Published On:Tuesday, 27 December 2011
Posted by Muhammad Atif Saeed
Strategy: SWOT analysis - introduction
SWOT analysis is a method for analysing a business, its resources, and its environment.
SWOT is commonly used as part of strategic planning and looks at:
- Internal strengths
- Internal weaknesses
- Opportunities in the external environment
- Threats in the external environment
SWOT can help management in a business discover:
- What the business does better than the competition
- What competitors do better than the business
- Whether the business is making the most of the opportunities available
- How a business should respond to changes in its external environment
The result of the analysis is a matrix of positive and negative factors for management to address:
Positive factors | Negative factors | |
Internal factors | Strengths | Weaknesses |
External factors | Opportunities | Threats |
The key point to remember about SWOT is that:
Strengths and weaknesses
Strengths and weaknesses
- Are internal to the business
- Relate to the present situation
Opportunities and threats
- Are external to the business
- Relate to changes in the environment which will impact the business
Using SWOT analysis
There is no point producing a SWOT analysis unless it is actioned! SWOT analysis should be more than a list - it is an analytical technique to support strategic decisions
Strategy should be devised around strengths and opportunities
The key words are match and convert:
A key challenge for any business is to convert weaknesses into strengths. For example:
| Weakness | Possible Response |
| Outdated technology | Acquire competitor with leading technology |
| Skills gap | Invest in training & more effective recruitment |
| Overdependence on a single product | Diversify the product portfolio by entering new markets |
| Poor quality | Invest in quality assurance |
| High fixed costs | Examine potential for outsourcing or offshoring |
Don’t forget that for every perceived threat, the same change presents an opportunity for business.
