SWOT Analysis
Strengths: characteristics of the business or project
that give it an advantage over others.
Weaknesses: characteristics that place the business or
project at a disadvantage relative to others.
Opportunities: elements in the environment that the business
or project could exploit to its advantage.
Threats: elements in the environment that could cause
trouble for the business or project.
Internal and external factors :
Strengths and weaknesses are usually considered
internal, while opportunities and threats are usually considered external. The
degree to which the internal strengths of the firm matches with the external
opportunities is expressed by the concept of strategic fit.
Internal factors are viewed as strengths or weaknesses depending upon their effect on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses (distractions, competition) for another objective. The factors may include personnel, finance, manufacturing capabilities, and all of the marketing mix's 4Ps.
External factors include macroeconomics,
technological change, legislation, and sociocultural changes, as well as
changes in the marketplace.
A number of authors advocate assessing external
factors before internal factors before internal factors.
Some uses of SWOT analysis:
SWOT analysis has been used at different levels
of analysis in many arenas, not just in profit-seeking organizations. Examples
include non-profit organizations, governmental units, and individuals.SWOT
analysis may also be used in pre-crisis planning and preventive crisis
management. SWOT analysis may also be used in creating a recommendation during
a viability study/survey.
Strategy building -;
SWOT analysis can be used to build
organizational or personal strategy. Steps necessary to execute
strategy-oriented analysis involve identification of internal and external
factors (often using the popular 2 × 2 matrix), selection and evaluation of the
most important factors, and identification of relations existing between
internal and external features.
For instance, strong relations between
strengths and opportunities can suggest good conditions in the company and allow
using an aggressive strategy. On the other hand, strong interactions between
weaknesses and threats could be analyzed as a potential warning and advice for
using a defensive strategy.
Matching and converting-:
One way of using SWOT is matching and
converting.Matching is used to find competitive advantage by matching the
strengths to opportunities. Another tactic is to convert weaknesses or threats
into strengths or opportunities. An example of a conversion strategy is to find
new markets. If the threats or weaknesses cannot be converted, a company should
try to minimize or avoid them.
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.
Outcome-
Doing a thorough SWOT analysis can help
position your brand and gain an edge over the competition. Identifying your
strengths and opportunities is a stepping stone to finding ways of optimizing
them to better your market chances. The analysis also ensures you are not
ignorant of weaknesses that may downplay your efforts, as well as threats that
may harm your progress. With a SWOT analysis software like MindManager, you can
quickly consolidate.
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