SWOT Analysis

Anupama D
MBA-HCM
ASM
 What is SWOT analysis?

• SWOT analysis is a strategic planning method used to evaluate the

Strengths, Weaknesses, Opportunities, and Threat
involved in a project or in a business venture. It involves specifying
the objective of the business venture or project and identifying the
internal and external factors that are favorable and unfavorable to
achieve that objective.
• SWOT is an acronym for Strengths, Weaknesses, Opportunities
and Threats. Strengths (S) and Weaknesses (W) are considered to
be internal factors over which you have some measure of control.
Opportunities (O) and Threats (T) are considered to be external
factors over which you have essentially no control.
 SWOT
• SWOT Analysis is the most renowned tool for audit and analysis of the overall
strategic position of the business and its environment.
• Its key purpose is to identify the strategies that will create a firm specific business
model that will best align an organization’s resources and capabilities to the
requirements of the environment in which the firm operates.
• In other words, it is the foundation for evaluating the internal potential and
limitations and opportunities and threats from the external environment.
• It views all positive and negative factors inside and outside the firm that affect the
success.
• A consistent study of the environment in which the firm operates helps in
forecasting/predicting the changing trends and also helps in including them in the
decision-making process of the organization.
An overview of the four factors (Strengths, Weaknesses,
Opportunities and Threats)

Strengths-
Strengths are the resources, skills, or other advantages a firm enjoys relative to
its competitors. These are responsible for giving the firm a competitive edge in
the market. A company may possess some or all of the following strengths:
• financial resources
• Skilled manpower
• Goodwill and image in the market for goods and services
• Top position in the market
• Disciplined and well mannered employees with high morale and positive
attitude.
• Access to the best distribution network
• Good customer service/relation
Weaknesses-
A weakness is a drawback that act as an impediment to success or growth. This
drawback could be in the terms of deficient skills, lack of resources and lack of
capability. Weakness prevent the firm from gaining competitive advantage.
Weakness could result from any or all of the following:
• Lack of facilities
• Loss of funds or finances
• Poor brand images
• Absences of good managers
• Ineffective management
• Poor marketing skills
Opportunities-

Any situations that appears to be in favour of the environment of a firm is called an

opportunity. An environment opportunity is a situation that makes it possible for a
company to enjoy a competitive advantage. Some opportunities for a firm may be as
follows:
• Introduction of new technology
• Identification of a new market segment
• Modification in the regulatory environment
• improvement in seller-customer relationship
Threats-

Threat are just the opposite of opportunities. A threat refers to an extremely

unfavourable situation in the firm’s environment. It is a challenge posed by an
unavoidable trend that could lead, in the absence of a purposeful action, to the erosion of
the company’s position. Some threat to a firm may come from the following situations:
• Slow market growth
• Entry of resourceful multinational companies/competitors
• Increase in buying power of main suppliers
• Adverse changes in governmental policies, rules and regulations
Advantages of SWOT Analysis

SWOT Analysis helps in strategic planning in following manner-

• It is a source of information for strategic planning.
• Builds organization’s strengths.
• Reverse its weaknesses.
• Maximize its response to opportunities.
• Overcome organization’s threats.
• It helps in identifying core competencies of the firm.
• It helps in setting of objectives for strategic planning.
Disadvantages of SWOT Analysis
• It does not show how to achieve competitive advantage( only a starting point
for the discussion how to achieve competitive advantage)
• SWOT is a static assessment in time..
• It may lead the firms to overemphasize a single internal or external factor for
strategy formulation( inter relationship between the key internal and external
factors are not revealed).
• It does not indicate relative importance of different variables
• It may be affected by the evaluator perception and judgment
• It provides a static picture of the organization only.
THANK YOU…