SWOT Analysis

SWOT Analysis is an important tool to help a business identify its Strengths, Weaknesses, Opportunities, and Threats. SWOT Analysis helps businesses to identify areas of opportunities in terms of external and internal forces.

Strengths are what a company does best. These are identified in comparison to what competitors do. For example, what areas of the marketplace a business is specialized in that competitors do not offer.

Weaknesses are the opposite of strengths. They are identified by what a company does not do as well or is not offering in the market in comparison to competitors.

Opportunities are external factors that a business can take advantage of. They are identified based on the current market trends and can be seen as areas to improve solutions or services offered to customers.

Threats are external factors that potentially harm or could negatively impact a company. These can be identified by changes in the market, economic recession, lack of consumer confidence, or even political and legislative factors.

For example, a business specializing in the production of organic food products can use SWOT Analysis to develop a better strategy for the future:

• The Strengths of this business could be the superior quality of the organic food products and the fact that it has a long standing reputation in the market.
• The Weaknesses of this business may include the fact that the pricing of the products is relatively high compared to competitors, or the lack of diversification offered in terms of product selection.
• The Opportunities of this business could be to identify and gain a foothold in new markets, such as online business or bulk orders.
• The Threats to this business could come from competitors who are offering similar products at a lower price, new legislation that may harm the industry, or economic recession that causes consumers to become more conservative in spending.

By utilizing SWOT Analysis, the business can develop a better understanding of its current situation and develop a more effective strategy going forward.