26/2/2023 0 Comments
SWOT (Strategic Planning Tool)
SWOT analysis is a strategic planning tool that can be used by managers to do a situational analysis of the organisation. It is a useful technique to understand the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) an organisation is facing in its current business environment.
Organisations maintain their dominant position in market by critically analysing and reviewing the SWOT analysis. SWOT analysis is a highly interactive process and requires effective coordination among various departments within the company such as – marketing, finance, operations, management information systems and strategic planning.
SWOT Analysis / Matrix
The SWOT Analysis framework facilitates an organisation to identify the internal strategic factors such as -strengths and weaknesses, and external strategic factors such as - opportunities and threats. It leads to a 2X2 matrix – also known as SWOT Matrix.
The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps managers to develop four types of strategies:
The central purpose of SWOT matrix is to identify the strategies that an organisation can use to exploit external opportunities, counter threats, and build on, protect its strengths, and eradicate its weaknesses.
Step by Step Guide to 'Company-X' SWOT Analysis
Strengths of Company-X: Internal Strategic Factors
As one of the leading companies in its industry, Company-X has numerous strengths that enable it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Some of the strengths of Company-X are:
Weakness of Company-X: Internal Strategic Factors
Weakness are the areas where Company-X can improve upon. Strategy is about making choices and weakness are the areas where a company can improve using SWOT analysis and build on its competitive advantage and strategic positioning.
Opportunities for Company-X: External Strategic Factors
Threats Facing Company-X: External Strategic Factors
Limitations of SWOT Analysis for Company-X
Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations.
Weighted SWOT Analysis of Company-X
In light of the above mentioned limitations of the SWOT analysis / matrix, corporate managers decided to provide weightage to each internal strength and weakness of the company. Organisations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.
This method is called Weighted SWOT analysis. It is better than doing simplistic SWOT analysis because with Weighted SWOT Analysis Company-X managers can focus on the most critical factors and discount the non-important one. It also solves the long list problem where organisations ends up making a long list but none of the factors deemed too critical.
This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically.
Looking for more?
All of our SWOT analysis examples are based on real businesses. The SWOT analyses are broken into three parts: First, what the company’s about; second, the SWOT analysis; and lastly, some discussion of potential growth strategies for the business based on what’s revealed by the SWOT analysis.
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