What Is a SWOT Analysis? Definition, Framework, Example

What Is a SWOT Analysis?

By Jeremy Bowman – Updated Nov 5, 2025 at 11:45 AM EST

Key Points

SWOT analysis helps assess a company's current state and future potential without complex math.
It identifies strengths, weaknesses, opportunities, and threats to inform investment choices.
Regular SWOT reviews can guide strategic business or investment adjustments effectively.

SWOT analysis stands for strengths, weaknesses, opportunities, and threats. It’s a popular framework used by investors, executives, and managers for analyzing businesses and understanding their potential on multiple levels.

Loading paragraph...

a graphic defining the term swot analysis — Image source: The Motley Fool

Loading image...

Loading paragraph...

E-commerce

E-commerce is the buying and selling of goods online and the related businesses that facilitate it

Loading paragraph...

Table by author.

Loading table...

Using a SWOT analysis for a company like Apple opens up more areas for discussion and debate. For example, you could analyze Apple’s pricing power and whether it’s sustainable, especially in light of some of the weaknesses and threats it faces.

Loading paragraph...

Pricing Power

Pricing power means that a business can increase prices without losing more than a marginal percentage of its customers, if any.

As the Apple example shows, you can use a SWOT analysis both internally and externally. If you were an executive, you could use the grid above as a guide to leverage your strengths and pursue opportunities while trying to neutralize weaknesses and deter threats.

For instance, investors have long been concerned that too much of the company’s revenue came from the iPhone, and Apple has taken steps to diversify over the years, including building its services business.

Related investing topics

Loading paragraph...

Best Ways to Invest $1,000: How to Start and What to Buy

Four figures can produce some great returns if invested in the right places.

Bests Bonds to Invest in for the Long Term (2026)

Find out why bonds are getting a lot of attention from investors these days.

Best AI Stocks to Buy in 2026 and How to Invest in Them

Learn how you can make money from the wave of seasoned companies innovating in AI and new AI tech companies.

5 Best High Dividend Mutual Funds to Buy in 2026

Want to own a diversified collection of stocks that offer dividends? These may be a good fit.

Loading hub_pages...

The SWOT analysis is a tool investors and managers can use to better understand the businesses they’re looking at and make better decisions. Using the SWOT analysis can help investors find stocks that will thrive in the next bull market, focusing on those with appealing strengths and opportunities and limited weaknesses and threats.

Meanwhile, managers can use the SWOT analysis to improve their business internally, looking at each part of the business and adjusting strategy to leverage strengths and take advantage of opportunities while minimizing weaknesses and threats.

If you’re new to a company, or looking for a way to begin to understand a business, the SWOT analysis is a great way to do it.

Loading paragraph...

About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

TMFHobo

@TMFBowman

Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Apple. The Motley Fool has a disclosure policy.