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Glossary – SWOT analysis

SWOT analysis

Nikiforov Alexander
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Contents

Introduction to SWOT Analysis

SWOT analysis is a methodology that allows assessing the development prospects of a company based on its strengths and weaknesses, as well as the opportunities and threats it faces in the market. This methodology is actively used in the strategic planning process, helping organizations identify both internal and external factors that influence their success.

The main components of SWOT analysis include:

  • S (Strengths) — strengths that stand out among competitors;
  • W (Weaknesses) — weaknesses that need to be overcome;
  • O (Opportunities) — external opportunities for growth;
  • T (Threats) — external threats that may affect the business.

The method was developed by Albert Humphrey in the 1960s and has been further developed through publications, such as Jesse Russell's book "SWOT Analysis."

Why SWOT Analysis is Needed

SWOT analysis provides the company with valuable information about its current state and the opportunities it faces. It allows:

  • To adapt to changes in the market environment;
  • To summarize and analyze growth over a certain period;
  • To identify new challenges and points of growth;
  • To assess risks associated with new products or services.

Thus, SWOT analysis helps organizations not only understand their strengths and weaknesses but also identify opportunities for improvement and risk reduction.

How to Perform SWOT Analysis

To conduct a SWOT analysis, it is necessary to prepare a 2x2 table that will contain four key elements: strengths, weaknesses, opportunities, and threats. Ideally, different departments of the company — such as production, marketing, and sales — will create their own lists, which will then be discussed in a strategic session.

The process of performing a SWOT analysis includes the following steps:

Strengths

To formulate the strengths of the company, the following questions can be asked:

  • What are the main competitive advantages?
  • What unique technologies or methodologies are used?
  • How does the company attract and retain customers?

Weaknesses

To identify weaknesses, one should answer the questions:

  • In what ways do competitors outperform the company?
  • What do customers dislike about the products or services?
  • Where is there a need for process improvement?

Opportunities

When analyzing opportunities, one should consider:

  • What industry events could impact business development?
  • Are there new technologies or trends that open up new horizons?

Threats

To assess threats, it is necessary to examine:

  • Are there changes in legislation that could affect the business?
  • Are new competitors emerging in the market?

How to Use the Results of the Analysis

After completing the SWOT analysis, the company should analyze the data obtained and formulate an action plan. It is important to ask the following questions:

  • Which strengths should be highlighted more to customers?
  • How can the company use opportunities to eliminate weaknesses?
  • Which threats require immediate attention?

Matching the data from the SWOT analysis allows for the development of a strategy that helps the company leverage its strengths to overcome threats and improve weaknesses to maximize opportunities.

Example of SWOT Analysis

Let's consider an example of SWOT analysis for a dance studio that wants to open a new branch in Moscow. Initial data:

  • The studio conducts classes for all ages and skill levels.
  • The instructors have a high professional status.

Strengths: respect for instructors, unique courses, good transport accessibility. Weaknesses: need to form a new team, lack of funds for advertising.

Opportunities: hosting major events in Moscow, lack of strong competitors. Threats: new competitors, difficulty in finding instructors.

Conclusion

SWOT analysis is an important tool for strategic planning that allows companies to structure information about internal and external factors affecting their operations. Regularly conducting SWOT analysis helps adapt to changes in the market environment and remain competitive.

Disadvantages of SWOT Analysis

Despite its advantages, SWOT analysis has some disadvantages:

  • Subjectivity: results may depend on the opinions of the participants.
  • Lack of quantitative data: SWOT analysis is based on qualitative descriptions.
  • Time-bound: results require periodic updating.

Thus, SWOT analysis serves as a foundation for making more informed business decisions; however, its results should be supplemented with quantitative data and objective assessments.