SWOT Analysis

What it is:
A simple system for identifying a company's strategic growth opportunities in the marketplace: also suggests strategies to increase competitive advantage.

Its other names:
TOWS Analysis; Strength/Weakness/Opportunities/Threats Analysis.

Where it comes from:
The 1969 book Business Policy, Text and Cases by Edmund P. Learned and others (Irwin).

Summary:
An organization conducting a SWOT analysis will list its:

1. Internal factors, such as proprietary brands, company culture, distribution systems, exclusive access to natural resources, image, market share, patents, and personnel. The analysts will then decide which of these factors are strengths and which are weaknesses.
2. External factors, such as competitors, economic trends, partners, regulatory concerns and suppliers. The analysts will then decide which of these factors are Opportunities and which are Threats.

Analysts then create separate lists for each of the SWOT categories (strengths, weaknesses, opportunities and threats) and compare them to uncover strategic insights. Example: Could a sagging brand image (a weakness) be reduced by a strong marketing department (a strength)?

What else you need to know:
SWOT's usefulness depends on management creativity and vision. Example: A new technology might look like a threat in the hands of a competitor, but become an opportunity when you get the rights to use it.