How to Read a SWOT Analysis


The success of a business is determined by the interplay of internal strengths and weaknesses with external opportunities and threats. You can understand the relationship between these factors by reading a SWOT analysis, which lays out a firm's strengths, weaknesses, opportunities and threats. Consider each element of the SWOT analysis on its own and think about how the elements are related to one another.

Review the components of a SWOT analysis. A SWOT analysis consists of both internal and external factors. The internal factors are the strengths and weaknesses of the firm; these are things the firm controls. The external factors are the opportunities and threats; these are things outside of the firm's control.

Read the firm's strengths. The strengths will be the organization's internal capabilities that give it an advantage in the marketplace. Note how these strengths can be exploited; the SWOT analysis may state this explicitly, or you may have to develop your own ideas.

Read about the firm's weaknesses. The weaknesses are the firm's internal shortcomings. As you read about the firm's weaknesses, consider how they can be improved.

Read the description of the firm's opportunities. Opportunities are external situations that can be exploited by the firm for gain. Consider the opportunities in relation to the organization's internal strengths. Develop a plan to use the business' strengths in order to exploit opportunities.

Read about the threats faced by the company. Threats are external situations that have the potential to cause harm to the business. Think about these threats in relation to the firm's weaknesses. If a weakness has the potential to be exploited by a threat, then it is important to develop a plan for preventing it. Plan to combat external threats either by eliminating them or by building a weakness into a strength.

Assess the links between the four parts of the SWOT analysis. Consider how each element affect the others. For example, if the firm's weakness is poor manufacturing skills, consider how this can increase the risk of threats and prevent the firm from exploiting opportunities. Also consider how this weakness can be changed into a strength.

Create an overall plan to respond to the external forces by manipulating internal factors that can be controlled. For example, if the firm faces the threat of a new technology replacing its products, the firm might develop a plan to make developing new technology into one of its strengths.

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