SWOT refers to Strength, Weakness, Opportunities, and Threats.Strength and weakness are internal and opportunities and threats are external.Strategy is formulated based on SWOT analysis for corporate survival and success. For the generation of a series of strategic alternatives or choices, it is necessary to analyses the firm’s internal strengths and weaknesses and an external opportunities and threats.
Strength: Strength refers to an inherent capability of an organization which, it can use to gain strategic advantages over its competitors.
Example – Superior research and development skill which can be used for new product development so that the company gains competitive advantages.
Pay TM - Demonetisation
Weakness: Weakness is an inherent limitation or constraint of the organization, which creates strategic disadvantage to it.
Example – Overdependence on a single product line which is potentially risky for a company in times of crisis. (Amber Enterprises)
Opportunity: An opportunity is a favourable condition in the organization’s environment which enables it to strengthen its position.
Example – PAYTM, Growing demands for the product or services that company provides.
Threat: A threat is an unfavourable condition in the organization’s environment which causes a risk for, or damage to the organization’s position.
Strategy provides an integrative framework for the top-management to search for, evaluate and exploit beneficial opportunities, to perceive and meet potential threats and crisis, to make full use of resources and strengths, to offset corporate weaknesses.
Example – emergence of strong new competitors, who are likely to offer stiff competition to the existing competitors in an industry. (Jio and Airtel)
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