SWOT analysis is a basic strategic analytical tool allowing you to consider strengths, weaknesses, opportunities and threats in regard to making a strategic decision.
The most common use of the SWOT analysis is on corporate level where the general business strategy is developed and evaluated by applying the analysis. SWOT is however very
useful on any strategic level, including the relatively small strategic moves.
This tutorial will guide you through both the use of SWOT analysis on corporate level and
its application in connection to smaller decisions. Some strategists consider SWOT analysis
a necessary step in any decision-making process. The reason for keeping analysis on minimal
required level is however that analyzing every strategic decision takes a lot of time which in
business is always a scarce resource. Furthermore, many strategists, especially marketers,
consider that a strategy move is best tried out in the real world.
SWOT analysis is however irreplaceable in many decision-making processes.
SWOT Analysis on corporate strategy level
SWOT analysis on corporate strategy level
is an analytical tool marking every major
decision-making process.
SWOT stands for Strengths, Weaknesses,
Opportunities, Threats. The analysis is
mostly a strategic check-tool where pluses
and minuses are outweighed against each
other so that the best strategic solution is
chosen.
SWOT analysis does not however take
place “on paper”. In its nature it is a strategic research of possible strategy moves.
Thus, a company accepts a few hypotheses
and tests them against the market factors.
Factors as core competences, niche, market
share and opportunities, supply and demand, competitors, supply chain, stakeholders, etc. are taken into account.
Those factors are divided into internal and
external factors and analyzed as such for
clarity.
Thus, when a strategist starts a SWOT
analysis it looks like on the picture on the
next page.
Strengths and weaknesses represent internal factors. Opportunities and threats represent external factors.
As a rule, a SWOT analysis begins with
analyzing internal strengths and weaknesses. The reason is that a company needs
to understand its own position and possible position on the market based on what
is possible internally. Only this way realistic strategy suggestions can be made.
After finding optimal internal conditions a
company needs to turn to the market and
test whether its strategic propositions can
be realized.
In reality this process means that you will
often need to go back and change your assumptions based on the internal analyses
as it can turn out that your strategic moves
do not make sense in the given market.
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