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SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing that firm.

SWOT analysis is a historically popular technique through which managers create a quick overview of a company’s strategic situation

Strengths and weaknesses are internal to the company ; opportunities and threats are external .

Key Issues – Many times students confuse SWOT factors as cool things (physical) a firm has, but dig deeper into what a firm DOES. Also, SWOT factors should always be in the context of what a firm does better or worse than its competition.

A Strength is something a firm does well.

It may be a process, a patent, or some other product-related activity like customer service, product delivery, or channel support. Well-developed strengths can lead to a distinct competitive ADVANTAGE. A strength is a resource or capability controlled by or available to a firm that gives it an advantage relative to its competitors in meeting the needs of the customers it serves

Weaknesses are areas where the firm performs less well than competitive firms.

These are areas where the firm needs to improve—or at least not compete or AVOID head-to- head with better performing organizations. A weakness is a limitation or deficiency in one or more of a firm’s resources or capabilities relative to its competitors that create a disadvantage in effectively meeting customer needs

Opportunities are events, conditions, or situations in the external environment that are particularly well-suited or attractive to the way a firm does business or is planning to do business

An opportunity is a major unfavorable situation in a firm’s environment. The firm tries to match its strengths to CAPITALIZE on opportunities that emerge, are emerging, or will emerge within the planning period.

Threats are events or conditions in the external environment that are not well-suited or attractive to the way a firm does business or is planning to do business. A threat is a major unfavorable situation in a firm’s environment. A threat is a major unfavorable situation in a firm’s environment. Companies try to avoid or DEFEND threats or minimize their impact

Trends are included in some SWOTT analysis as a second “T” These are events or conditions in the external environment impact a firm and require a deep UNDERSTANDING of their impact.

LIMITATIONS of SWOT

· A SWOT analysis can overemphasize internal strengths and downplay external threats

· A SWOT analysis can be static and can risk ignoring changing circumstances

· A SWOT analysis can overemphasize a single strength or element of strategy

· A strength is not necessarily a source of competitive advantage