SWOT Analysis: Definition, Application, Examples

SWOT Analysis: Definition, Application, Examples

Table of Contents

SWOT analysis is a strategic planning tool that allows you to describe the realistic state of affairs of any company. The abbreviation "SWOT" is formed from four English words: "strengths, weaknesses, opportunities, threats". They are translated accordingly as “strengths, weaknesses, opportunities, threats”. The advantage of a SWOT analysis is a comprehensive study of the company, competitors and the industry as a whole.

Compiling a SWOT analysis is to list all significant aspects of business activities. For example, “cost advantage over competitors” is an important aspect that must be specified in a SWOT analysis. However, “regular team building events” does not directly affect business development, so it should not be added to the list.

The strengths and weaknesses categories belong to the factors determined by the internal state of affairs in the company. Opportunity and threat categories are external factors that must be considered when developing the next business plan. Strengths and opportunities reflect the positive aspects at this stage of the company's development. These are the elements that contribute to the achievement of the set business goals. Weaknesses and threats are negative aspects that hinder the development of the company.

Gathering all the data together makes it possible to understand how to minimize damage from negative aspects. Ideally, after conducting a SWOT analysis, management should modernize the business strategy to turn negative factors into new growth points. Below we will look at specific examples of how to implement this.

Inventing SWOT Analysis

The emergence of SWOT analysis is a controversial issue. The principle of building a matrix of strengths and weaknesses is an invention of American economists. However, the research literature on the topic lacks precise data on when and by whom this type of analysis was first applied.

For example, the English Wikipedia does not give an unambiguous answer regarding the authorship of the method, and the article in the Russian section of the Wiki indicates that the authorship belongs to professors at Harvard University. A study by Tim Friesner, a professor at The University of Winchester, articulates two theories. First, the invention of the method belongs to Harvard Business School professors George Smith Jr. and C to Roland Christensen, who formulated the theoretical basis in the 1950s. Their colleague Kenneth Andrews began putting SWOT analysis into practice in the 1960s.

The second assumption is that SWOT analysis in the 1970s was created by Albert Humphrey, head of the research group at the Stanford Research Institute. His team developed a concept that would allow managers of different levels to quickly implement changes in business processes, based on the key goals and objectives of the company. In any case, in the 1980s, SWOT analysis became a practical tool used by the world's largest corporations.

Elements of a SWOT Analysis

Market trends and conditions are constantly changing, so business agility is important.

But before the introduction of changes, it is necessary to study the company, conduct a study of the aspects of its functioning.

This can be done using an enterprise SWOT analysis.

A well-designed plan and data collection provide a clear vision of the direction in which the company should move, how it is appropriate to spend the budget.

SWOT (SWOT) - what is it: abbreviation explanation

Such research involves processing a large amount of information about the business.

However, the time spent justifies itself: the results of the work can be used for six months and longer (until the appearance of new input).

To get an idea of ​​what a SWOT analysis is, read the name:

  • S - strengths - strengths (company strengths);
  • W - weaknesses - weaknesses (company weaknesses);
  • O - opportunities - opportunities (potential);
  • T - threats - threats (risks).

What is the vulnerability of the enterprise, what are its advantages - information, thanks to which productive marketing activities are developed.

Improving weaknesses will strengthen the company and bring it to a new level.

Potential information is necessary to understand in which direction you can develop in order to increase profits.

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