An important step in situational analysis, which access your company’s strengths, weaknesses, opportunities, and threats, is known as SWOT analysis.
Strategic situation analysis is divided into two types “Internal analysis” (strengths and weaknesses) and “external analysis” (opportunities and threats). Internal analyses are those factors that are internal to the organization; you can easily control these factors, while external factors are the factors that are outside the organization and affecting your business directly or indirectly.
SWOT analysis is used to analyze: Attributes of the company that are helpful to accomplishing the goals and objectives, attributes of the company that are harmful in achieving the goals, external environment that is useful in accomplishing your company’s goals and objectives and upcoming external condition, which are harmful in achieving your goals and objectives. SWOT analysis is a powerful tool that helps investors to judge, whether, the company is capable enough to achieve different objectives or not. While writing SWOT analysis makes sure, the data you are writing must contain relevant material.
Strengths are defined as the positive attributes of the organization, which are within the organization’s control. Such as, specialist marketing and advertising skills, patents, introduction of new and innovative product or service, site of your business, cost benefit through proprietary knowledge, strong reputation, exclusive access to natural resources, quality development and procedures, etc.
Factors that are within the organization control and can easily be improved. It is necessary to take care of your weaknesses because these factors can detract you in achieving your goals and objectives. These factors are: lack or advertising and marketing skills, site of your business, poor quality of your product and service (i.e. in relation to your competitors), damage reputation, distribution channel, limited resources, etc.
Opportunities are the external factors that are providing benefit your business directly or indirectly. Such as, market growth, careful research about market, market size, etc.
These are also the external factors, which are not in organization’s control, but they can seriously damage your organization mission. Threats include: competition, economic crises, earthquakes, competition, price war, new regulations, tax policy, etc.