SWOT Analysis Fundamentals: Definition and Application
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What is SWOT Analysis?
It is a method used to evaluate the factors involved in a project (Strengths, Weaknesses, Opportunities, and Threats).
Objectives and Goals of SWOT Analysis
The primary objective is to identify the factors that are favorable or unfavorable for achieving the company's goals.
Essentially, the SWOT analysis establishes the subsequent steps in the process of planning.
The Components of SWOT
What Does SWOT Stand For?
- S: Strengths
- W: Weaknesses
- O: Opportunities
- T: Threats
How Are SWOT Factors Classified?
They are classified into two main categories:
- Internal Factors
- External Factors
Internal vs. External Factors
Which Factors are Internal?
Internal factors (Strengths and Weaknesses) are generally inside the company's control.
Which Factors are External?
External factors (Opportunities and Threats) are generally beyond the company's control.
Detailed Definitions of SWOT Components
Opportunities (+)
Opportunities represent the reason for an organization to exist and develop.
Strengths (+)
Strengths are tangible and intangible attributes that benefit the organization.
Threats (-)
Threats place the organization's mission or operation at risk.
Weaknesses (-)
Weaknesses detract from the organization's ability to attain its goals.
Examples of Internal and External Factors
What are the Four P's (Internal Factors)?
Internal factors often include the 4 Ps of the Marketing Mix:
- Product
- Price
- Place
- Promotion
Other internal factors include: Personnel, Finance, Manufacturing Capabilities, and Infrastructure.
What External Factors Can Be Included?
External factors may include:
- Macroeconomic matters
- Technological change
- Legislation
- Sociocultural changes
- Marketplace changes
- Competitive position
The SWOT Analysis Process
How Must the SWOT Analysis Start?
It starts by defining the desired objective.
What is the First Decision Determined by SWOT?
From the SWOT results, the subsequent steps in the process of planning are established.
What Happens if the Objective is Not Attainable?
If the objective is not attainable, the process is repeated (re-evaluation and adjustment).
Nature of Strengths, Weaknesses, Opportunities, and Threats
What are Strengths and Weaknesses?
They are intrinsic value-creating skills or assets.
Are Opportunities and Threats Created by the Organization?
No, they exist in the environment.
How Do Opportunities and Threats Emerge?
They emerge as a result of the competitive dynamic caused by future gaps in the market.
SWOT Output and Purpose
How Are SWOT Results Represented?
The results are typically presented in a matrix format.
How Are Threats Classified?
Threats are classified by their severity and probability of occurrence.
What is the Purpose of Generating SWOT Analysis?
The analysis generates information for matching an organization's or group's goals, programs, and capacities to the social environment.