SWOT Analysis

Tuesday, 12 March 2024 12:43 PM

What Is a SWOT Analysis?

A SWOT Analysis is one of the most commonly used tools to
assess the internal and external environments of a company.
It is a tool used to understand the strengths, weakness,
opportunities, and threats involved in a business and it helps to
achieve the check to a company and identifying the internal
and external factor that our support you or unfavourable to
achieving the objective of company .In addition, a SWOT
analysis can be done for a product, place, industry, or person. A
SWOT analysis helps with both strategic planning and
decision -making,
SWOT is an acronym for Strengths, Weaknesses, Opportunities,
and Threats.
A SWOT analysis is divided into two main categories:
internal factors and external factors.
By definition, Strengths (S) and Weaknesses (W) are considered
to be internal factors over which you have some measure of
control.
Also, by definition, Opportunities (O) and Threats (T) are
considered to be external factors over which you have
essentially no control.
An overview of the four factors (Strengths, Weaknesses,
Opportunities and Threats) is given below-
Internal factors :
1. Strengths - Strengths are the qualities that enable us to
accomplish the organisation’s mission. Strengths can be either
tangible or intangible.
Example of strength
1. Your a specialised marketing expertise and high skills.
2. Patent protection
3. Strong brand names, ending images
4. In new innovative products
5. Best service provider
6. Location of your business
7. Well developed corporate strategy
8. Access to distribution network
9. Portfolio management skill
10. Exclusive access to high-grade natural resources

for example, the strength of Hindustan Unilever is a brand

image and it has diversified in many areas because of its
popular brands

2. Weaknesses - Weaknesses are the qualities that prevent us

from accomplishing our mission and achieving our full
potential. These weaknesses deteriorate influences on the
organizational success and growth. Weaknesses are the
factors which do not meet the standards we feel they should
meet.
Weaknesses in an organization may be
1. depreciating machinery
2. insufficient research and development facilities,
3. narrow product range
4. poor decision-making
5. huge debts
6. high employee turnover
7. complex decision making process
8. large wastage of raw materials,
9. A weak brand name
10. Unsatisfied services
11. Low investment in research and development and
innovations
12. Single product line
13. Lack of patent protection
14. Poor financial management
15. Rising manufacturing, cost etc.

Weaknesses are controllable. They must be minimized and

eliminated. For instance - to overcome obsolete machinery,
new machinery can be purchased. .
For example, the weakness of proctor and gamble is over-
dependence on a single product. Another example is over-
dependence of Colgate is on its single product like toothpaste
and tooth powder. This company has not diversified into other
consumer goods. It is its weakness

Examples of internal factors include:

• Company culture
• Company image
• Operational efficiency
• Operational capacity
• Brand awareness
• Market share
• Financial resources
• Key staff
• Organizational structure

External factors :

External factors are the opportunities and threats to the

company.

3. Opportunities - Opportunities are presented by the

environment in which our organization operates. These arise
when an organization can take benefit of conditions in its
environment to plan and execute strategies that enable it to
become more profitable. Organisations can gain
competitive advantage by making use of opportunities.
Organization should be careful and recognise the opportunities
and grasp them whenever they arise. Selecting the targets that
will best serve the clients while getting desired results is a
difficult task. Some examples of such opportunities include:-
1. Developing market
2. Merger is joint ventures or strategic alliances
3. Moving into a new market segment that offer improve profits
4. An unfulfilled customer needs
5. Introduction of new technologies
6. Cheap labour
7. White product range
8. Expansion in foreign market changes in social pattern,
population, profile, lifestyle, changes etc
For example,India has emerged as a global manufacturing
base because of talented Human Resources and cheap
labour. MNCs like Hyundai, Toyota, Suzuki, Ford or taking
benefit of this opportunity by setting their manufacturing
units in India.

4. Threats - Threats arise when conditions in external

environment jeopardize the reliability and profitability of the
organization’s business. Threats are uncontrollable. When a
threat comes, the stability and survival can be at stake.
• Societal changes
1. Customers
2. new Competitors
3. Economic environment
4. Government regulations
5. Suppliers
6. Partners
7. Market trends
8. Price war
9. New regulation
10. Changing customer tastes
11. Substitute product
12. Recession in economy
13. Rising labour cost
14. increased trade barriers

Questions to ask during a SWOT analysis:

Strengths (internal, positive factors)
Strengths describe the positive attributes, tangible and
intangible, internal to our organization. They are within our
control.
• What do we do well?
• What internal resources do we have? Think about the
following:
(Positive attributes of people, such as knowledge, background,
education, credentials, network, reputation, or skills.)
• Tangible assets of the company, such as capital, credit,
existing customers or distribution channels, patents, or
technology.
• What advantages do we have over our competition?
• Do we have strong research and development capabilities?
Manufacturing facilities?
• What other positive aspects, internal to our business, add
value or offer we a
competitive advantage?
Weaknesses (internal, negative factors)
Weaknesses are aspects of our business that detract from the
value we offer or place at a competitive disadvantage. We
need to enhance these areas in order to compete with our best
competitor.
• What factors that are within our control detract from our
ability to obtain or maintain a competitive edge?
• What areas need improvement to accomplish our objectives
or compete with our strongest competitor?
• What does our business lack (for example, expertise or access
to skills or technology)?
• Does our business have limited resources?
• Is our business in a poor location?
Opportunities (external, positive factors):
Opportunities are external attractive factors that represent
reasons our business is likely to prosper.
• What opportunities exist in our market or the environment that
we can benefit from?
• Is the perception of our business positive?
• Has there been recent market growth or have there been
other ch anges in the market
the create an opportunity?
• Is the opportunity ongoing, or is there just a window for it? In
other words, how
critical is our timing?
Threats (external, negative factors):
Threats include external factors beyond our control that could
place our strategy, or the business itself, at risk. We have no
control over these, but we may benefit by having contingency
plans to address them if they should occur.
• Who are our existing or potential competitors?
• What factors beyond our control could place our business at
risk?
• Are there challenges created by an unfavorable trend or
development that may lead to
deteriorating revenues or profits?
• What situations might threaten our marketing efforts?
• Has there been a significant change in supplier prices or the
availability of raw
materials?
• What about shifts in consumer behavior, the economy, or
government regulations that
could reduce our sales?
• Has a new product or technology been introduced that makes
our products,
equipment, or services obsolete?