SWOT stands for the English terms Strengths , Weaknesses , Opportunities and Threats which is a very popular analytical tool in business.In Business Administration , SWOT Analysis is an important tool used for strategic planning that consists of collecting important data that characterize the internal environment (strengths and weaknesses) and external (opportunities and threats) of the company.
The SWOT analysis is a tool used to make environmental analysis, being the basis for the management and strategic planning in a company or institution. Thanks to its simplicity can be used for any type of scenario analysis, from the creation of a blog to the management of a multinational. This is an example of a simple system to position or verify the strategic position of the company / institution in the environment in question.
The SWOT analysis technique was developed by the American Albert Humphrey during the development of a research project at Stanford University between the 1960s and 1970s, using data from the Fortune 500, a magazine that compiles a ranking of the largest American companies.
The following information should be included in the SWOT categories to analyze the company scenario:
- Strengths ( forces ) – Internal advantages of the company in relation to competitors. Eg product quality offered, good customer service, financial strength, etc.
- Weaknesses ( weaknesses ) – Internal disadvantages of the company in relation to competitors. Eg high production costs, bad image, poor facilities, poor brand, etc .;
- Opportunities ( opportunities ) – positive external aspects that can enhance the company ‘s competitive advantage. Eg changes in customer tastes, bankruptcy of a competing company, etc .;
- Threats ( threats ) – negative external aspects that could jeopardize the company ‘s competitive advantage. Eg new competitors, loss of key workers, etc.
Cross Swot Analysis
The cross-swot analysis consists of crossing information from the four quadrants, in order to obtain a framework that allows to outline important strategies for the future of the company / institution.
For cross-SWOT analysis it is first necessary to make a clear analysis of the environment, that is, to deeply research the strengths and weaknesses and to identify opportunities and threats. For each crossing it is important to know how to create objectives / strategies:
- Strengths x Opportunities = offensive strategy / development of competitive advantages.
- Strengths x Threats = confrontation strategy to modify the environment in favor of the company.
- Weaknesses x Opportunities = reinforcement strategy to be able to take advantage of opportunities better.
- Weaknesses x Threats = defensive strategy with possible profound modifications to protect the company.