SWOT Analysis – Concept , Components , Importance and Limitations | Strategic Management

SWOT Analysis

SWOT Analysis

Concept of SWOT Analysis

A SWOT analysis measures the strengths and weaknesses of an organization. By conducting a SWOT analysis, the organization can identify areas for improvement and areas for focus. Strategic decisions can be made by understanding an organization’s strengths and weaknesses.

The purpose of strategic planning is to develop the vision, mission, objectives, strategies, and policies of a company. An environmental analysis begins with finding a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses. Therefore, environmental analysis is used to develop strategic alternatives.

Basically, SWOT stands for strengths, weaknesses, opportunities, and threats for a company. Combined with the strategic capability of an organization, a SWOT analysis identifies critical issues that may impact the development of the organization’s strategy. Hence, it is also called situation analysis. In formulating a strategy, SWOT analysis plays an important role.

Structured information is presented about the external environment and internal environment. We identify and evaluate environmental opportunities and threats. In a similar way, strengths and weaknesses can be found through an analysis of resources or internal processes. In the final step, we develop possible strategic alternatives by matching the external components with the internal capabilities.

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