SWOT Analysis

SWOT Analysis

The word SWOT stands for Strength, Weakness, Opportunity and Threat. By this information, it is clear that SWOT analysis is a technique which is utilized to understand the strengths and weaknesses and for identifying the available opportunities and the possible threats. So, this technical analysis helps organization in developing a strong and effective business strategy focusing on all the business strengths and weaknesses as well as the opportunities and threats present in the marketplace. It is an organized framework and basic, straightforward model for business’s greatest strengths, weakness, opportunities, and threats.

It serves as one of the most important tool inHRMforbusiness development. An effective SWOT proves to be a psychologyof successfor the organization. Som people say that SWOT analysis was devised byAlbert S Humphrey. 

The mechanism of SWOT analysis is to take information from an environmental analysis and then making its separation on the basis of internal (strengths and weaknesses) and external issues (opportunities and threats). Once this procedure is over, the analysis tells what the factors responsible in objective accomplishments are and what restrictions are and how to overcome those restrictions in order to achieve the desired results. While doing SWOT analysis, the strengths and weaknesses of the organization must be kept realistic. SWOT analysis has to be very simple and short avoiding any type of over analysis and complexity. The information which will be available with help of the analysis will be beneficial for the organization in order to match the firm resources and capabilities to the competitive environment.

Elements of SWOT Analysis:


                    SWOT analysis                     

There are above mentioned four elements of SWOT analysis (acronym). The basic purpose of conducting a SWOT analysis is to find out the positive forces and strengths and all the possible potential problems which are to be eliminated. So while conducting a SWOT analysis, one must be careful about using the medium, the format or the layout for the communication of these issues. I have given some samples for the analysis. One can mention the internal and external side by side. Then participants are to be asked the easy questions mentioned accordingly:

There is one more way:Capture




With the help of this analysis a large number of information is collected which is based on the internal and external factors. Sometimes, much of the collected data and information doesn’t have significant relevance. SWOT analysis categories the internal aspects as strengths and weaknesses and external as opportunities and weaknesses. So there are two types of analysis here, internal and external analysis.

Click here to study SWOT Analysis of Nokia.

Internal analysis includes the study of potentials and weaknesses of internal environment. It includes following factors:

-          Organization structure, culture and image

-          Access to natural resources

-          Key staff

-          Operational efficiency and capacity

-          Brand awareness

-          Market share

-          Financialresources

-          Trade secrets

These are listed as the strengths and weaknesses of the organization.

External analysis includes the following factors:

-          Market trends

-          Customers, competitors, suppliers and partners

-          Social changes and new technologies

-          Economic and regulatory environment

This type of structured and organized SWOT analysis serves many purposes for the organizations. Some important utilizations are as follows:

  1. Problem solving
  2. Planning
  3. Product and competitor evaluation
  4. Personal Development
  5. Decision making
  6. Workshop sessions
  7. Brainstorm meetings

Procedure of conducting a SWOT Analysis

SWOT analysis tool is used to find out the internal strengths and weaknesses in the business and external opportunities and threats. This information is used to plan the business for goal accomplishments. Follow the steps listed below for conducting a SWOT analysis:

  1. Objective of SWOT Analysis:

Before starting the analysis, there should be a clear objective. For example, it can be done to decide if organization should make any change in the product or services.

  1. Research:

Before doing the analysis, one must conduct some research on the areas which can influence the environment such as business and market. To know about the competitors, market research needs to be conducted. To find out about the strengths and weaknesses, talk to the staff, clients, partners etc.

  1. Know the business strengths:

While conducting the analysis, every possible and potential strength should be known. Such as employees, resources, financial resources, business location, cost and competitive advantages.

  1. Know the business weakness:

The business weakness what can invite disadvantages to the business should be known. Like lack of staff, clients, business location away from market, declination in market share etc. These weaknesses should be addressed in the layout of the analysis.

  1. Potential Opportunities:

List the possible external opportunities like introduction of new technology, training and coaching programs, government and administration change.

  1. Potential Threats:

The external factors which are responsible for any possible threat or problem to the business like unemployment, increasing interest rates and competition etc.

These are listed information will help in developing a strategy to address the issues in the SWOT analysis. With help of this one can find out that how to utilize the strengths for getting benefits from the available opportunities, how to utilize to overcome the threats, how to improve weakness and how to minimize the weakness for business objective accomplishments.