SWOT Analysis   

It is a technique of environment analyses where

S         stands for strengths,
W        for weaknesses,
O         for opportunities, and
T         for threats.

SWOT analysis is the starting point for formulating a strategy. It evaluates organization’s strengths and weaknesses, environmental opportunities and threats and helps the organization formulate strategies and achieve its objectives by:

1. Exploiting its strengths,
2. Exploiting environmental opportunities,
3. Minimizing and correcting its weaknesses, and
4. Minimizing environmental threats.

(i) Strength is a positive attribute of the organization. It enables it to accept environmental challenges and improve its competitive position.

Organizational strengths can be:
1. Common strengths, and
2. Distinctive competencies

(ii) Weakness is an attribute of the organization which restricts its competitive strength. It restricts organization’s ability to make effective strategies for achieving its goals. Organizational weaknesses require change in objectives which can be achieved through present skills and capabilities or investment in capabilities where organizational strengths can be applied. This enables the organization implement strategies that will help to attain its objectives.

(iii) Opportunities are environmental challenges which improve organization’s operational efficiency. They are the favorable environmental conditions.

The external opportunities are: boom in the economy, development of new technology, growing markets, liberal government policies, etc.

(iv) Threats are environmental challenges which weaken the organization’s competitive position. They are the unfavorable environmental condition.

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