SWOT Analysis

SWOT Analysis

SWOT is an acronym used to describe the particular strengths,weaknesses,opportunities and threats that are strategic factors for a specific company. Swot analysis should reflect the corporation's distinctive competencies, the particular capabilities and resources that a firm possesses and the superior way in which they are used and also it should be able to identify the opportunities that the firm is not currently able to take advantage of due to a lack of appropriate resources.

It can be said that the essence of a strategy is to take advantage of opportunities, it is opportunity divided by capacity. An opportunity by itself has no real value unless the company has the capacity to take advantage of that opportunity. It should be noted that even if a strategy is primarily for the purpose of using capacity to take advantage of opportunity,that there may be some weaknesses by the company and this can prevent a strategy from being successful. SWOT can thus be used to take a broader view of strategy through the formula SA= O/(S-W) I.e (Strategic Alternative equals opportunity divided by strength -weaknesses).

Internal Strengths and weaknesses

These are conditions internal to the organization. A strength is a positive condition internal to the organization that may result in competitive advantage or customer benefits. A weakness is a negative condition internal to the organization that may lead to a negative customer value or a competitive disadvantage. Most of these internal strengths and weaknesses are as a result of prior management decisions.

Internal strengths and weaknesses are the controllable factors in a swot analysis meaning that they are under the influence of the manager and can be improved upon,especially the weaknesses.

External Opportunities and threats.

An opportunity is an issue or condition in the external environment of a company that may help it reach its goals. A threat on the other hand is an issue or condition in the company's external environment that may prevent the firm from reaching its goals. When the external opportunities and threats are very strong,they may prompt the organization to evolve its goals and strategies.

External opportunities and threats as the name implies are external to the organization and uncontrollable by the managers of the organization. Companies must continually monitor and respond to its external opportunities and threats if it wishes to grow and remain healthy.