SWOT analysis definition can be elaborated as a system for distinguishing and breaking down the inward and outer elements that can affect the reasonability of a task, item, place or individual. Both business entities and nonprofit organizations use SWOT analysis. Even individuals can assess products, projects and initiatives using this type of analysis. The inception of this type of analysis can be attributed to Albert Humphrey, who first brought it out in the 1960s and again in the 1970s. According to Fortune 500, many different types of organizations have employed the use of SWOT analysis to help them make educated business decisions.
The reason and place where SWOT analysis is used
As has been explained in the SWOT analysis definition, it helps business organizations make educated business decisions. It is usually used at the beginning or as a part of building a viable strategy for businesses. It is regarded as such a vital tool in business decision making owing to the capability of this analysis to reveal to you success opportunities that were previously unrecognized and of also being able to reveal potential threats before they become too much of a burden for the company. It can help companies identify particular sectors of the market where they enjoy a competitive edge or to help individuals weave a suitable career path by highlighting the course of actions or jobs that would enhance and take advantage of their strengths and talents, while also making them cautious of activities which might hinder progress.
The different components of a SWOT analysis
The name SWOT stands for four individual segments that are intrinsic part of this analysis. These four elements that are part of the SWOT analysis include:
- Strengths- Resources or attributes that are available to an organization or individual, which would aid in their success.
- Weaknesses- Resources or attributes that are available to an organization or individual, which might work against their success.
- Opportunities- Factors that are available externally, but can be capitalized by the organization or individual in order to aid in their success and growth.
- Threats- Factors that are available externally, but should be remedied by the organization or individual, since they have a huge potential of jeopardizing their success and growth.
Each of these elements is represented in the form of a quadrant, within something known as the SWOT matrix. The SWOT matrix allows companies and individuals to identify and organize each of the resources and attributes that fall under any of the concerned elements. The first quadrant represents threats, the second weaknesses, the third opportunities and threats are written down on the last one.