SWOT analysis

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SWOT Analysis

A way to identify and analyze a company's goals by assessing its strength, weaknesses, opportunities, and threats. An advantage to SWOT analysis is that it separates internal factors (strengths and weaknesses) from external ones (opportunities and threats). This allows the company to match what it could do in theory with what is possible in reality. Another advantage is the fact that conducting SWOT analysis is straightforward if the company conducting it is honest with itself. See also: Qualitative Analysis.

SWOT analysis

a framework for identifying the internal strengths (S) and weaknesses (W) of a firm, and the external opportunities (O) open to it and the threats (T) it faces, which can be used by corporate planners in formulating the firm's COMPETITIVE STRATEGY and MARKETING STRATEGY in individual product markets and its overall BUSINESS STRATEGY.

The internal appraisal of a firm's strengths and weaknesses involves looking at the firm's current resources: the amount and quality of these resources, how well they are being managed in terms of achieving operating economies and developing core skills, and how the firm's resources match up to the requirements of the MARKET place as identified by the external appraisal of threats and opportunities. This kind of audit typically reveals a checklist of strengths and weaknesses of the firm as seen by its incumbent management (but their perception could be endorsed or changed by employing the services of an outside team of MANAGEMENT CONSULTANTS). For example, the analysis may reveal that the firm is especially strong in PRODUCTION but that the firm's products have failed to sell well because of poor MARKETING. This can then be remedied by upgrading the marketing function with a more careful focus on understanding customer needs.

The appraisal of the firm's external environment involves looking both at the immediate threats and opportunities encountered in the firm's present markets and also at the long-term strategic possibilities open to the firm for developing its business interests in other directions (see PRODUCT-MARKET MATRIX, BOSTON MATRIX). A typical threat facing a firm in its existing market is loss of business to competitors and to new entrants (due possibly, as in our example above, to the firm's poor marketing), but for firms possessing COMPETITIVE ADVANTAGE (lower costs, superior products) over rivals, opportunities abound, particularly in expanding markets. The ultimate threat facing firms in an existing market is, of course, the danger of market obsolescence, i.e. the market itself goes into decline as new substitute products emerge. In consequence, careful attention needs to be paid to the identification of opportunities for successful DIVERSIFICATION, where, for example, the firm's core internal skills can be carried over and transferred to new markets.

Having drawn up a checklist of possible SWOT factors, caution needs to be exercised in interpreting them. For example, many feature film makers who made movie films for screening through cinemas (often their own vertical chains), initially saw the advent of television as a threat to their traditional business and refused TV companies permission to screen their films. The reality was and still is, of course, that television is simply another form of viewing, representing an opportunity for market development and concentric diversification, i.e. the basic materials and skills involved in film-making (actors, film crews etc.) are the same irrespective of whether a film is being produced for the cinema or television; the key thing, strategically, is the perception of the true dimensions of the market which is being supplied. See also PEST.

References in periodicals archive ?
For a 40-year-old technique, it's somewhat surprising how much traction SWOT analyses have gained in the past few years, at least when it comes to published literature.
It can also be short-lived if ongoing SWOT analyses don't include the threat component--or if the founder pays no attention to the threat component.
SWOT analyses are useful in a number of situations.
Searching for articles or books about SWOT analyses is simplified by the fact that the acronym is rarely used for anything else.
You'll find information about how to create a SWOT analysis in the literature, but you'll also find examples of SWOT analyses for specific companies and industries, usually the larger publicly traded companies and broad industries.
Not only do they explain how to construct SWOT analyses, they also frequently include them for specific companies.
On the basis of SWOT analyses and using the methodology explained in this introductory article, the authors present objectives and strategies for advancing the profession in the next decade.
Although SWOT analyses are usually conducted by teams or committees, the authors in this issue worked alone in constructing their visions of what career counseling might become in the next decade.
Some readers may be intrigued by the idea of conducting their own SWOT analyses and constructing a strategic plan for the career counseling profession or their role in it.
This report analyses various Internet search engines and performs their SWOT analyses so as to allow for competitors & prospective entrants in this industry to know about the point of parity and point of differentiation for competing with certain Industry participants.
UK Video Games and Consoles Retailing 2006 is a new market view that provides market value and volume data, growth forecasts to 2011 and SWOT analyses of the key video games and console retailers in the market across specialists, non-specialists, grocers and pureplay online retailers.
Also incorporated in the study is a SWOT analyses of Doosan, LG Chemicals and Pulmuone.