A SWOT analysis is a strategic planning technique that involves scanning the internal and external business environment to determine whether a specific goal is attainable and what needs to be involved in achieving that goal.
The "S" in SWOT stands for strengths, internal factors that are favorable to achieving the desired outcome. Strengths may include product patents, trade secrets, exclusive access to resources and company reputation.
The "W" in SWOT stands for weaknesses, internal factors that may interfere with achieving the desired result, including high overhead, lack of supplier relationships and poor reputation.
The "O" in SWOT stands for Opportunities; these are external factors that may help in reaching the desired outcome, including new technologies, increased customer demand and loosened regulations.
The "T" in SWOT stands for threats, external factors that may hinder the achievement of the desired goal; these include changes in customer preferences, intense competition in a particular market and governmental regulations.
Using the SWOT Analysis
Once a SWOT analysis has been completed, it should be reviewed to determine whether the desired outcome is feasible. Management should focus on how to capitalize on each strength and opportunity, and how to mitigate each weakness and threat.