SWOT analysis is commonly used in business for strategic planning, but can also be applied to personal and professional development, life management, and financial planning. It assesses internal and external factors to identify strengths, weaknesses, opportunities, and threats and is used by individuals and companies to make decisions and create plans for the future.
Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis is most often applied in various business contexts. It can also be used to analyze unrelated situations where strategic decision making is important. In the business context, SWOT analysis is used for strategic planning and development. Non-commercial applications include personal and professional development, life management and financial planning.
SWOT analysis is a way to assess a current position and identify internal and external factors that establish that position and can lead to changes. It is a decision-making exercise that relies on specific data to generate a strategic plan. Formal SWOT applications can be seen most often in business management, but informal applications of the analysis are performed daily by individuals. People who employ this kind of thinking in their daily lives may not be aware of its academic genesis.
Companies use SWOT analysis to plan for the future. They apply the analysis to the business as a whole, to a department or product, or to a competitor. Strategic planning, marketing, and product development are typical business areas where management teams use SWOT. The assessment of strengths and weaknesses, opportunities and threats can also be used by an audit team to design corrective actions. Large companies use SWOT in the context of research and development, patent mapping and large-scale planning projects.
In a business context, SWOT analysis is often part of creating the initial business plan. In fact, lenders and investors often require this type of assessment to prove that the prospective business owner has adequately assessed the business’s risk and likely market position. These SWOT business apps are just examples, however. There are many other types of business situations that employ SWOT, including as a theoretical exercise to solicit input from employees during retreats and workshops.
Ordinary people also use SWOT to make decisions, although they may not know the official name of the process. For example, when a person decides whether or not to make a major life decision, such as relocating or ending a relationship, he might make a list that details pros and cons, weighing these factors against future opportunities or potential pitfalls. These are just different labels applied to traditional SWOT categories. Financial analysts use SWOT to evaluate investments and career planners use it to help people decide a career direction.
Most interesting, perhaps, is the application of SWOT in the personal development arena, used by trainers and motivational speakers. It is not uncommon to find these types of professionals employing a modified SWOT approach in workshops and seminars to get people to identify their personal assets and develop a plan for the future. These types of uses only emphasize the flexibility of SWOT analysis as a decision-making paradigm.
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