Definition:
SWOT is an abbreviation for Strengths,
Weaknesses, Opportunities and Threats
SWOT analysis is an important tool
for auditing the overall strategic position of a business and its environment.
Once key strategic issues have been
identified, they feed into business objectives, particularly marketing
objectives. SWOT analysis can be used in conjunction with other tools for audit
and analysis, such as PEST analysis
and Porter's Five-Forces analysis. It is also a very popular tool with business and marketing
students because it is quick and easy to learn.
The Key Distinction - Internal and
External Issues
Strengths and weaknesses are
Internal factors. For example, a strength could be
your specialist marketing expertise. A weakness could be the lack of a new
product.
Opportunities and threats are
external factors. For example, an opportunity could
be a developing distribution channel such as the Internet, or changing consumer
lifestyles that potentially increase demand for a company's products. A threat
could be a new competitor in an important existing market or a technological
change that makes existing products potentially obsolete.
it is worth pointing out that SWOT
analysis can be very subjective - two people rarely come-up with the same
version of a SWOT analysis even when given the same information about the same
business and its environment. Accordingly, SWOT analysis is best used as a
guide and not a prescription. Adding and weighting criteria to each factor
increases the validity of the analysis.
Areas to Consider
Some of the key areas to consider when
identifying and evaluating Strengths, Weaknesses, Opportunities and Threats are
listed in the example SWOT analysis below:
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