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SWOT

 The concept of SWOT (Strengths, Weaknesses, Opportunities, and Threats) originally emerged from the SOFT framework (Satisfactory, Opportunity, Fault, and Threat).

SWOT Breakdown

  • S – Strengths: Internal factors that positively contribute to an organization’s growth. These are the strong points within the organization or its environment.
  • W – Weaknesses: Internal factors that negatively affect the organization at present.
  • O – Opportunities: External factors that can help an organization grow or achieve its goals in the future.
  • T – Threats: External factors that may hinder the organization in achieving its goals in the future.

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Good

Bad

 Present (Internal forces)

 Strength

 Weaknesses

 Future (External forces)

 Opportunity

 Threat

When to Use SWOT Analysis

  • Business strategy planning
  • Market entry assessment
  • Launching a new product
  • Evaluating a new business idea
  • Assessing competition
  • Reviewing and analyzing a business proposition
  • Determining a company’s market position
  • Assessing risks before acquisition or partnership

How to Conduct a SWOT Analysis

To identify Strengths, Weaknesses, Opportunities, and Threats, assess:

  • Present internal strengths and weaknesses
  • Future external opportunities and threats

These factors can be categorized into a 2x2 SWOT Matrix, which helps determine strategic actions:

 Strengths           

  Weaknesses
  • Unique thing about organization or product
  • What are your capabilities?
  • Core experience and knowledge area
  • Market reach
  • Location advantage compared to others or suitable for a business
  • Work of research, niche in an area
  • Competitive edge
  • Cost of your product or service
  • Value addition
  • People, assets and financial strength
  • Environment (infrastructure, systems and processes)
  •  Market reputation
  • Gaps in capability and skills
  • Weakness in knowledge and lack of experience
  • Limited or limitation in market presence
  • Distribution challenges, after sales service track record
  • Behind competition in areas
  • Issues of cash-flow, funds
  • Leadership and working culture of the organization
  • Behind competition/late in the market

  Opportunities

  Threats
  • New markets
  • New trends - lifestyle, technology, business
  • Competition's weaknesses
  • Niche areas
  • Need of better services and products (value addition)
  • New business due to globalization
  •  Usual big business and contracts
  • Merger/acquisition and partnership
  •  Local and global economy
  • Demand (less)
  • Finance and cash reserves
  • Legal and political
  • New competitors
  • New trends in technology and lifestyle
  • Resource availability (human and other)

Above list provides list of good and bad things or areas. What actions to take can be interpreted from those points but it is better to identify the actions using a systematic way 2X2 SWOT matrix. Using this one can find out areas where  there are opportunities as well and organization has strength so those areas should be leveraged and should be priority areas of focus. Similarly other combinations provide different actions or areas of focus.

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Strengths

Weaknesses

 Opportunities

 Strength/Opp
List of priorities

 Weakness/Opp
List of corrective measures

 Threats

Strength/Threats
List of areas easy to handle

 Weakness/Threat
List of risk areas

2x2 SWOT Matrix

Strength/Opportunities - First priorities - Where should we focus on ?

Weaknesses/Opportunities - Good options if overcome challenges/weaknesses - What should we correct?

Strength/Threats - Can be defended - What challenges can we handle?

Weakness/Threats- Risk - What risks we have to plan for?

Related Concepts

  • PEST Analysis: Evaluates external market and environmental factors. While SWOT analyzes a business or proposition, PEST focuses on external influences.
  • Porter’s Five Forces Model: Assesses a company’s competitive position within an industry.

References

Case studies and sample SWOT analyses:

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