SWOT analysis is one kind of model of different strategic management models. It is a strategic planning technique used to support an individual or organization. This trick detects the Strengths, Weaknesses, Opportunities, and Threats related to commercial competition or planning development. However, there are described the SWOT analysis examples for business studies. Here also details the importance of SWOT analysis examples and even sources of data for SWOT analysis examples.
What is SWOT?
SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors of an organization. In SWOT analysis, the data frame structure is bellowed: Such as:-
|Data Sources||Positive Factors||Negative Factors|
SWOT Analysis Examples for Business Studies:
Internal data is related to information concerning the internal operations of the organization. These include several things, for example, financial structure, personal characteristics, organizational structure, production issues, and so on. External data are ‘external’ in their relationship with the organization. They include environmental features such as legal requirements, political circumstances, economic scenarios, competitor’s strategies, and tactics—furthermore, cultural and social patterns, demographic trends, technological progress, etc.
Within all the internal and external data are relevant to the organization. There are four categories of information, such as internal strengths, internal weaknesses, external opportunities, and external threats.
SWOT Analysis Leads to Strategy Formulation:
You will find that the strategists in an organization assess the organization’s internal strengths and weaknesses. You also evaluate its environmental opportunities and threats. SWOT analysis facilitates a firm to formulate appropriate strategies in the context of the firm’s vision and mission. The strategies help in accomplishing the firm’s vision or mission. These are gained by exploiting its strengths and opportunities as well as by overcoming its threats and correcting.
The attached figure presents a scenario that shows how SWOT analysis leads to strategy formulation. You can see in the picture that the vision of a company sets the ground for developing a mission statement. For the managers to understand company situations, they analyze the company’s strengths, weaknesses, opportunities, and rates based on internal and external data. Based on the SWOT results, they formulate appropriate strategies to support the mission by exploiting opportunities and strengths, neutralizing the external environment’s threats, and overcoming weaknesses.
Before the SWOT analysis, you should clear a broad idea about the meaning of strength, weakness, opportunity, and threat.
The first indicator of SWOT analysis is a strength. Strength is something that a company is good at doing. It is a distinctive competence of an organization that enables it to achieve a particular advantage in the marketplace. Any resource, skill, or other advantage relative to competitors can be called strength. Anything can be a strength if it gives the organization enhanced competitiveness. Power can take the produce of an expertise/skill, valuable human assets, valuable physical assets, fruitful alliances, valuable intangible assets, etc. adequate physical facilities such as land and building or machinery, sufficient financial resources, trained and qualified marketing people, well-managed information systems, able top leadership and right image of the organization are some examples of internal strengths.
The second indicator of SWOT analysis is a weakness. Unfortunate situation and lack of organization are called weakness. Weakness places the organization at a drawback. Weakness indicates a deficiency or limitation, or constraint. Any fault affects an organization’s performance adversely. An organization’s internal weakness can relate to the following things. For instance:-
- Competitively essential skills;
- A lack of competitively valuable physical, organizational or intangible assets
- Weak/missing competitive capabilities in critical areas.
Examples of internal weaknesses include inadequate physical and financial resources, untrained executives, strained labor-management relations, poor leadership at the top, use of old technology that hinders production, and the like.
Opportunity is the third one of SWOT analysis. An opportunity is something that an organization may grab for growth and profitability. It is a favorable condition in an organization’s external environment. An opportunity arises when a business can benefit from circumstances in its outer atmosphere to articulate and implement strategies, That enable it to earn higher profits. Opportunities offer essential avenues for profitable growth and indicate the potential for competitive advantage.
Examples of opportunities include opening up new markets in other countries, deregulation policy of a government, reducing taxes on imported raw materials, higher tax rebates on firm’s income, government subsidy, increasing demand for products among customers, and so forth. As an instance, we can cite the case of deregulation of the airline industry in Bangladesh. Deregulation is a significant opportunity for private airlines such as GMG and United Airlines to serve those routes that Bangladesh Biman does not help. However, this can be a threat to Biman. So, the opportunity for one organization can be a strategic threat to another organization.
More read: Porter’s 5 Forces Model
The final one of SWOT analysis is a threat. A warning is something a firm may expose to in the external environment that may cause suffering in growth or profitability. It is an unfavorable trend in the external environment. A threat arises when circumstances in the outside environment jeopardize a firm’s business’s reliability and viability. Certain factors in a firm’s external environment may pose threats to its profitability and competitive well-being. Frequent advances in technology, foreign competitors’ entry, smuggling of products through the border, cheap imported products, civil war, and unstable political situations in the country, frequent changes of government regulations, and uncontrolled law and order situation are typical examples of threat.
Importance of SWOT Analysis in an Organization:
SWOT analysis is a useful tool for analyzing an organization’s overall situation. This approach attempts to balance the organization’s internal strengths and weaknesses with external opportunities and threats. It delivers a decent outline of whether a firm’s circumstance is strong or insalubrious. SWOT discloses the company’s actual situation regarding resources, capabilities, external opportunities, and external threats. It comforts to appeal a decision about how a plan can harmonize to both its capitals and marketplace opportunities. Additionally, how weakness can be corrected, and threats can guard against it.
More specifically, SWOT analysis is vital for a company for the following reasons:-
- It evaluates the strengths, weaknesses, opportunities, and threats of the company and concludes the attractiveness of its causes.
- It points out the need for strategic action.
- The strengths are identified through SWOT Analysis. It can use as the cornerstones of strategy and the basis on which to build competitive advantages.
- SWO analysis enables the company to build its strategy around what the company does best based on its strengths. It should avoid procedures whose success depends heavily on areas where the company is weak.
- The results of the SWOT analysis help correct competitive weaknesses that make the company vulnerable.
- Based on the opportunities identifies through SWOT analysis. Managers can aim their strategies at pursuing opportunities well-suited to the company’s capabilities and provide a defense against external threats.
Read more: Value Chain Analysis Model
Sources of Data for SWOT Analysis:
SWOT conducts for analyzing the external and internal environmental factors that affect a company’s business activities. Therefore, the sources of data analysis will diverge grounded on ecological issues. The springs of data for exterior problems will never be the same for different industries. However, there are some familiar sources which a company may explore. For instance:-
- Chambers of commerce and industry,
- Domestic trade associations
- Export promotion bureaus,
- Trade fairs and exhibitions,
- Foreign trade missions or consulates,
- Broad of investment,
- Concerned ministries, other business units in the same industry,
- Research organizations,
- Consulting firms,
- Market survey firms, and
- Independent think tanks such as the Center for Policy Dialogue (CPD).
The internal sources of data include different files. Such as personal files of employees, production records, sales reports, inventory registers, marketing information, accounting information, management information systems, various financial statements, annual reports of the organization, own publications and reports, and any other kind of records the organization maintains.
Finally, we can say that SWOT analysis is part and parcel in an installing organization. This article has tried to explain the importance of SWOT analysis examples for business studies. In the future, we’ll come with more elaboration of the SWOT analysis examples for business studies.