SWOT Analysis

SWOT Analysis

SWOT Analysis is a framework that evaluates the position of an organisation in terms of its strengths, weaknesses, opportunities and threats. It is considered as an important strategic planning technique that helps in assisting the competence level of business. Also, it assists the performance, functions and potential of business or industry. Earlier, SWOT analysis was used only by businesses but currently, it is used by non-profit organisations, government, investors and entrepreneurs. SWOT analysis supports business in examining the external and internal factors that are favourable or unfavourable to achieve objectives of the business. Strengths and Weaknesses are considered as the internal factors of business where Opportunities and Threats are the external factors of business. 

  1. Strengths – It describes the positive attributes of business whether they are tangible or intangible. These attributes are within the control of business. Strengths of a business can be in the form of:
  • What are the internal sources of an organisation?
  • How business can compete with its competitors at a national or international level?
  • What are the positive attributes of business that helps in gaining a competitive advantage?                                                                                                                                                                                                                                                                                                                                                                                             2.Weaknesses – It is the unfavourable factor that exists within the business. In order to reduce unfavorability, a business should improve their weak areas to compete with its competitors effectively. To eliminate weakness, a business should know:
  • What are the factors that eliminate weak points of business or maintain a competitive advantage in the market place?
  • Enlist areas that need improvement to accomplish objectives of business?
  • How business lacks in terms of technology, competitive advantage etcetera?                                                                                                                                               3.Opportunities – It is the favourable external factor that facilitates business to gain competitive advantage. Example, when tariffs of the country decline then car manufacturers exports their car to a new market to increase its sales and market share. These are considered as the attractive factors that provide reasons to prosper business. An organisation should focus on:
  • What opportunities increase the organisation’s productivity level?
  • Are the changes in the market creates opportunities for business or not?
  • What government policies enhance opportunities to an organisation?                                                                                                                                                                                                                                                                                                     4.Threats – Generally, threats harm an organisation such as the threat of high cost, limited labour supply and high competition. For instance, the major threat faced by the manufacturer of wheat is the drought that destroys the crop field. These factors are beyond the control of businesses but they can address it by focusing on these points:
  • What obstacles are faced by business in the marketplace?
  • What situations threaten the business or affect their competency level?
  • Is business faced any cash flow or debt-related problems?
  • What steps need to be adopted by a business to eliminate threats?

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