Why Do SWOT?

One of the components of strategic thinking requires the generation of a series of strategic alternatives, or choices of future strategies to pursue, given the company’s internal strengths and weakness and its external opportunities and threats. The comparison of strengths, weaknesses, opportunities and threats is normally referred to SWOT analysis.

1. Strength: Strength is an inherent capability of the organization which it can use to gain strategic advantage over its competitors.

2. Weakness: A Weakness is and inherent limitation or constraint of the organization which creates strategic disadvantage to it.

3. Opportunity: An opportunity is a favorable condition in the organization’s environment which enables it to strengthen its position.

4. Threat: A threat is an unfavorable condition in the organization’s environment which causes a risk fro, or damage to, the organization’s position.

Implication of SWOT analysis:

SWOT analysis provides us a logical framework for systematic and sound thrashing of issues having bearing on the business situation, generation of alternative strategies and the choice of a strategy. Variation in managerial perceptions about organizational strengths and weaknesses and the environmental opportunities and threats lead to the approaches to specific stragegies and finally the choice of strategy that takes place through an interactive process in dynamic backdrop.

It presents a Comparative Account. SWOT analysis presents the information about both external and internal environment in a structured form where it is possible to compare external opportunities and threats with internal strengths and weaknesses. This help in matching external and internal environments so that s strategies can come out with suitable formula by developing certain patterns of relationship. The patterns are combinations say, high opportunities and high strengths, high opportunities and low strengths, high threats and high strengths, high threats and low strengths.

It also guides the strategies in Strategy identification. It is natural that a strategist faces a problem when his organization cannot be matched in the four patterns. It is possible that the organization may have several opportunities and some serious threats. It is equally  true that the organization may have powerful strengths coupled with major weaknesses in the light of critical success factors. In such organization that helps to identify the major purpose of strategy under focus.