A SWOT analysis (Strengths Weaknesses Opportunities Threats) is a useful tool to analyse the strategic environment of a company from both an internal and external viewpoint.
Internal analysis
StrengthsThe strengths of a business relate to the internal environment, that is strengths specific to the company.
Example: A strength of our company is that, due to its small size, the time taken to implement an idea is quick with no need to obtain approval and authorisation for a project idea and no need to deliberate about project timescales and cost.
WeaknessesThe weaknesses of a business relate to the internal environment, that is the weaknesses specific to the company.
Example: A weakness of our company is that, due to its small size and lack of critical mass, it does not have the manpower to expand the business and develop numerous websites in parallel.
External analysis
Opportunities
The opportunities for a business relate to external conditions out of the company's control.
Example: An opportunity for our company is the continuing trend to increase online Internet advertising spend at the expense of more traditional newspaper and television mediums. This is out of our control and therefore an external factor, however, as our business is driven by online advertising, growth in spend is an opportunity for us to grow.
ThreatsThe threats to a business relate to external conditions out of the company's control.
Example: A threat to our company is the possibility of a recession and uncertain times. This is an external factor as it out of our control, however, should the economy experience two consecutive quarters of decline (the definition of a recession) then it is likely that companies would be less willing to advertise which would impact our advertising revenues.
Labels: finance, investors
