SWOT Analysis Overview

Study Notes

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.

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.

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Limited financial resources, Weak spending on R&D, Very narrow product line, Limited distribution, Higher costs, Out-of-date products/technology, Weak market image, Poor marketing skills, Limited management skills, Under-trained employees.

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.

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 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.

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

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