We know that there are several techniques which are used for analysing and diagnosing the environment of business, but one such important that we are very much aware but still not practice that is SWOT analysis.
Let’s discuss it’s importance in the analysis of business performance –
S- Strength
Strength is an inherent capability of the company which it can use to gain strategic advantage over its competitors. For example having Country wise distribution network such as of Hindustan Unilever Limited which is basically a strength of the company.
W-Weakness
A weakness is also an inherent limitation or constraint of the company which creates strategic disadvantages for it. Technology weakness, shortage of funds are such examples of weakness.
O-Opportunity
An opportunity is a favourable condition in the company’s external environment which enables it to strengthen its position growing demand is also an example of opportunity. A company is free to join any sector which has growing opportunities.
T-Threat
A threat is an unfavorable condition in the company’s external environment which causes damage or risk to its position, competition from multinational compani is a threat for Indian firms.
So SWOT analysis is helpful in the formulation of an effective strategy that can capitalise on the opportunities and neutralize the threats faced by an organisation with the help of its strength.
