Strategic Management SWOT Analysis

SWOT analysis is particularly helpful in strategic management.

SWOT analysis is a strategic management tool that evaluates environmental business factors. SWOT stands for strengths, weaknesses, opportunities and threats. SWOT analysis can help management make strategic decisions on what direction to take a business or how to improve existing business functions. It is particularly helpful in matching market opportunities with a business's resources and capacities.

Strengths

Strengths is an internal environmental measure. It looks within your business at its resources and capabilities. You are observing what differentiates your business and gives it an advantage over competition. Examples of strengths could be patents, brands, unique operating processes, access to cheap inputs or strong reputation. A strength can be anything internal that gives your business a competitive advantage.

Weaknesses

Weaknesses are also an internal measure that looks at your resources and capabilities. With weaknesses, you are observing where your business has strategic disadvantages against competitors. You can think of a weakness as the lack of a strength. Some examples would include no patent protection, poor branding, expensive inputs or poor reputation. Weaknesses can often coexist with strengths. For example, you may have access to cheap inputs but as a result are overly reliant on one supplier.

Opportunities and Threats

Opportunities and threats are external environmental measures. They look at factors in the market in which your business operates. Opportunities and threats are typically beyond your business's control. Opportunities could include new technology, favorable political conditions, a new market or market gaps. Threats could be tightening regulations, new competition, substitute products or shifting consumer preferences.

Putting it Together

Once you have evaluated your company's strengths, weaknesses, opportunities and threats, you can put your SWOT analysis to use in four primary ways. First, your business can create strategies to take advantage of opportunities using its strengths. You can overcome weaknesses to pursue opportunities. You can use strengths to stave off external threats. Lastly, you can strategize to protect your weaknesses from threats. These four strategic areas make the SWOT analysis invaluable to strategic management.

References

• QuickMBA: SWOT Analysis
• Marketing Teacher: SWOT Analysis