The SWOT analysis or the SWOT matrix is a popular management technique. But did you know who invented this system? It was a business consultant from USA named AlbertS. Humphrey. He came up with the system in the 1960s, yet the SWOT analysis has stood the test of time. Let us study it in detail.
Table of content
1 Suggested Videos
2 SWOT Analysis or SWOT Matrix
2.1 Strengths
2.2 Weaknesses
2.3 Opportunities
2.4 Threats
3 Solved Question on SWOT Analysis
Suggested Videos
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The SWOT analysis is a mnemonic, the full form is Strengths, Weakness, Opportunities and Threats Analysis. So as it is self-evident from the name, in this analysis, the entrepreneur must analyze the internal and external environment of the business.
This will help him identify the threats looming on the business or any weakness it has. It will also help him identify the strengths of the business and any future opportunities that may present themselves.
A SWOT analysis can be done on the whole business in general or even on a project by project basis. We can even do a SWOT matrix for entrepreneurs themselves. It is a good way to check the progress of the company according to projections. Let us take a look at the four elements of a SWOT matrix.
Strengths
These are the things that the business is excelling at. These are the qualities that give you an edge over your competitors, something that makes you stand apart.
It can even be an intangible thing like the reputation of the business or the entrepreneur. Maybe it is the uniqueness of the product or service. At times it is the quality of your human resources, like the excellent leadership qualities of the entrepreneur.
Weaknesses
Once we have identified the strengths, the next logical step is to identify the weaknesses of the business. This requires some critical thinking and self-awareness on the part of the entrepreneur.
These weaknesses can be many things that the company lacks. Or the things that your competitors do better than your business. It can be a lack of adequate or quality resources like the lack of experiencedstaff, or the lack of financial backing. Sometimes the product is unclear, confusing or too run of the stream.
Opportunities
SWOT analysis also involves a thorough study of the external environment by the entrepreneurs. This allows the entrepreneur to identify the opportunities that may present themselves in the near future. Then he can work on capitalizing on these opportunities to expand his business or increase his profitability.
There are a variety of opportunities that can present themselves for an entrepreneurship business. There can be a new emerging market for your products or services. The number of competitors in your area or market could be on the decline. Your business recently had some media exposure or publicity. These are all opportunities.
Threats
The last element of a SWOT matrix is threats. No business can function without facing some threats from its external environment. This involves everything that poses a risk to the company that can hinder its growth or its survival.
Threats can involve a multitude of factors like many emerging competitors, changing rules or laws in the market, changing of customer attitude etc.
Solved Question onSWOT Analysis
Q: Press coverage is always an opportunity for the business. True or False?
Ans: This is a False statement. If the press coverage is negative or the company has had bad publicity, then this can also be a threat to the business.
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SWOT Analysis
The SWOT analysis, invented by Albert S. Humphrey, is a popular management technique used to assess the internal and external factors affecting a business. It stands for Strengths, Weaknesses, Opportunities, and Threats. Let's delve into the details of each component:
Strengths
- These are the qualities that give a business a competitive edge, such as unique products or services, strong brand reputation, or exceptional human resources. Identifying strengths is crucial for leveraging advantages in the market .
Weaknesses
- After identifying strengths, it's essential to recognize the areas where the business lags behind, such as lack of resources, unclear product positioning, or inferior performance compared to competitors.
Opportunities
- Entrepreneurs must analyze the external environment to identify potential opportunities for business growth, such as emerging markets, declining competition, or positive media exposure .
Threats
- This component involves assessing external factors that pose risks to the business, such as increasing competition, changing market regulations, or shifts in customer behavior.
Solved Question on SWOT Analysis
Q: Press coverage is always an opportunity for the business. True or False? A: This is a False statement. While positive press coverage can be an opportunity, negative press or bad publicity can also pose a threat to the business .
These concepts are essential for entrepreneurs to conduct a comprehensive analysis of their business environment and make informed strategic decisions.
If you have further questions or need more details on any specific aspect, feel free to ask!
