Strengths and weakness are internal, whereas opportunities and threats are external.
What is a SWOT analysis?
A SWOT analysis is a procedure that a team management uses to identify strengths and weakness in the organization. SWOT stands for: strengths, weaknesses, opportunities and threats. SWOT analysis is used for the strategic planning, to that the organization is on target to meet their aims and objectives. When the organization practices SWOT analysis they have to be truthful about their bad points and good points. Strengths and weakness are internal, whereas opportunities and threats are external.
Strength is basically, that makes any specific organization different from others. Like powerful brand, unique technology, highly qualified work source, loyal consumer base and efficient production leading to low cost. For example, if I take Apple products and Lenovo products into consideration, People will tend to buy more apple products over Lenovo one’s because apple is a powerful brand and has loyal consumer base.
Weakness mainly indicates insufficiency of a source, which basically stops the business from functioning at the maximum level. There are some areas that the businesses need to develop to remain competitive. For example, inefficient production leading to high cost. Moreover, less qualified work source.
Opportunity refers to external factor. This is the factor which organization can use to practice to give competitive advantage. Competitive advantage is linked to a key source, which is the cost advantage. Where a business is able to produce its products at lower cost than the competition. Competitor can go bankrupt if bills not paid or heavy amount not given.
Threat is related to those factors, which have potential to destroy an organization. For example, there are many cheap products appearing in the world, which allows people to buy products that are cheap and look exactly like a branded product. This eventually brings down the profit of a branded company.
SWOT analysis is a valuable method for judging the organizations strengths and weaknesses while recognizing the opportunities and problems that an organization has.