Importance Of Swot Analysis

SWOT Analysis Sample

A scan of the internal and external environment is an important part of the strategic planning
process. Environmental factors internal to the firm usually can be classified as strengths (S) or
weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats
(T). Such an analysis of the strategic environment is referred to as a SWOT analysis.

Strengths :-

A firm’s strengths are its resources and capabilities that can be used as a basis for developing a
competitive advantage. Examples of such strengths include:
• Patents
• Strong brand names
• Good reputation among customers

/> • Cost advantages from proprietary know-how
• Exclusive access to high grade natural resources
• Favourable access to distribution networks

Weaknesses :-

The absence of certain strengths may be viewed as a weakness. For example, each of the
following may be considered weaknesses:
• Lack of patent protection
• A weak brand name
• Poor reputation among customers
• High cost structure
• Lack of access to the best natural resources
• Lack of access to key distribution channels
In some cases, a weakness may be the flip side of a strength. Take the case in which a firm has
a large amount of manufacturing capacity. While this capacity


may be considered a strength
that competitors do not share, it also may be considered a weakness if the large investment in
manufacturing capacity prevents the firm from reacting quickly to changes in the strategic
environment.

Opportunities :-

The external environmental analysis may reveal certain new opportunities for profit and growth.
Some examples of such opportunities include:
• An unfulfilled customer need
• Arrival of new technologies
• Loosening of regulations
• Removal of international trade barriers

Threats :-

Changes in the external environmental also may present threats to the firm. Some examples of
such threats include:
• Shifts in consumer tastes away from the firm’s products
• Emergence of substitute products
• New regulations
• Increased trade barriers


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Article Written By jontymagicman

I am DInesh Varyani.

Last updated on 26-07-2016 206 0

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