SWOT Analysis

SWOT analysis means analyzing strengths, weaknesses, opportunities and it is a useful strategic planning tool and is based on the assumption that if managers carefully review internal strengths and weaknesses and external threat and opportunities, a useful strategy for ensuring organisational success can be formulated. It is a simple technique for getting a quick overview of a strategic situation so that such strategies can be formulated as to produce a good between the company’s internal competencies (strength and weaknesses) and environment (opportunities and threats).

Strengths and Weaknesses: “strength” is a positive characteristic that gives a company an important capability. It is an important organisational resource which enhances a company, competitive position. Some of the internal strengths of an organisation are:

• Distinctive competence in key areas
• Manufacturing efficiency
• Skilled workforce Adequate financial resources Superior
• image and reputation
• Economies of scale
• Superior technological skills
• Insulation from strong competitive pressures
• Product or service differentiation
• Proprietary technology.

A “weakness” is a condition or a characteristic which puts the company at disadvantage. Weaknesses make the organisation vulnerable to competitive pressures. These are competitive liabilities and strategic managers must evaluate their impact on the organization’s strategic position when formulating strategic policies and plans. Weaknesses require a close scrutiny because some of them can prove to be fatal. Some of the weaknesses to be reviewed are:

• No clear strategic direction
• Outdated facilities
• Lack of innovation is Complacency
• Poor research and developmental programmes
• Lack of management vision, depth and skills
• Inability to raise capital
• Weaker distribution network
• Obsolete technology
• Low employee morale
• Poor track record in implementing strategy
• Too narrow a product line
• Poor market image
• Higher overall unit costs relative to competition