The term SWOT stands for strengths, weaknesses, opportunities and threats. Therefore a SWOT analysis is a management tool that concentrates upon providing an evaluation of these factors as they apply to a particular business and the environments and markets that it operates within.

In essence a SWOT analysis is divided into two parts. The strengths and weakness analysis concentrate predominately upon the internal operations of the business and the opportunities and threats provide an analysis of the external environment and those factors external to the business that may impact upon its performance and strategy. Let us deal with strengths and weaknesses first and see how an analysis of these factors can be used to help improve business performance and competitiveness.

Strengths and weaknesses

Although most people want to believe that they have the best business it is important to be able to fully appreciate its strengths and weaknesses for two reasons. The first is that only through such an analysis and recognition can one identify what are the best attributes of the business and where it either needs improvement or additional effort placed to make the operation more competitive and efficient.

In essence an analysis of the business strengths and weaknesses bothe provide a study of the same factors. For example, both will concentrate upon the key skills, abilities and resources, including financial, employees and equipment. By identifying which of these areas the business has strengths in it enables the business expansion and marketing strategy to be developed in a way that uses these strengths to its advantage. For example, if the business has key skills in producing goods that satisfy a particular consumer sector, then the business plan would concentrate upon targeting its product to that segment rather than trying to sell to every consumers.

Conversely, if the analysis identifies areas where the business is weak (disadvantages), these need to be taken into account and addressed within the business strategy. For example, if the financial resources of the business are limited or weak, there is little point in developing a marketing and promotional strategy that involves the use of high cost media advertising, such as TV, within its budget as this will limit the spread and effectiveness of the programme. Similarly, if the business has employee resources that are only able to cope with the current level of production there is little benefit in

• 1
• 2
• 3
• next page >>

---

Add your voice

Know something about What is a SWOT analysis and how can I use it??
We want to hear your view. Write now!