SWOT analysis – It was developed in 1960`s at Stanford research institute. SWOT Analysis is a strategic management technique to understand the internal and external environment of an organization in terms of its strengths, weaknesses, opportunities and threats.
S = Strength W = Weakness O = Opportunity T = Threat
There are four sequential steps of conducting a SWOT Analysis –
- Setting up objectives for the concerned organization
- Identifying the strengths ,weaknesses ,opportunities and threats of the business
- Answering the 4 major questions –
How to maximize the internal strengths of the organization?
How to minimize the internal weaknesses of the organization?
How to capitalize on opportunities present in the external environment of the organization?
How to protect the organization from threats in the external environment?
- Based upon the results of the above analysis a SWOT matrix is prepared which consists of Strengths, Weaknesses, Opportunities and Threats present in the Organization`s internal and external environment and its impact on the business is studied.
A firm must direct its strengths towards exploitation of opportunities and blocking threats which minimizing the exposure of weaknesses at the same time.
SWOT Analysis is an important tool for auditing the overall strategic position of a business and its environment. The basic objective of SWOT Analysis is to provide a frame work to reflect a firm’s ability to overcome barriers (threats) and avail opportunities emerging in the environment.
Advantages of SWOT Analysis –
- It is simple to use low cost is involved it is flexible and can be adapted to varying situations
- It leads to clarification of issues
- It helps in development of goal oriented objectives
- It is useful as a starting point for strategic analysis
Disadvantages of SWOT Analysis-
- Realities may be more complex than represented by swat matrix due to simplicity of its use
- It may result in compiling of lists rather than focusing on organizational objectives
- Strengths may sometimes be confused with opportunities
- The Person conducting the analysis may be biased towards a view-point and may misinterpret the situation
EXAMPLE of SWOT Analysis of Google –
SWOT Analysis of Google
|It is globally recognised||Weak Social Media Presence|
|It is the top search engine in the world||Lack variety in revenue sources|
|Android operating system has the maximum mobile users||Credibility of information|
|Adwords and Adsense Program||Lack of promotional activities|
|Serves in 34 Languages|
|Diversified Product range|
|Excellent Mailing Service – Gmail|
|Developing Countries||Competition from other search engine like Yandex and Bing|
|Cell phone and Laptop market||Competition from huge Technology giants like Microsoft and Apple|
|High speed Internet Service||Violation of Laws on Youtube|
|Google Robotics||Failing products like picasa, Google+ and Projects like google glass|
|Increase in Online Advertising|