SWOT Analysis Overview

SWOT Analysis

• An acronym for Strengths, Weaknesses, Opportunities, and Threats.
• SWOT analysis was developed at Stanford University in the 1960s and 1970s.
• A planning tool that examines the internal and external factors relating to a project or business.
• It provides a framework for organizing and using data to understand the situation, strengths, weaknesses, opportunities, and threats.
• It helps move from everyday problems to a fresh perspective.

Strengths

• Characteristics that give a business an advantage.
• Positive, tangible, and intangible attributes, internal to an organization.
• Examples: Abundant financial resources, Well-known brand name, Economies of scale, Lower costs, Superior management talent, Better marketing skills, Good distribution skills, Committed employees.

Weaknesses

• Characteristics that place a business at a disadvantage compared to others.
• Internal factors that detract from the organization’s ability to attain its goals.
• Examples: Limited financial resources, Weak spending on R&D, Very narrow product line, Limited distribution, Higher costs, Out-of-date products/technology, Weak market image, Poor marketing skills, Limited management skills, Under-trained employees.

Opportunities

• Chances to make greater profits in the environment.
• External attractive factors that represent reasons for an organization to exist and develop.
• Arise when an organization can take advantage of conditions in its environment.
• Examples: Rapid market growth, Rival firms are complacent, Changing customer needs/tastes, New uses for products discovered, Economic boom, Government deregulation.

Threats

• External elements that could cause trouble for the business.
• Factors beyond an organization's control that could place its mission or operation at risk.
• Examples: Entry of foreign competitors, Introduction of new substitute products, Product life cycle in decline, Changing customer tastes/prefs, Economic recession, Increased competition.

SWOT Analysis

• SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
• It's a strategic planning tool developed at Stanford University in the 1960s and 1970s.
• SWOT is a framework for organizing data and information about internal and external environments to understand the implications on projects and businesses.
• It is used to move from traditional strategies to a fresh perspective.

Strengths

• Positive internal characteristics that give a business or team an advantage.
• Tangible and intangible aspects that influence an organization's growth.
• Characteristics include:
  • Human competencies
  • Process capabilities
  • Financial resources
  • Products & services
  • Customer goodwill and brand loyalty
  • Examples:
    • Abundant financial resources
    • Well-known brand name
    • Economies of scale
    • Lower costs
    • Superior management talent
    • Better marketing
    • Good distribution skills
    • Committed employees

Weaknesses

• Internal characteristics that place a firm at a disadvantage.
• Detract from an organization's ability to achieve its goals.
• Represent factors that don't meet desired standards.
• Can be controlled.
• Examples:
  • Limited financial resources
  • Weak R&D spending
  • Narrow product line
  • Limited distribution
  • Higher costs
  • Outdated products and technology
  • Poor market image
  • Poor marketing skills
  • Limited management skills
  • Under-trained employees

Opportunities

• External favorable conditions that present chances for greater profits.
• Help organizations grow and develop.
• Situations where organizations can take advantage of external factors to become more profitable.
• Opportunities come from:
  • Market
  • Competition
  • Industry/Government
  • Technology
  • Examples:
    • Rapid market growth
    • Complacent rival firms
    • Changing customer needs and tastes
    • New uses for products discovered
    • Economic boom
    • Government regulations

Threats

• External factors that could harm a business.
• External conditions that can jeopardize an organization's mission and operations.
• Difficult to control.
• Compound weaknesses and can threaten an organization's stability and survival.
• Examples:
  • Entry of foreign competitors
  • Introduction of new substitute products
  • Product life cycle decline
  • Changing customer tastes
  • Economic downturn
  • Government regulation changes

Explore the fundamentals of SWOT Analysis, a strategic planning tool that assesses Strengths, Weaknesses, Opportunities, and Threats in business. Learn about the internal and external factors that impact an organization's planning and decision-making. Discover key examples and how to leverage this framework effectively.