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 GoogleStrengthWeaknessIt is globally recognisedWeak Social Media PresenceIt is the top search engine in the worldLack variety in revenue sourcesAndroid operating system has the maximum mobile usersCredibility of informationAdwords and Adsense ProgramLack of promotional activitiesServes in 34 LanguagesDiversified Product rangeExcellent Mailing Service – GmailOpportunitiesThreatDeveloping CountriesCompetition from other search engine like Yandex and BingCell phone and Laptop market Competition from huge Technology giants like Microsoft and AppleHigh speed Internet ServiceViolation of Laws on YoutubeGoogle RoboticsFailing products like picasa, Google+ and Projects like google glassIncrease in Online Advertising