SWOT Analysis

(noun)

A SWOT analysis (strengths, weaknesses, opportunities, threats) is an exercise undertaken by organizations to understand their current status and assess how to improve.

Related Terms

Examples of SWOT Analysis in the following topics:

  • SWOT Analysis

    • A SWOT analysis allows businesses to assess internal strengths and weaknesses in relation to external opportunities and threats.
    • One of the most recognized of these is the SWOT (strengths, weaknesses, opportunities, and threats) analysis.
    • Identifying SWOTs is essential, as subsequent stages of planning can be derived from the analysis.
    • The SWOT analysis matrix illustrates where the company's strengths and weaknesses lie relative to factors in the market.
    • Explain how a SWOT analysis can be used as a tool in strategic decision making

  • Combining Internal and External Analyses

    • This internal analysis requires careful consideration of the following models and factors:
    • Combining these two constitutes context analysis, which is a method of analyzing the environment in which a business operates.
    • Context analysis considers the entire environment of a business, both internal and external.
    • Using context analysis, alongside the necessary external and internal inputs, companies are able to generate strategies which actively capitalize on this knowledge in pursuit of competitive advantage.
    • Here is an example of the SWOT analysis matrix, which arranges strengths, weaknesses, opportunities, and threats.

  • Considering the Environment

    • SWOT analysis: In this particular model, a company's strengths and weaknesses are assessed in the context of the opportunities and threats in the business environment.
    • A SWOT analysis enables a company to identify the ideal structure to maximize its internal strengths while capturing external opportunities and avoiding threats.
    • Porter's five-forces analysis: This analysis identifies factors of the industry's competitive environment that may substantially influence a company's strategic design.
    • Porter's five-forces analysis identifies five environmental factors that can influence a company's strategic design: power of buyers, power of suppliers, competition, substitutes, and barriers to entry.

  • Making Strategy Effective

    • One method of assessing suitability is using a strength, weakness, opportunity, and threat (SWOT) analysis.
    • One method of analyzing feasibility is to conduct a break-even analysis, which identifies if there are inputs to generate outputs and consumer demand to cover the costs involved.
    • One method of assessing acceptability is through a what-if analysis, identifying best and worst case scenarios.
    • A firm may perform a break-even analysis to determine if a strategy is feasible.

  • Setting Objectives and Standards

    • When creating a set of objectives, it is important for the organization to complete a self-evaluation, usually through tools like SWOT analysis (strength, weaknesses, opportunities, threats).
    • A SWOT analysis helps the company understand where it can achieve competitive advantage by pinpointing what it does well (strengths) and where the opportunities lie with those actions.

  • The Impact of External and Internal Factors on Strategy

    • Analysis of both internal factors and external conditions is central to creating effective strategy.
    • There are many effective models to discuss, measure, and analyze the external environment (such as Porter's Five Force, SWOT Analysis, PESTEL framework, etc.).

  • Porter's Five Forces

    • Often, the Five Forces are mapped against a SWOT analysis to develop a corporate strategy.
    • To complete a Five Forces analysis, it is often best to build a grid on a piece of paper and label each section.

  • Fulfilling the Planning Function

    • Among the most useful tools for strategic planning is a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats).

  • Strategic Management

    • Strategic management entails five steps: analysis, formation, goal setting, structure, and feedback.
    • Analysis – Strategic analysis is a time-consuming process, involving comprehensive market research on the external and competitive environments as well as extensive internal assessments.
    • The process involves conducting Porter's Five Forces, SWOT, PESTEL, and value chain analyses and gathering experts in each industry relating to the strategy.
    • Strategy Formation – Following the analysis phase, the organization selects a generic strategy (for example, low-cost, differentiation, etc.) based upon the value-chain implications for core competence and potential competitive advantage.
    • The above model is a summary of what is involved in each of the five steps of management: 1. analysis (internal and external), 2. strategy formation (diagnosis and decision-making), 3. goal setting (objectives and measurement), 4. structure (leadership and initiatives), and 5. control and feedback (budgets and incentives).

  • Overview of Inputs to Strategic Planning

    • Porter's Five Forces, SWOT, Value Chain, etc.).