SWOT Analysis and its usefulness
SWOT analysis is a
strategic planning technique used to help a person or organization identify
strengths, weaknesses, opportunities, and threats related to business
competition or project planning.
The word SWOT stands for four terms; internal
Strengths and Weaknesses, and external Opportunities and Threats.
Strengths describe what an organization excels at and
what separates it from the competition as like a strong brand, loyal customer
base, a strong balance sheet, unique technology, and so on. Strengths are the
plus points for any business which helps to make a good result.
Weakness means the areas an organisation needs to
improve for their betterment. As like a weak brand, higher-than-average
turnover, high levels of debt, an inadequate supply chain, or lack of capital.
Opportunities are favourable factors that could give an
organization a competitive advantage. Business needs and should be always fond of opportunities. So it’s really important for an organisation to know
what their opportunities are.
Threats mean the obstacles and difficulties an
organisation may face on their way to business. Threats refer to factors that
have the potential to harm an organization.
This framework helps to evaluate an
organisation’s competitive position and further possibilities in business.
For example, in 2015, a Value Line SWOT
analysis of The Coca-Cola Company noted strengths such as its globally famous
brand name, vast distribution network and opportunities in emerging markets.
However, it also noted weaknesses and threats such as foreign currency
fluctuations, growing public interest in "healthy" beverages and
competition from healthy beverage providers.
Its SWOT analysis prompted Value Line to pose
some tough questions about Coca-Cola's strategy, but also to note that the
company will probably remain a top-tier beverage provider that offered
conservative investors a reliable source of income and a few capital gains
exposure.
Five years later, the Value Line SWOT analysis
proved effective as Coca-Cola remains the 6th strongest brand in the world (as
it was then). Coca-Cola's shares (traded under ticker symbol KO) have increased
in value by over 60% during the five years after the analysis was completed.
(investopedia.com)
SWOT analysis can be used for personal SWOT
analysis also. It helps you focus on your strengths, minimize your weaknesses,
and take the greatest possible advantage of opportunities available to you.
SWOT is more likely a filtration process for a
business organisation to filter strengths, weakness, opportunities and threats.
A company can use a SWOT for overall business strategy sessions or for a
specific segment such as marketing, production or sales.
A SWOT analysis is a great way to guide
business-strategy meetings.
Sifat Ahmed
Session: 2019-20
Department of Human Resource Management
