Strengths, weaknesses, opportunities, and threats (SWOT) analysis

Strengths, weaknesses, opportunities, and threats (SWOT) analysis is a marketing / management tool used to evaluate a company’s competitive position. Strengths, weaknesses, opportunities, and threats (SWOT) analysis begins with assessing a firm’s strengths. Strengths include what the firm does well, what competitive advantages the firm has over rivals, and what resources the firm has to utilize. Strengths are relative to competitors’ strengths and relative to the firm’s target markets. Analysis of strengths, if done objectively, provides ideas for future growth of the firm.
Weaknesses are what the firm does not do well and areas that could be improved. Weaknesses create limitations on the growth of a firm. Weaknesses can include lack of human or financial capital, market access, sales capability, product quality, or other problems. Weaknesses should be assessed from the customer’s perspective. What is it that the firm is not doing well?
Opportunities are favorable situations that could create benefits to the firm if pursued. Often managers wait for opportunities to arise, but creative and assertive managers seek out and capitalize on opportunities ahead of competitors. Changes in government policies, changes in technology, competitors’ action or inaction, and market conditions can create opportunities.
Threats are obstacles or conditions that may prevent a firm from achieving its objectives. Threats can include competitors’ actions, changing technology, financial constraints, and government policy. Analysis of threats helps a firm anticipate problems rather than react to them.
Strengths, weaknesses, opportunities, and threats analysis is often incorporated as part of environmental scanning, assessment of the political, legal, economic, cultural, and competitive environment in which a firm operates.