swot analysis
What is SWOT?
SWOT analysis - an acronym standing for Strength, Weaknesses, Opportunities and Threats.
The SWOT analysis is an extremely useful tool for understanding and reviewing the company’s position prior to making decisions about future company direction or the implementation of a new business idea.
S = strengths
These are the internal factors about a business that can be looked upon as real advantages. They could be used as a basis for developing a competitive advantage. They might include experienced management, product patents, loyal workforce and good product range. These factors are identified by undertaking an internal audit of the firm. This is often carried out by specialist management consultants who analyse the effectiveness of the business and the effectiveness of each of its departments and major product ranges.
W = weaknesses
These are the internal factors about a business that can be seen as negative factors. In some cases, they can be the flip side of a strength. For example, whereas a large amount of spare manufacturing capacity might be a strength in times of a rapid economic upturn, if it continues to be unused it could add substantially to a firm’s average costs of production. Weaknesses might include poorly trained workforce, limited production capacity and ageing equipment. This information would also have been obtained from an internal audit.
O = opportunities
These are the potential areas for expansion of the business and future profits. These factors are obtained by an external audit of the market the firm operates in and its major competitors. Examples include new technologies, export markets expanding faster than domestic markets and lower rates of interest increasing consumer demand.
T = threats
These are also external factors, gained from an external audit. This audit analyses the business and economic environment, market conditions and the strength of competitors. Examples of threats are new competitors entering the market, globalisation driving down prices, changes in the law regarding the sale of the firm’s product and changes in government economic policy.
SWOT analysis - an acronym standing for Strength, Weaknesses, Opportunities and Threats.
The SWOT analysis is an extremely useful tool for understanding and reviewing the company’s position prior to making decisions about future company direction or the implementation of a new business idea.
S = strengths
These are the internal factors about a business that can be looked upon as real advantages. They could be used as a basis for developing a competitive advantage. They might include experienced management, product patents, loyal workforce and good product range. These factors are identified by undertaking an internal audit of the firm. This is often carried out by specialist management consultants who analyse the effectiveness of the business and the effectiveness of each of its departments and major product ranges.
W = weaknesses
These are the internal factors about a business that can be seen as negative factors. In some cases, they can be the flip side of a strength. For example, whereas a large amount of spare manufacturing capacity might be a strength in times of a rapid economic upturn, if it continues to be unused it could add substantially to a firm’s average costs of production. Weaknesses might include poorly trained workforce, limited production capacity and ageing equipment. This information would also have been obtained from an internal audit.
O = opportunities
These are the potential areas for expansion of the business and future profits. These factors are obtained by an external audit of the market the firm operates in and its major competitors. Examples include new technologies, export markets expanding faster than domestic markets and lower rates of interest increasing consumer demand.
T = threats
These are also external factors, gained from an external audit. This audit analyses the business and economic environment, market conditions and the strength of competitors. Examples of threats are new competitors entering the market, globalisation driving down prices, changes in the law regarding the sale of the firm’s product and changes in government economic policy.