This document provides an overview of SWOT analysis, including its meaning and components. A SWOT analysis involves evaluating the strengths, weaknesses, opportunities, and threats of a business or organization. It provides a framework to identify internal strengths and weaknesses as well as external opportunities and threats. The results are often organized in a SWOT matrix to help strategize how to use strengths to take advantage of opportunities, overcome weaknesses, and defend against threats. Performing a SWOT analysis is important for crafting an effective business strategy and gaining a competitive advantage.

1. SWOT ANALYSIS
BY: DR. DEBAJANI PALAI
FACULTY: IMIT

2. MEANING
 SWOT ANALYSIS is the strategic thinking which requires the evaluation of
Strength, Weakness, Opportunity & Threats.
 It provides information that is helpful in matching the resources of the firm
to face the environmental competition.
 It creates a logical framework for strategic alternatives and selecting the
best one.
 It guides the strategist in strategy identification and formulation.
 Strength & Weakness are internal analysis of business whereas
Opportunity & threat are external environmental analysis.

3. CONT…
 Strength : It is an inherent capacity of the organization which provides
strategic advantage over its competitors.
 Weakness: It is an inherent limitation or constraint of the organization
which creates disadvantage to the organization.
 Opportunity: It is a favorable condition of the environment which enables
the business to strengthen its position.
 Threat: It is an unfavorable condition of the environment which causes risk
or damage to the position of the organization

4. Strengths
 A firm’s strengths are its resources & capabilities that can be used as a
basis for developing a competitive advantage.
 Examples of strengths:
 Patents
 Brand names
 Good-will
 Customer loyalty
 Technical-know-how
 Strong distribution network
 Competent personnel

5. CONT…
 Powerful strategy with valuable skill.
 Strong financial condition to avail resources timely.
 Company image & reputation.
 Attractive customer base.
 Market leader
 Superior intellectual capacity.
 Strong advertisement & promotion.
 Product innovation skill
 Use of e-commerce
 Wide geographic coverage
 Expansion of the organization

6. Weaknesses
 The absence of certain strengths create weaknesses.
 Examples
 Lack of patent protection
 Weak brand name
 Poor reputation among customers
 High cost structure
 Lack of access to resources
 Lack of access to key distributors
 Lack of skilled HR

7. CONT…
 No clear strategic direction.
 A weak balance sheet with high debt.
 Higher overall unit cost relative to key competitors.
 Calk of intellectual capital.
 Lack of cost control measures and cost accounting practices.
 Internal operating problems.
 Facing problems from rivals.
 Lack of e-commerce or global distribution channel.
 Weak reputation.
 Narrow product line.
 Shortage of resources & underutilization of resources.
 Lack of adaptability of technology & expansion of the organization.

8. Opportunities
 The external environmental analysis reveal certain new opportunities for
the growth of the organization.
 Examples
 Liberal policies and regulations
 Unfulfilled customer needs
 Adaptive with new technology
 Removal of international trade barriers

9. CONT…
 Expansion with new product line with broader range of customer needs.
 Technological up gradation to enter in new business line.
 Integrating forward & backward.
 Falling trade barriers in attractive foreign markets.
 Opening to take market share away from rivals.
 Acquisition of rivals
 Joint venture
 New market expansion.


10. Threats
 Changing environment invite threats for business.
 Example
 New rules and regulations
 Change in consumer tastes away from firm’s products
 Availability of substitute
 Increased barrier
 Strong rivalry

11. CONT…
 Loss of sales to
 Entry of new competitors
 High cost of production with low technological innovation.
 Slowdown market growth.
 Adverse shift in foreign exchange rate.
 New policies and regulations.
 High bargaining power of customers.
 High bargaining power of suppliers.
 Adverse demographic change.

12. SWOT Matrix
 SWOT Matrix creates a scope for identifying the best fit between firm’s
strength with its opportunities.
 It also states that how to overcome a weakness and threat.
 Matrix is the combination of rows and columns. The SWOT analysis profile
consists of combinations of
 S-O
 WO
 S-T
 W-T

13. Cont…
STRENGTHS WEAKNESSES
OPPORTUNITIES S-O-STRATEGIES W-O-STRATEGIES
THREATS S-T-STRATEGIES W-T-STRATEGIES

14. CONT…
 S-O-STRATEGIES- Strategies pursue opportunities that are a good fit to the
company’s strength.
 W-O-STRATEGIES- Overcome weaknesses to pursue opportunities.
 S-T-STRATEGIES- Identify ways that the firm can use its strengths to reduce
its vulnerability to external threats.
 W-T-STRATEGIES- Establish a defensive plan to prevent the firm’s
weakness from making it highly susceptible to external threats.

15. IMPORTANCE OF SWOT ANALYSIS
 SWOT analysis presents the information about both internal & external
environment in a structured form.
 It compares external opportunities & threats with internal strength &
weaknesses.
 The strategist can be able to choose a suitable strategy by analyzing SWOT
profile which consists of combination of: high opportunity with high
strength, high opportunity with low strength, high threats with high
strength & high threats with low strength.
 It helps the managers to craft business model that will allow the company
to gain competitive advantage.
 Potential strength and competitive advantage, potential weakness &
competitive deficiencies, potential opportunities & threats to company’s
wellbeing.