SWOT analysis is a strategic planning method used to evaluate the
Strengths, Weaknesses/Limitations, Opportunities, and Threats 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 used to To
develop a plan that takes into consideration many different internal and
external factors, and maximizes the potential of the strengths and
opportunities while minimizing the impact of the weaknesses and threats.
1. Strengths
2. Weaknesses
3. Opportunities
4. Threats
1.
Strengths
Strengths are the
qualities that enable us to accomplish the organization’s mission. These are
the basis on which continued success can be made and continued/sustained.
Strengths can be either tangible or intangible. These are what you are
well-versed in or what you have expertise in, the traits and qualities your
employees possess (individually and as a team) and the distinct features that
give your organization its consistency. Strengths are the beneficial aspects of
the organization or the capabilities of an organization, which includes human
competencies, process capabilities, financial resources, products and services,
customer goodwill and brand loyalty. Examples of organizational strengths are
huge financial resources, broad product line, no debt, committed employees,
etc.
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 depreciating
machinery, insufficient research and development facilities, narrow product
range, poor decision-making, etc. Weaknesses are controllable. They must be
minimized and eliminated. For instance – to overcome obsolete machinery, new
machinery can be purchased. Other examples of organizational weaknesses are
huge debts, high employee turnover, complex decision making process, narrow
product range, large wastage of raw materials, etc.
3. Opportunities
Opportunities are
presented by the environment within 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.
Organizations can gain competitive advantage by making use of opportunities.
Organization should be careful and recognize 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. Opportunities may arise from
market, competition, industry/government and technology. Increasing demand for
telecommunications accompanied by deregulation is a great opportunity for new
firms to enter telecom sector and compete with existing firms for revenue.
4. Threats
Threats arise when
conditions in external environment jeopardize the reliability and profitability
of the organization’s business. They compound the vulnerability when they
relate to the weaknesses. Threats are uncontrollable. When a threat comes, the
stability and survival can be at stake. Examples of threats are – unrest among
employees; ever changing technology; increasing competition leading to excess
capacity, price wars and reducing industry profits; etc.
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