SWOT Analysis is a framework wherein it evaluates the internal and external factors of the business in attaining its objectives. It is very useful when generating an effective strategic plans or alternatives. SWOT is the acronym for Strengths, Weaknesses, Opportunities and Threats. It defines for different aspects of the situation within the business itself.

SWOT analysis is a tool that can be used by the managers by reviewing the organization’s strengths, weaknesses, opportunities and threats, then a helpful and concrete strategy can be formulated in order to ensure that the success of the organization will soon be realized.

SWOT analysis’ aim is to know the factors relevant to the internal and external parts of the business. There are two main categories to derive the information from. These are: Internal Factors, of which the strengths and weaknesses are taken into account within the organization; and External Factors, the opportunities and threats as represented by the external environment.

The strengths and weaknesses of the organization are considered internal factors. These internal factors usually use the 4 P’s; and other aspects such as finance, manufacturing capabilities. For the external factors it usually include: socio-cultural change, macroeconomic matters, change in technology, legislation, and changes in the market place. The information derived from the internal and external factors are placed in a matrix form. Out of the results, the process of analyzing begins. This will be helpful in critically analyzing the current situation of the business, if it is heading towards the right direction in achieving its objectives or not. In this manner, there can be a development of a strategic plan out of the SWOT.

SWOT analysis is another tool and method used in categorization. It may be a helpful tool to use but it has some disadvantages. Disadvantages such as: has the ability of persuading companies to have a long list of information than focusing on thinking the important things in achieving its goals or objectives; presentation of uncritical list of results without having a clear priority, for instance, the balance between strong threats and weak opportunities.

The real deal here is that the information that resulted from the listing in the form of matrix for the SWOT is that it will lead to a formulation of a strategic plan. It will be a source of the basic data that will be used in generating an alternative strategic plan. It has a vital role in the strategic planning process, if this tool will be used.

It should be pointed out that the information given should not be biased. It should the real facts and circumstances that are happening within the organization and outside the environment. This is an assurance that the results that will be given in relation to the formulation of a strategic plan will be accurate and geared to reach and realize the organization’s objectives.

Strengths

The first thing to do in the SWOT analysis is identifying what are the strengths of the organization. Strengths are the things that the organization has been doing well or is good at it. It might be a competitive advantage over other organization in the playing field, competence or a skill. These can be identified with based on the ability of the organization and the resources that are available. Strengths are internal factors. Therefore, you have to look deeper within your organization and focus on what is going on within the organization based on its abilities and resources that are available.

As to ability, three factors should be considered: versatility, which means the ability to adapt to a changing environment; growth, the ability of the organization in maintaining a continuing growth; markets, the ability of the organization to create or enter into new markets.

As to resources, there are three factors to be considered: availability, the ability of the organization to get the needed resources; quality, which pertains to the quality of the resources that are available; allocation, the ability of the organization to distribute resources efficiently and effectively.

Weaknesses

Another internal factor in the SWOT analysis is the Weaknesses. Weaknesses are the things that the organization does poorly compared to other organizations; these can also pertains to things that the organization lacks; or certain conditions that hinder or put the organization in a disadvantage to reach its goals and be successful. Weaknesses can be determined through analyzing what are the organization’s losses, failures, defeats and inabilities that do not match up to adapt to the rapidly changing environment. There are some root causes why such weaknesses arisen. These are might be of the following: lack of resources, slow deliveries, inadequate processes, inability to incorporate technology within the organization, insufficiency of quality, and the most common root cause is the lack of the management when it comes to managerial skills.

Through analyzing what are the weaknesses of the organization there are certain possible results that might arise these are: aggression, to change the attention from the organization’s weakness; protection, this is done by having strategies to lessen the weaknesses; correction, which means the identified defect will be corrected at the earliest time possible.