EDCS: Lesson 6 SWOT Analysis

swot analysis advantages and disadvantages
swot analysis advantages and disadvantages

Trainings could be planned before implementing the final solution to keep the team up to speed with the new technology being implemented. Minimizing Weaknesses – Employees are used to working in the traditional manner and are not completely exposed to the advancement in technology. The adequate actions shall be executed once identified all such threats and opportunities. It is very critical and crucial to identify the weaknesses early and try to minimise them. Weaknesses are inherent limitations within an organisation which creates disadvantage over others.

Four quadrants—namely strengths, weaknesses, opportunities, and threats—make up the essence of the analysis. Strengths refer to the company’s abilities that give it an advantage over its competitors. Strengths and weaknesses are usually internal factors that affect the business environment, while opportunities and threats make up the external segment. Opportunities are the projects and processes that a business optimizes with its strengths, while threats serve as obstacles or road bumps to the project. A SWOT analysis evaluates the internal strengths and weaknesses, and the external opportunities and threats in an organization’s environment. The internal analysis is critical in identifying the source of competitive advantage.

It pinpoints the resources that need to be developed in order to remain competitive. SWOT evaluation assesses internal and external components, in addition to present and future potential. The acronym SWOT stands for strengths, weaknesses, opportunities and threats. The SWOT evaluation approach is a planning device utilized by companies to determine key business aims, and the inner and exterior components that can assist or undermine those objectives. While SWOT can help companies to evaluate their technique and course, there are some drawbacks to utilizing SWOT.

For example, if certainly one of your strengths is monetary, you would possibly buy a weakened competitor or invest in promising technology. If you’ll be able to assist ensure the survival of your organization with the first part of the SWOT analysis, this half helps make your company prosper and improves efficiency. The most important a part of a SWOT evaluation is to improve the viability of your organization. Important threats coupled with a company weak spot usually put at risk your company’s future, and the SWOT analysis identifies these risks.

This stage requires a detailed and brainstorm analysis by your partners or others’ heads to know what is going wrong within your organization. Some of the noteworthy mentions and must read answers are from Rahul Garg , Vinod Jeba Azir (how it can be used for AS-IS vs TO-BE tool) and Swarandeep Kaur Juneja . The objective of the project is to enhance the efficiency of the overall process without any compromises with the quality of the output. For example – For an ongoing Business Excellence Project ABC company has decided to go with the trend and automate some of its processes using RPA . Opportunities can occur in political decisions, demographic change, and social issues. In the rapidly changing environment, it may be challenging to perform and adhere to SWOT analysis with long horizon.

  • SWOT analyses differ from company to company, so a company may require different data sets to conduct various SWOT analyses.
  • Reducing these cycles frequently necessitates venturing outside of your primary market.
  • It also helps in understanding the current standing of the business, which heavily influences the future route that the company will intend to take.

For instance, if a longtime cereal firm plans to launch a brand new product, brand recognition could be listed as a power. Businesses which are conscious of their strengths are better in a position to improve and exploit them to their advantage. Like SWOT, it explores Threats, Opportunities, Weaknesses, and Strengths, nevertheless it emphasizes the external environment, while SWOT leads with the interior components. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT Analysis is a technique for assessing these four features of your small business. SWOT evaluation leads to 4 particular person lists of strengths, weaknesses, alternatives and threats.

The categories tend to be similar to the “Opportunities” section, but directionally opposite. Weaknesses are areas or characteristics where a business is at a competitivedisadvantagerelative to its peers. Like strengths, these can also be more qualitative or quantitative. Examples include inexperienced management, swot analysis advantages and disadvantages high employee turnover, low margins, and high use of debt as a funding source. A SWOT analysis is a technique for assessing these four aspects of your business. SWOT Analysis is a tool that can help you to analyze what your company does best now, and to devise a successful strategy for the future.

ClearTax serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India. StrengthsWeaknessesOpportunitiesS-O strategiesW-O strategiesThreatsS-T strategiesW-T strategiesS-O strategies pursue opportunities that are a good fit to the company’s strengths. An entrepreneur can make an analysis as to develop a completely new product, or to just bring slight change in the existing product. On the other hand, the external factors are the factors that exist outside the organization and there is no control of the organization over it. We use SWOT analysis to gather information about any industry, company, products, or even people. Counteracting Threats – The current business model demands data to be move from one country to another.

FAQs on SWOT Analysis

SWOT analysis is a micromanagement system used in the process of strategic planning in business organizations. With the help of SWOT analysis, a business can understand the competitive position of the company, understand what is lacking and where, and how it can be improved. Simply put, SWOT analysis plots how the company’s resources and capabilities can be best used wisely to best the competitive position it is in the industry and the market. To examine the firm more thoroughly, the analyst community may aim to comprehend strengths, weaknesses, opportunities, and risks. Consider how the results of a SWOT analysis might assist analysts in better understanding model assumptions. It may be an equity researcher attempting to determine a company’s fair market value or a credit analyst attempting to comprehend a borrower’s creditworthiness better.

swot analysis advantages and disadvantages

So, we need to figure out the right opportunity at that particular point in time and leverage it. Its time to write down things which goes against the organization. Being honest is very important and listing out as many things as possible.

SWOT Analysis Example- How To Write SWOT Analysis

A SWOT diagram analyzes a product or business by focusing on each of the four factors. It typically consists of four boxes one of each area and the details of the analysis are written in the corresponding box. This would also help the management get more business with limited resources and would have an overall positive impact on the growth of the company.

swot analysis advantages and disadvantages

It’s a technique used to strategically evaluate your abilities what you are good at) and areas where you need improvements. Threats are challenges that you might encounter during your career journey, like taking an entrance test or seeking admission to a university with limited seats. This element of SWOT Analysis, if tackled properly will end up making you stronger and help you achieve your career goals effectively and efficiently. Try to perform a SWOT analysis of your organization twice a year, so you can remain up to date with the latest happenings and devise effective strategies for your company. You now understand why you must conduct a SWOT analysis of your company.

Advantages and Disadvantages of SWOT Analysis

Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing. Threat is an unfavourable condition in the organisation’s environment which creates a risk for, or causes damage to, the organisation. Strength is an inherent capacity which an organisation can use to gain strategic advantage. Is your career in danger due to the rise of new technology or the decline of outdated ones? Because they didn’t take the time to grasp the newest technology, software engineers’ jobs frequently become stale. Assessing your areas of weakness will assist you identify where you need to make self-improvement investments.

What are the advantages of a SWOT analysis?

A SWOT analysis helps you assess internal factors that might affect your business (strengths and weaknesses) and external factors (opportunities and threats). You will need to review and act on the results from the SWOT analysis.

These inputs are taken based on the four primary elements as explained below. A firm must direct its strengths towards exploitation of opportunities and blocking threats which minimizing the exposure of weaknesses at the same time. Beneficial aspects of the organization or the capabilities of an organization, process capabilities, financial resources, products and services, customer goodwill and brand loyalty. These factors define the characteristics of the industry or market which directly impact its working and growth. This framework has four elements of a company, categorized as internal and external strategic factors.

Swot Diagram 4 Rectangular Elements Advantages Stock Vector (Royalty Free) 1328440301 | Shutterstock

The major advantages of SWOT analysis is to provide input to the business excellence team and transform the Business. These are some of the areas where we can use SWOT for business excellence. This technique is strategic tools for accessing business in these four aspects. The SWOT analysis has been a popular business tool for many years. While business planning does require some time and knowledge, most planners agree that a SWOT analysis should be completed at the beginning of the planning process.

What are disadvantages of SWOT analysis?

According to Harvard Business Review, one drawback of a SWOT analysis is that it can oversimplify the type and extent of strengths, weaknesses, opportunities and threats facing the company. It also ignores some of the strengths and weaknesses of other companies that could affect your business.

The output of the analysis would provide information that is helpful in matching the organisations resources and capabilities to the competitive environment in which it operates. When the outcome is combined with other tools, SWOT can help in identifying transactional and transformational improvement projects aligned to goals the organization. Describes the company’s strengths which separates if from its competition that can be used to maximise the identified opportunities. Examples could be, the brand value, customer base, technology and so on.


Five years later, Coca-Cola remains the world’s 6th strongest brand thanks to the Value Line SWOT analysis. After the analysis, Coca-Cola’s shares have appreciated over 60% over the past five years. SWOT analyses differ from company to company, so a company may require different data sets to conduct various SWOT analyses.

The Internal Analysis of the organization includes the organizational position with respect to different functional areas like Production, Finance, Marketing & Distribution and so on. The External Analysis will include the industry performance, competitive activity and a review of the growth and decline of the user industries. Just like when figuring out opportunities, you need to consider your strengths and weaknesses, the same when assessing threats. Market fluctuations, government policies or public interferences are all external factors that may badly affect your business.

Below is a table with questions to consider or ask for each group. The term threat refers to factors that could harm an organisation. Droughts, for instance, may damage or reduce crop yields at wheat-producing companies. Materials costs are rising, competition is increasing, and the labour supply is tight, among other things. The two by two grid of a SWOT matrix has a square for each of the four SWOT factors. There are a few questions at the beginning of each segment to get your mind working.

In this area when you compete yourself with your competitor that makes you behind. You can also take view from other stakeholder how they see you as compare to competitors. And then thinks the areas which you could improve or avoid the current practice. Introduction Business Valuation is the process of valuing a company on the basis of its history, brand and any relevant information related to it. When going to an interview – So you can focus on your strengths and talk about them more. If you have a very good idea about the job requirements beforehand you can modify the CV to match them as well.

What is the advantages and disadvantages of SWOT analysis?

The SWOT methodology advantages, such as its use to address a variety of business issues, makes it a desirable tool to support some brainstorming sessions. However, the tool's disadvantages, such as the subjective analysis of an issue, make it less desirable for others.

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