SWOT analysis

What is a SWOT analysis?

SWOT is an acronym for Strengths, Weaknesses, and Opportunities and Threats. SWOT is a simple but power tool that decision makers use for analyzing internal and external environment for an informed planning of next steps. SWOT is usually demonstrated as 2x2 matrix having Internal (S&W) and External (O&T) factors in one axis and Favorable (S&O) and Unfavorable (W&T) factors on the other axis.

By providing information that is helpful for creating a match between the organization’s capabilities and resource from inside-out perspective to the competitive environment of the organization from outside-in perspective, SOWT analysis covers both perspectives. However, “fitting internal strength and weaknesses to external opportunities and threats is often frustrated by the fact that the two sides pull in opposite directions- the distinctive resource base and activity system of a firm can point in totally different direction compared with developments in current markets”( Dewit and Meyer, 2004)

		Favorable factors			Unfavorable factors
Internal factors		Strengths			Weaknesses
		Characteristics that gives an advantage over the others.			Characteristics that put the organization at an inferior position compared to the others, the disadvantages can be lack of advantages or even flip side of an advantage that has also negative sides.
External factors		Opportunities			Threats
		Factors that could help to improve competitive advantage			Factors that could cause trouble.

Utilizing the analysis helps the decision maker with different options:

to match strength to opportunities

to convert the weakness to strength

to avoid threats

to develop current strength

or any combination if them.

De Wit Bob and Meyer Ron Strategy: Process, Content, Context (an International Perspective) [Book Section]. - Minneapolis/St. Paul : International Thompson, 2004. - Vol. 3rd editoin.