What is SWOT analysis in business management?

Meaning of a SWOT analysis

SWOT is an acronym that stands for Strength, Weakness, Opportunities and Threats.
SWOT is a technique which will help you in analyzing the current stage of the company and to develop a strong business strategy.
It is used to develop objective and identify the internal and external factors that will influence in achieving it.
Strength and weakness are the internal factors that you have some control over and can be changed.
Opportunities and threats are the external factors that are very difficult to control and change.
This tool can also be applied at an individual level to analyze internal and external factor that influence your career growth.

Strengths are the positive factor of the organization that is favorable in achieving a goal.
Strength can be either tangible like skilled labor, financially stable, etc. or intangible like good co-ordination, dedication, loyalty, etc.
Strength enables an organization to accomplish its goals and objective.
To analyze your strength you need to ask the following question:
1. What are you best at?
2. What unique ability do you possess?
3. What qualities do you have in your teams, such as knowledge, education, skills and network?
4. What kind of technology do you use?

Weaknesses are the negative factor of the organization that is unfavorable in achieving a goal.
Weaknesses are the internal factor which do not meet the standards, even we try to meet.
It prevents a company from working at full potential and in achieving its goal.
Weakness can be minimized and controlled by taking a certain measure.
To analyze your weaknesses you need to ask the following question:
1. What should you avoid and eliminate?
2. What is your financial ability?
3. What kind of training did your employees need?
4. In which did you want to improve?

It is the external factor that is helpful in achieving the goal of the organization.
Opportunities always give a competitive advantage in the market.
To determine opportunities in the market you need to ask the following question:
1. What interesting trends are you aware of?
2. Development in technology.
3. Changes in government policies that are beneficial to you?
4. What new market you can invest in?

Threats are the external factor and are uncontrollable.
It is the factor which can create a loss for the organization.
This may arise due to the change in customer’s trends.
To determine threats you need to ask the following question:
1. Is the change in technology is bad for your market position?
2. Is it a disadvantage in changing government policies?
3. What is the current situation of your competitors?
4. Does changes in environmental condition affects your business?

It plays an important role in doing strategic planning and making decisions.
To identify internal and external factors which are favorable and unfavorable to the organization.
Since SWOT covers all past and present data for analysis. Therefore it will be helpful in forecasting sales and demand.
When you perform a SWOT analysis, you will be more focused in achieving the goal.