The meaning of swot analysis Importance and limitations of swot analysis

1. CONTENTS
Intro to swot analysis
Understanding what it means by strengths, weakness,
opportunities and threats
Importance and limitation of Swot analysis

2. Each letter on the word swot stand for its specific meaning. The letters represent
the following meaning
S: Strengths
W: Weakness
O: Opportunities
T: Threats
A swot analysis is the tool that identifies strengths, weakness, opportunities and
threats that an organization face
Swot analysis provide information that is helpful in matching firms resources and
capabilities to the competitive environment that a firm operates
The strengths and weaknesses comes from within the firm while opportunities and
threats arise on the external environment that a firm serve.
Swot analysis is also sometimes known as SWOC analysis, where “S” stands as
strengths, “W” as weakness, “O” opportunities and “C” as constraints which
actually same as threats

3. These are the characteristics of the business that give it
an advantage over others.
They are the qualities that enable a firm to accomplish
its mission. These are the basis on which continued
success can be made and continued/sustained
A firm need to ask itself the following questions
i. What advantages does the firm have that others do
not have?
ii. What do they better than anyone else?
iii. What personal resources do they have access to?

4. POTENTIAL INTERNAL STRENGTHS INCLUDE THE FOLLOWING
( EXAMPLES OF INTERNAL STRENGTHS)
I. Adequate financial resources
II. Superior technology skills
III. Strong distribution channels
IV. Customer loyalty
V. Better manufacturing capability (i.e good production quality)
VI. Strong advertisement campaign
VII. Protection from competitive pressure

5.  These are the limitations/characteristics that places a firm at a
disadvantage relative than others. They result to strategic disadvantage.
 They prevent a firm to accomplish its mission and achieving the full
potential. These weaknesses deteriorate influences on the
organizational success and growth
 Weaknesses are controllable. They must be minimized and eliminated
POTENTIAL INTERNAL WEAKNESS (EXAMPLES OF FIRMS
WEAKNESS)
i. Lack of managerial depth & talents
ii. Poor reputation of the firm
iii. Weak distribution network
iv. Too narrow product line (producing one product only instead of multiple
products)
v. Unreliable products/services
vi. Weak marketing image resulting to weak brands

6.  This refers to favorable conditions in the environment
that a firm operates on that provide a chance for an
organization to make greater profit. They arise to the
external environment of the firm
 Opportunities do not come frequently ,therefore the
management must exploit them immediately without
delay.
 Each opportunity must be analyzed in terms of
profitability

7. POTENTIAL OPPORTUNITES
(EXAMPLE OF OPPORTUNITIES)
I. Changing customer tastes
ii. Technological advances
iii. New distribution channels
iv. Change in social pattern, population profiles, life cycle
changes

8.  These are unfavorable conditions in the environment
that a business operates. They create risk to the firm
POTENTIAL THREATS( EXAMPLES OF THREATS)
i. Slower market growth
ii. Rising sales of substitute products
iii. Technological advances
iv. Changing in customer tastes and needs
v. Adverse demographic changes.

9.  1.It is the source of information for strategy planning
 2.it builds an organization strengths
 3.It reverse organizational weakness
 4.It maximizes firms response to opportunity
 5.It identify the core competencies of the firm
 6.It helps in setting objectives or strategic plan
 7.It helps to know the past, present and future

10.  A SWOT analysis may be limited because it:
1.It doesn't prioritize issues
2.it doesn't provide solutions or offer alternative
decisions
3.it can generate too many ideas but does not helping in
choosing which one is best
4.it can produce a lot of information, but not all of it is
useful.