Approach Of SWOT Analysis

Organizations always adhere and progress through an action plan. In order to review organization’s progress and its background, a tool is designed to analyze its growth. SWOT analysis is used for analyzing several factors which can improve the business. Analysis of strategic environment is called as SWOT analysis. SWOT stands for Strength, Weakness, Opportunities and Threats. Among these Strength and Weakness are considered as internal factors whereas Opportunities and threats are considered to be external factors. SWOT analysis can be at times biased. So it’s used as a guide but not as direction. Another analysis known as TOWS is employed to explore weak points to convert it to strong points. SWOT can be used in combination with other tools for review and study, such as Pest analysis and Porter's Five forces analysis.

SWOT is a popular method as it can be in variety of scenarios. Its flexibility is the key benefits of SWOT. In strategic planning process both internal factors and external factors are scrutinized. This analysis helps in matching resources and potentiality of an individual to face competitive situations. Now let’s discuss about the internal factors. Strengths of a company can be an easy access to resources and also deliver the product to the customers with good quality. Company’s branded name can help in getting contact with clients and they create patents for their product. Lack of strength can be stated as weakness. Weakness of a company can be viewed as high cost structure, poor fame among customers. Weakness is just another side of strength i.e. some company may have more workers to make enough production. But the companies have to pay off their workers with salary which may be a large investment when compared to the profit earned from production.

External factors are the opportunities and threats say marketing consultants Birmingham. External factors are used to find new opportunities which will yield more profit and growth of the organization. The opportunities may be to deliver the product who is in need of the product, arrival of newer technologies in marketing. Sometimes threats arise in a firm. Company face threats like discovery of substitute materials than their product and incorporation of new regulations in trading markets. SWOT matrix is formulated to develop strategies. With this matrix four strategies are formulated. They are S-O strategies which explores opportunities that can suit company’s objective. W-O strategies replace weakness with opportunities. S-T strategies help in reducing the threats with strength. W-T strategies put forth the cynical plan which reduces the weakness and threats raised in a firm.