SWOT Analysis: Essential technique for managers | MIT School of Distance Education

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MIT School of Distance Education

• SWOT Analysis Essential technique for managers

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• The business environment is dynamic. Changes in
  the ecosystem affect the functioning as well as
  the performance of the business. Various internal
  and external factors influence the business
  environment. So, these need to be controlled. It
  is the task of managers to carry out strategic
  management so that the business can sustain
  itself amidst all the changes. For this managers
  rely on SWOT analysis. It is a widespread
  technique used by managers.

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What is a SWOT analysis?

• SWOT stands for Strengths, Weaknesses,
  Opportunities and Threats. The strengths and
  weaknesses of a business can be identified by
  analyzing its internal environment, while
  opportunities and threats can be identified from
  its external environment.

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• For a business, STRENGTH is its inherent capacity
  which enables it to gain a strategic advantage
  over its competitors. For example, Hindustan
  Unilever Limited has its circulation network
  country-wide, which acts as its strength.
• WEAKNESS is the intrinsic factors which restrict
  the business to gain an advantage over its
  competitors. For example, family feuds or fund
  shortage for a business can act as its
  disadvantage.

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• OPPORTUNITY is a lucrative condition that can be
  gained from an external environment. The
  opportunities that are seized add to the strength
  of a business and bestow a competitive advantage.
  For example, demand growth, globalization and
  liberalization act as opportunities for a company.

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• THREAT is a hostile condition in the external
  environment which may act as a danger for
  business. For example, increasing competitors in
  the market or the addition of more multinational
  companies in India can be a threat for the Indian
  firms.

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Significance of SWOT analysis

• SWOT Analysis is one of the vital tools of
  strategic management. It is needed for strategic
  formulation and selection. It helps the firm in
  knowing the difference between the things it can
  do and the things it is allowed to do. A strategy
  becomes effective when the business focuses more
  on the capitalization of the opportunities and
  counterbalances any threat which may affect it
  badly.

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• Furthermore, it allows a business to gain a
  competitive advantage of its strength and work on
  its weaknesses. Some of the examples of strength,
  weakness opportunities and threats are given
  below

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STRENGTHS

• Patents
• A strong brand portfolio
• Favourable access to the distribution network
• Goodwill in the market
• Strong brand name

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WEAKNESSES

• Weak brand name
• High cost
• Dispersed manufacturing locations
• No patent
• Lack of goodwill in the market

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OPPORTUNITIES

• Increased penetrations especially in rural areas
• Frequency of usage in all categories
• New innovations
• Brand growth by fulfilling customers needs

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THREATS

• Increased trade barriers
• Fluctuation in fiscal benefits
• Arrival of spurious products
• Low-priced competition
• Continuous change in the customers taste and
  preferences
• Regular change in the oil prices

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Closing Note

• A manager is responsible to identify the
  strengths and weaknesses of the organisation and
  work on them. He should also ensure that the
  organization can capitalize on opportunities and
  shun threats. Through SWOT analysis, the managers
  can easily create effective strategies that can
  drive a business towards success. So, the
  managers must be trained to follow effectively
  follow this technique.

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• At MIT School of Distance Education (MIT-SDE),
  we train all future managers so that they can
  create effective strategies. We offer management
  courses in different specialisations including
  IT, HR, operations, marketing, finance, and many
  more. Our courses are equivalent
  to correspondence MBA but better than it in the
  sense that our syllabus is up-to-date.

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• Our course includes a rich mix of theory and
  practical that provides industry-specific
  knowledge to the candidates. So, apply for
  our distance MBA equivalent courses and enhance
  your employability.

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