A SWOT analysis helps firms analyse the strengths, weaknesses, opportunities and threats presented by corporate strategy. SWOT is an acronym which stands for Strengths, Weaknesses, Opportunities and Threats.
Strengths and Weaknesses are internal factors which are controllable by the organisation.
Opportunities & threats are external factors which are uncontrollable by the organisation.
Lets discuss each of the four factors (strengths, weaknesses, opportunities and threats) examined under a SWOT analysis.
Below is a diagram showing each of the sections that make up a SWOT analysis. The diagram has been split into the four SWOT analysis sections and shows which of the SWOT factors are internal factors and which SWOT analysis factors are external influences.
SWOT Analysis Strength Factors
Strengths are internal factors that will help the organisation be successful. They can include employees, procedures, business assets and products. Examples of internal factors that are a strength are:
A strong brand name
Good Market share
Good Reputation
Expertise and Skill
SWOT Analysis Weakness Factors
Weaknesses are internal factors which could stop or slow down organisation's growth and success. Just like strengths they can relate to employees, procedures, business assets and products. Examples of internal factors that are a weakness are:
Low or no market share
No brand loyalty
Lack of employee experience
Inefficient company processes and procedures
SWOT Analysis Opportunity Factors
Opportunities are things outside the business, which may benefit the firm. Examples of opportunities include
Threats are things outside the business which could make trading conditions more challenging for the firm. Examples of threats include
Competitors
Government policy such as a ban on some of the activities carried out by the firm
Taxation rules which reduce the firm's or consumer income
A change in consumer habits which makes the firm's products less appealing to the target market.
SWOT Conclusion
A SWOT analysis is a simple way to quickly assess the things that are "good" and "bad" for an organisation on a particular date. After the SWOT analysis firms should work out how to they can build on their strengths and make the most of opportunities. They also need to assess the impact of weaknesses to decide whether they need to get rid of them or simply prevent them from growing. Threats are external factors so organisations can not control them or wipe them out, instead firms should plan how to minimise their impact on the business.
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