SWOT: Essential Tool for Strategic Planning

2.1Meaning of SWOT Analysis

S.W.O.T. is an abbreviation for Strengths, Weaknesses, Opportunities and Threats. So, what constitute these factors in our real life applications?

As a general guideline, S.W.O.T. May be categorized into two factors. They are the commonly known external and internal factors.

The external factors refer to elements that are normally outside your own control and most of the time deal with external environmental factors. Example factors are: political, economic, societal and technological in short commonly known as P.E.S.T. Within the S.W.O.T., Opportunities and threats belongs to this category.

On the other hand, Internal factor refers to factors that are internal in nature and normally within your own control. Examples of factors are capabilities related factors such as production capability, market knowledge, management of distributors etc. Within the S.W.O.T., Strengths and Weaknesses are internal factors.

In real life application, how do you differential between all the four factors. To explain, it with a situation as below:

SWOT Analysis is one of the effective analytical tools to evaluate a situation. The situation may be strategic related or capabilities related. SWOT Analysis is often used along with Strategic planning and it forms one of the key critical success factors in a Strategic Planning Process.

While detail Analysis is performed, it can become a complex process because it entails several data analysis involves external factors such as Political, Economical, Societal and Technological in short called P.E.S.T. Besides, it also examines internal factors such as operational capabilities as compared to the competitors.