Introduction to SWOT Analysis
SWOT (strengths, weaknesses, opportunities, and threats) analysis is a micromanagement system used in the process of strategic planning in business organizations. With the help of SWOT analysis, a business can understand the competitive position of the company, understand what is lacking and where, and how it can be improved. Simply put, SWOT analysis plots how the company’s resources and capabilities can be best used wisely to best the competitive position it is in the industry and the market.
Understanding SWOT Analysis
Four quadrants—namely strengths, weaknesses, opportunities, and threats—make up the essence of the analysis. Strengths refer to the company’s abilities that give it an advantage over its competitors. Weaknesses are the company’s disadvantages. Strengths and weaknesses are usually internal factors that affect the business environment, while opportunities and threats make up the external segment. Opportunities are the projects and processes that a business optimizes with its strengths, while threats serve as obstacles or road bumps to the project.
Because SWOT analysis fleshes out the past and the present performance of the company, it is used as an assessment tool to weigh the cause of business deviation. It also helps in understanding the current standing of the business, which heavily influences the future route that the company will intend to take. As such, SWOT analysis becomes essential to plan the business blueprint.
Highlights of SWOT Analysis
Although widely prescribed for business organizations, SWOT analysis works for all systems and structures at all levels and in all communities. Wherever planning is a priority, SWOT can be used. Examples of entities that use SWOT include students, NGOs, (any) organizers, etc. or even for in-business departments such as production, marketing, sales, and more. SWOT analysis can only be possible for clearly specified objectives that are measurable. If the planning process does not achieve a goal—and that goal cannot be quantified/measured—then SWOT analysis is not possible. SWOT analysis is also better called SVOR (strengths, vulnerabilities, opportunities, risks) in project management. The SVOR tableau also understands the mathematical link between resources and performance. SWOT is a starting point, and not an inherently conclusive statement. It’s a tool of analysis that provides an understanding. It is a fact and research based process for understanding the past, present and future of the company at an internal and external level, and requires diverse interpretations of the analysis. A problem with SWOT analysis is that it assumes that all factors in the environments are contained and independent. SWOT provides a very introductory and one-dimensional perspective.
