What is SWOT Analysis? Definition of SWOT Analysis, SWOT Analysis Meaning and Concept
SWOT analysis, also called SWOT analysis or SWOT, consists of a process where weaknesses, threats, strengths and opportunities of a company are studied. Hence, the name it acquires.
It is a very important tool before making any commercial strategy. In this sense, for a company to successfully carry out this strategy, it must first know the current situation of your company.
The objective of this analysis is that the company, based on the information it obtains on its situation, can make the decisions or organizational changes that best adapt to the demands of the market and the economic environment.
Components of SWOT analysis
SWOT analysis is based on two basic pillars:
- Internal analysis: Leadership, strategy, people who work in the company, the resources they have and the processes should be questioned.
Within the internal analysis, the strengths and weaknesses of the company should be analyzed. The strengths will tell us the skills that the company has that make it different from its competitors. And on the contrary, the weaknesses will show us the factors that make us remain in an unfavorable position with respect to our competitors.
- External analysis: The market, the sector and the competition should be studied.
Within the external analysis, we will study the opportunities and threats. Within the possibilities we must take into account the possible future. In other words, the new markets in which our company has a place. And, threats can alert us to factors that can endanger the survival of our business.
Types of strategy to apply after the SWOT analysis
Depending on the results obtained by the company after the SWOT analysis, it must apply a certain type of strategy. We can classify these strategies as offensive, defensive, for survival or for reorientation.
- Offensive strategies: It consists of generating higher returns thanks to your potential. That is, thanks to the opportunities (external factor) we seek to counteract the weaknesses (internal factor).
- Defensive strategies: It consists of reducing the risks generated by vulnerabilities. That is, reduce the risks caused by threats (external factor) by relying on your strengths (internal factor)
- Reorientation strategies: The idea is to correct weaknesses (internal factor) thanks to opportunities (external factor).
- Survival strategies: Strengthen your weaknesses to survive your threats.