Swot analysis , its importance and limitations

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 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 What advantages does the firm have that others do not have? What do they better than anyone else? What personal resources do they have access to? STRENGTHS

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 WEAKNESS

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 OPPORTUNITY

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. THREATS

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 IMPORTANCE OF SWOT ANALYSIS

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. LIMITATION OF SWOT ANALYSISS