fifth element’ is where it all comes together. It is called the actionable strategies, where you combine two quadrants, and this relationship benefits you by giving further clarity. Have a look at the examples below.
- Strengths + Opportunities:
This is when your business plans are about using what you are good at to chase exciting breaks. For example, if you are great at design and there is a demand for fresh branding, you jump in. The other way round, you can also acquire skills like Search Engine Optimization to fit into the growing market demand.
- Weaknesses + Opportunities:
Imagine that you find a weak spot in your venture, like a lack of teamwork abilities, and there is a trend of team lunches on LinkedIn. Just go for it. This chance must be taken to overcome the limitation without any trouble.
- Strengths + Threats:
At first, this combination might seem odd, but trust us, it is amazing. Using it, you can come up with strategies to guard against risks. Say you have got loyal customers. Boom! You can use that to stay strong if a competitor shows up.
- Weakness + Threat:
This relationship is also incredible as it helps you create strategies that become your safety net. For instance, you spot a threat and know you are not ready. So, you play it safe and avoid trouble.
The Frequently Asked Questions
Q. Can this tool be used for personal development?
Yes, you can use this as a powerful self-assessment tool. It helps individuals identify personal strengths, address weaknesses, spot growth opportunities, and prepare for external challenges.
Q. How are internal factors different from the external factors?
Internal factors (strengths and weaknesses) are within your control, like skills or resources. On the other hand, the external factors (opportunities and threats) come from outside, like market trends or competition.
Q. How often should a business update this analysis?
Businesses should revisit their SWOT analysis quarterly or during major shifts such as before launching products, entering new markets, or facing industry changes. This is important because regular updates help a business stay relevant and responsive to changing conditions.
The Summary
The SWOT is easy to understand, and so is the 5th element. It is just an additional central position in the matrix that exists where the four quadrants intersect. As a result, this element, which is also called ‘Actionable Strategies,’ allows you to pair one internal (strengths or weaknesses) and one external (opportunity or threat) together.
These brief bonds can change the perspective for the better of the company, helping you make informed decisions. This is the future of strategic planning that is going to make the lives of businessmen more and more stress-free.
