SWOT Analysis : Best Meaning, Definition, 4 Variables, Advantages, Disadvantages


The term SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Strengths (S) and Weaknesses (W) as internal elements over which you have some degree of influence.

SWOT Analysis is the most well-known method for auditing and analyzing a company’s general strategic position and surroundings.

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Its primary goal is to find ways that will result in a company-specific business model that better matches an organization’s resources and skills to the needs of the environment in which the firm operates.

In other words, it helps to analyze internal potential and limits and current and future external chances and dangers. It considers all excellent and harmful elements affecting the firm’s success, both inside and outside the company.

A regular study of the environment in which the company works helps in forecasting changing trends and also helps in taking them into the organization’s decision-making process.

4 Variables (Strengths, Weaknesses, Opportunities, and Threats).


Strengths are the characteristics that enable us to carry out the company’s mission. These are the pillars for achieving and maintaining long-term success.

Strengths can be physical or intangible. These are the areas in which you are well-versed or have experience, the characteristics and attributes that your personnel have, and the specific aspects that give your business consistency.

Strengths are an organization’s valuable parts, which include

  • Skills,
  • Resources,
  • Goods and services,
  • Goodwill, and
  • Brand loyalty.

Organizational strengths include extensive financial resources, a varied product range, and no debt.


Weaknesses are factors that keep us from completing our goals and reaching our full potential. These flaws hurt the organization’s success and growth.

  • Weaknesses are factors that do not fulfill the criteria they should.
  • Weaknesses in a company might include decaying machinery, a lack of R&D, a limited product line, bad decision-making, and so on.
  • Weaknesses can be overcome. They must reduce and removed. For example- old machinery and new machinery buy.

Other examples of organizational flaws include

  • Huge debts,
  • Undue personnel turnover,
  • The difficult decision-making process,
  • A limited product variety,
  • Significant waste of raw materials,


    The climate in which our business works presents opportunities. These occur when a company can use the needs of its surroundings to design and conduct plans that allow it to become growth.

    Organizations can get a competitive edge by capitalizing on opportunities. Organizations should be careful and notice and take opportunities when they emerge.

    Choosing the objectives that would best benefit the clients while performing the planned results is a hard task. Market, competition, industry/government, and technology may all provide opportunities.

    Increased demand for telecommunications, along with liberalization, presents a perfect opportunity for new firms to enter the telecom sector and compete for income with current firms.


    Threats develop when external factors affect the organization’s business’s stability and profitability.

    When they relate to the flaws, they increase their vulnerability. Threats are unstoppable. When a threat arises, stability and survival challenges.

    • Employee dissatisfaction,
    • Changing technology,
    • Increased competition resulting in excess capacity,
    • Pricing wars,
    • Reduced industry profits are examples of threats.

      Advantages of SWOT Analysis

      SWOT Analysis is instrumental in strategy formulation and selection. It is a strong tool, but it involves a great personal element. It is best when used as a focus, and not as a cure.

      Successful businesses build on their, correct their weakness, and protect against internal flaws and external threats.

      They watch their business environment and use new opportunities faster than their opponents.

      SWOT Analysis helps in strategic planning-

      • It is a source of information for strategic planning.
      • Builds organization’s strengths.
      • Reverse its weaknesses.
      • Maximize its response to opportunities.
      • Overcome organization’s threats.
      • It helps in identifying the core competencies of the firm.
      • It helps in setting objectives for strategic planning.
      • It helps in knowing past, present, and future so that by using past and current data, plans can chalk out. 

      SWOT Analysis provides information that helps in maintaining the firm’s resources and capabilities in the competitive environment in which the firm operates.

      SWOT Analysis’s Limitations

      SWOT Analysis is not without limitations. It may cause organizations to see events as easy, causing them to ignore some critical strategic contacts that may arise.

      Also, because there is so dynamic in the market, elements such as SWOT may be quite subjective.

      SWOT Analysis highlights the essence of these four factors, but it does not explain how an organization might decide on these factors for itself.

      Certain constraints of SWOT Analysis are beyond management’s control. Price increases are among them.

      • Inputs/raw materials;
      • Government regulations;
      • Economic climate;
      • Searching for a new market for a product
      • Internal limitations may include-
      • Insufficient research and development facilities;
      • Faulty products due to poor quality control;
      • Poor industrial relations;
      • Lack of skilled and efficient labor;

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