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INTERVIEW QUESTION:

What is SWOT Analysis?

Posted by Chris Adams

// 32386 Views // 3 Additional Answers & Comments

ANSWER

SWOT Analysis is a strategic planning technique used to assess the internal and external environment in which a company operates and competes. Internal environmental factors are classified into strengths and weaknesses, while external environmental factors are classified into opportunities and threats.

Each is identified as follows:

Strengths (internal factor): The company’s resources or capabilities that give it a competitive advantage within its market or industry.

Weaknesses (internal factor): Areas where the company lacks certain resources or capabilities that prevent it from taking advantage of available opportunities or make it vulnerable to other environmental factors.

Opportunities (external factor): Industry or market factors that may result in company profit and growth.

Threats (external factor): Factors that may have a negative impact on the company’s profit, growth, or position within its industry or market.

	Strengths (Internal)	Weaknesses (Internal)
Opportunities (External)	(Quadrant 1) Focus on areas where a company’s strengths align with market opportunities for rapid growth and profitability.	(Quadrant 2) If particularly profitable market opportunities exist then the company may want to eliminate weaknesses in this area to take advantage of these opportunities.
Threats (External)	(Quadrant 3) When a company’s strengths align with market threats, these strengths can be use to avoid or mitigate these market threats.	(Quadrant 4) When a company’s weaknesses are in the same area as market threats, steps should be taken to eliminate these vulnerabilities immediately.

A company should usually focus their effort on quadrants 1 and 4 first. Quadrant 1 delivers the most amount of gain for the least amount of effort since it takes advantage of existing strengths of the company. Quadrant 4 will likely require a lot of effort, but if left unattended, could result in detrimental outcomes for the company.

Here is a 5 minute video on SWOT Analysis

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ADDITIONAL ANSWERS / COMMENTS

Ben posted on Friday, October 2, 2009 5:01 AM

A SWOT Analysis can easily be mistaken for a reasearch output document, if the Objective of the SWOT is not clear.

Sandra posted on Monday, June 16, 2014 12:09 PM

SWOT analysis can be used effectively to build organization or personal strategy. Steps necessary to execute strategy-oriented analysis involve: identification, selection and evaluation of the most important factors and identification of relations existing between internal and external features.

For instance: strong relations between strengths and opportunities can suggest good condition of the company and allow using aggressive strategy. On the other hand strong interaction between weaknesses and threats could be analyzed as potential warning and advise for using defensive strategy.

Read more about swot on: http://blog.cayenneapps.com

Chandan posted on Wednesday, September 17, 2014 6:31 AM

Learn more about swot analysis here: http://www.zarantech.com/course-list/ba/business-analyst/

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