SWOT Analysis

SWOT Analysis is an effective method of identifying your internal and external environment summarised as your strengths, opportunities, weaknesses and threats and is key to business planning success.

Let's explore what makes the analysis of Strengths, Weaknesses, Opportunities and Threats so significant.

Four areas of analysis

Your SWOT analysis will help you focus and build on your strengths, minimise weaknesses, maximise your opportunities and mitigate any weaknesses and is the foundation of any business plan or marketing plan.

• Strengths - internal analysis
  
• Weaknesses - internal analysis
  
• Opportunities - external analysis
  
• Threats - external analysis
  

Now, we will analyze some aspects of that situation. We are looking for two key things:

• Opportunities:These are developments in the external marketing environment which will lead to new market segments or which will enhance existing ones. A change in consumer attitudes,a new law that makes a product required, a group in the population that is entering a new stage -- any of these could be major opportunities.


• Threats: These are developments which threaten to disrupt the status quo in some way. A new competitor, especially an aggressive one, will alter industry dynamics dramatically. A decline in interest for a major product category (e.g. cigarette,beer) would be another threat. A rise in interest rates can put a damper on the housing industry.

Above all, remember that opportunities and threats exist in the external environment and are completely independent of whatever firm you are studying. This is essential to understand, because any of several firms could pursue the same opportunity! A thorough analysis would consider likely competitor actions and recognize that others could get a share of the new segment.

Once we have identified the key opportunities and threats, we can determine which opportunities to exploit and how we can avoid or overcome threats. All of this happens after we are clear on what is happening in the environment.

Strengths & Weaknesses

A realistic, objective analysis of our subject company yields two key things. It gives us a sense of what strengths we can build on and what weaknesses we can overcome or avoid.

Weaknesses are usually just the opposite of strengths! A horrible brand reputation would be an example. While it is tempting to be charitable or full of worship when analyzing a firm, it is essential to get a realistic sense of where their problems lie.

Once this analysis is complete you will have to put various actions plans together to focus on what will make your business a success in the future.
Nowadays marketers often using OT (Opportunities and Threats) first before SW (Strengths and Weaknesses).