SWOT analysis is the term used in the context of marketing it is a very important analysis as it helps the company in analyzing the current circumstances in detail and help the company in making strategies to ensure that company is able to fight external threats like competitors as well as its own internal weakness and make use of its strength and take opportunities as and when they arise so as to emerge as winner; full form of SWOT is Strengths, Weakness, Opportunities, and Threats. In order to understand more about SWOT, let’s look at some of the advantages of SWOT –
Advantages of SWOT Analysis
- The S Advantage – S in SWOT stands for strength and by analyzing the strengths of the company or the project a company can know about the strong points and invest more money as well more time on those strong points because it is easy to build on strong points rather than trying to make weaker points strong. So for example, if a company specializes in labor intensive work and it forays into information technology sector instead of construction sector then it will be a failure as the company is not working according to its strengths.
- The W Advantage – W in SWOT stands for weakness and by analyzing the weakness the company can identify the weak spot or project or people in the company and make sure that competitors do not know about weakness because if they get information about the weak areas of the company then they will target those areas which can result in company losing to its competitors due to its weakness getting exposed. So for example if a construction company has won a highway project and its weakness is its relationship with suppliers of raw materials and if competitor get to know about it then they can use this weakness to make sure that company does not get access to raw material easily which in turn will result in delay in execution of project and can create the wrong image about the company.
- The O Advantage – O in SWOT stands for opportunities if the company is able to find or predict opportunities arising in the industry or market than it can prepare for those opportunities in advance and can use its resources to take advantage of such opportunities and make handsome profits out of such opportunities. For example, if the coffee shop owner is serving only coffee and during summer there is a sharp increase in demand for ice creams, now that restaurant owner can take advantage of this opportunity and can sell ice creams along with coffee in summer so as to make profits out of the opportunity.
- The T Advantage – T in SWOT stands for threats, in today’s competitive world threat will always be there no matter what business a company is doing, however, the important thing is to identify the threats present in the business and make contingency plan so as to counter such threats. While some threats are beyond the control of the company while for other threats company can prepare a plan to counter such threats. So, for example, a local cloth manufacturer company can make a plan to combat threat in the form of competition from online medium by selling its products through online medium also along with normal channel of sales or take insurance against loss arising from various threats like fire, earthquake, floods etc.., but if suppose government impose some taxes on cloth industry then it is beyond the control of the company.
As one can see from the above that SWOT analysis has many advantages and that is the reason why companies all over the world are conducting SWOT analysis of not only their own company but also on individual projects taken by the company, industries in which company is operating and so on.