SWOT analysis for day-to-day activities

Introduction

Today most business firms are keen to expand their businesses around the country and some of them are keen even to expand their wings overseas as well. However, when you are in the planning stage (strategic), there is a vital tool that will certainly help you to analyse things in a much better manner.

That tool is popularly known as ‘SWOT Analysis’. Albert Humphrey (2 June 1926 – 31 October 2005) from Stanford University is credited as the developer of this vital tool SWOT Analysis. Hence, this brief article has been written with a view to discuss the importance and the usefulness of the SWOT Analysis in brief.

Meaning of SWOT

Before moving forward, let’s try to define the meaning of SWOT. According to the Wikipedia, the extended meaning of SWOT is as follows:

Strengths: Strengths mean that the characteristics of the business or team that give it an advantage over others in the industry.

Weaknesses: Weaknesses are the characteristics that place the firm at a disadvantage relative to others.

Opportunities: Opportunities are the chances to make greater sales or profits in the environment (external).

Threats: Threats are the elements in the environment that could cause trouble for the business (external).

Usefulness of SWOT Analysis

Nevertheless, the SWOT Analysis cannot be limited to profit making institutions alone. It can be used for other organisations such as governmental firms, other private organisations and also for individuals as well. SWOT Analysis certainly helps everyone to analyses their Strengths, Weaknesses, Opportunities and Threats.

Therefore, SWOT Analysis can be considered as an important analysis method that can be applied to organisations as well as for the individuals. However, generally the SWOT Analysis is carried out by the marketing managers rather than the other managers in other organisations.

SWOT Analysis for decision makers

SWOT Analysis facilitates managers to assess the firm’s resources and to link them with the firm’s business strategy. It also involves specifying the objective of the business venture and helps to identify the internal and external factors that are favorable and unfavorable to achieve decided objectives.

Analysing the SWOT correctly and accurately is crucial, because subsequent steps in the process of planning for achievement of the decided objective may be derived from the SWOT Analysis. Thus, with the aid of SWOT Analysis, the decision makers can make vital decisions with regard to their future cause of actions correctly. If not they can look for an alternative method.

Why do we need SWOT Analysis?

The prime objective of the SWOT Analysis is to identify the key internal and external factors which are crucial to achieve the desired objectives. Hence, SWOT analysis can be carried out under two main categories: internal factors and external factors.

Internal factors

The Strengths and Weaknesses have been identified as internal factors to the organisation. Hence, this may include human resources (personnel), financial position, manufacturing capabilities, etc.

External factors

The Opportunities and Threats have been identified as external factors to the organisation. However, you may find some opportunities lying within the organisation or in an individual which are not yet exploited or not yet revealed as well.

In addition to those external factors it may include technological changes, socio-cultural changes, etc. However, due to above two key factors, SWOT Analysis is sometimes called ‘Internal-External Analysis’ as well.

Who can use SWOT Analysis?

Many believe that the SWOT Analysis can be only used or practiced in an organisation and only by marketing managers. Nevertheless, SWOT Analysis can be carried out by any organisation as well as any individual or a person who wish to analyses his or her own Strengths, Weaknesses, Opportunities and Threats.

As mentioned above, individuals too can use this vital tool to analyses his or her strengths and weaknesses as well as the opportunities and threats that he or she has to face. So, this will enable the person to focus on his or her strengths, to minimise his/her weaknesses, and take the maximum possible advantage of opportunities.

Therefore, I believe that the HR managers too can use this useful tool to assess their employees periodically and before making decisions with regard to the promotion, transfers, etc. However, HR managers should be fully aware of their employees’ Strengths, Weaknesses, Opportunities, and Threats before making any key decisions.

For an instance, if you recruit, promote or transfer an employee who is qualified in finance to the HR division or vice versa where the above employee could not function to his or her full abilities or skills, the relevant manager harms not only to the organisation but the employee as well. Thus, you cannot expect utmost efficiency and effectiveness from the relevant employee with regard to his or her work due to his or her de-motivated or discouraged status.

If the managers or the administrators take decisions based on any bias towards analysing employees’ skills and potentials then the usefulness of the SWOT Analysis will certainly be in vain.

Conclusion

Most decision makers or managers both in the government sector and private sector do not use or practice this simple yet useful management tool when it comes to planning and decision making.

Hence, such decision makers in both sectors should be willing to practice these kinds of methods in order to make correct and accurate decisions for the ultimate benefit of their respective organisations.

(The writer can be reached via [email protected].)