Businesses or organizations use SWOT analysis together with strategic planning. SWOT is a tool that evaluates an organizations internal capabilities and its external competitive position. SWOT analysis focuses on the internal Strengths or Weaknesses of an organization and external factors are either Opportunities or Threats. The information that SWOT analysis presents to an organization helps in matching its capabilities and resources to the competition posed by other organizations.
A SWOT analysis template allows organizations to develop strategies so that they can exploit their competitive advantages or protect themselves from internal weaknesses. The strength or weakness of an organization involves the identification of its internal capabilities and the disadvantages it has over other organizations. Opportunities and threats on the other hand involve the identification of external factors such as competition, government policies or intervention and other factors influencing the organization’s business operations and financial performance.
Organizations have weaknesses or strengths in certain departments and these together with external threats and opportunities create the basis for coming up with short and long term goals. A SWOT analysis template is useful for listing the strengths and weaknesses that an organization has in relation to its competitors. The strengths of an organization may include a strong brand name, patents, a good reputation among its customers, access to natural resources and distribution networks. When an organization realizes its strengths, it can have a competitive advantage over other organizations that sell similar products. For an organization to retain such strengths, it has to continue developing, defending and maintaining them.
The weaknesses of an organization may include lack of patents, weak brand names a poor reputation among its customers, lacking access to good distribution channels and good natural resources and poor financial management among others. Weaknesses make the competitors of an organization have more advantages than the organization in running their businesses. Weaknesses have a direct impact on the customers of an organization and it is therefore important to include them in the analysis so that the organization can look for ways to limit them.
The SWOT analysis template will also be useful when an organization is listing the opportunities and threats that it has. The template will help the managers of an organization to identify potential opportunities arising from external factors. These opportunities can help an organization increase its revenue and may include unfulfilled customer needs, availability of new technology, loosening regulations and joint ventures among others. The threats that an organization may have include customers having different tastes and therefore ceasing to buy the organization’s products, trade barriers, new regulations and price wars among others. Threats have the ability to reduce an organization’s profitability and hinder it from achieving its objectives and goals. Knowing this will help an organization look for ways to prevent threats from affecting its business operations.
Performing a SWOT analysis will help an organization use the opportunities available and improve weaknesses that would limit its potential compared to its competitors.