- A SWOT analysis is a compiling of strengths, weaknesses, opportunities, and threats.
- The key objective of a SWOT analysis is to help to develop a complete awareness of all the elements involved in making a business decision.
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The first two categories
are internal.
- Strengths are things that you excel in.
- Weaknesses are things that you struggle with. -
The following two categories are external.
- Opportunities are elements that organization could use to improve
- Threats are elements that have potential to harm your organization. - Using both internal and external data, the technique can direct businesses toward more successful strategies and away from those that have been or are likely to be less successful.
- Strengths define what a company excels at and what sets it apart from the competition. A strong brand, a loyal client base, a strong balance sheet, unique technologies, and so on are examples of strengths.
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Strengths
- What is our competitive advantage?
- What resources do we have?
- What products are performing well? - Weaknesses prevent a company from reaching its full potential. They are areas that the company must enhance in order to stay competitive. A weak brand, higher-than-average turnover, an inadequate supply chain, and so on are examples of weakness.
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Weaknesses
- Where can we improve?
- What products are underperforming?
- Where do we lack resources? - External factors that can give a company a competitive advantage are referred to as Opportunities. For example, if a country cuts tariffs, a car manufacturer can export its cars into a new market, increasing sales and market share.
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Opportunities
- What technology can we use to improve operations?
- Can we expand our core operations?
- What new market segments can we explore? - Threats are factors that have the potential to cause harm to a business. For example, rising costs for materials, increasing competition, tight labor supply, and so on.
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Threats
- What new regulations threaten operations?
- What do our competitors do well?
- What consumer trends threaten business?