Thursday, March 12, 2009

Analyzing Your Business's Strengths, Weaknesses, Opportunities, and Threats

This article argues a SWOT analysis will provide overall guidance for proceeding, however it should not be used to make tactical or operational decisions.

A SWOT analysis aims to provide decision makers with an overview of a particular target. This particular article focused on business and competitive intelligence (BCI) SWOT analysis, although the information has generalizability.

Conducting a SWOT methodology yields a number of benefits. First, the analyst must thoroughly think through all the potential options affecting a target. This is done by evaluating both the internal and external forces influencing the target. The methodology allows for the decision maker to comprehend the inherent unique strengths against those of its rivals. A SWOT analysis potentially allow the decision maker to turn weaknesses and threats into opportunities and strengths. A SWOT analysis will allow the decision maker to prepare a range of options if the worst case scenario comes to fruition.

A SWOT analysis also has drawbacks. The first is the potential for ambiguity: a potential strength may exist simultaneously as a weakness. In BCI, cognitive bias may surface in a self-evaluative SWOT analysis. An evaluation of weaknesses can tend to highlight extraneous circumstances instead of generalized trends. Also, threats are often guesswork; many never come to fruition.

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