Swot Analysis Purpose

SWOT Analysis Purpose

For a business organization to successfully operate in the global arena the organization must analyze, design and develop a viable business strategy. In the analysis step of business strategy development, one of several methods is used to analyze a firm's market, resources, obstacles to success and specific advantages. A company's success is dependent on designing or redesigning and developing an effective international business strategy that fits the company needs. The design and building of the organization and business processes will enable them to achieve their strategic goals. This process enables the alignment of what an organization does while defining the value that is established maintained or improved for external clients (Pershing, J., Stolovitch, H. and Keeps, J., 2006, p. 1099). To achieve competitive alignment organizations need to analyze their business strategy processes.

The purpose of a SWOT analysis is to find a way to take advantage of internal and external opportunities, offset threats, build and protect organizational strengths, and eliminate weaknesses. The opportunities and threats are key business drivers. This type of review is one example of a business risk analysis. Strengths and weakness are often internal while on the other hand the opportunities and threats are considered in terms of external factors. The SWOT analysis is identified as an IE Matrix because it is called the internal-external analysis process. The type of analysis is an effective method for comparing organizational components of business strategy. The desired outcome of this type of analysis is to refine the organization's business model to ensure effective alignment with a company's resources and capabilities with the business operations environment (Hill, C. and Jones, G., 2013, p.19).

The SWOT framework is one of the most useful front end tools that organizations use to analyze their business to achieve an effective business strategy. An advantage to using SWOT is it easy to use and the cost is limited to the time it takes to accomplish the analysis. SWOT has limitations in that it provides a static picture in time by identifying areas for consideration, and the analysis does not demonstrate how value or competitive advantage is created. The SWOT analysis is not an advocate of a specific business strategy but can provide insight into an organization's environmental operations - internal and external (Pershing, J., Stolovitch, H. and Keeps, J., 2006, p. 1095).

The four factors of SWOT are: strengths, weakness, opportunity and threats. The strengths are identified as the internal competence of an organization, valuable resources or as attributes that an organization can use to take advantage of opportunities in the external environment. The weaknesses reflect a lack of competence, resources or attributes internally that can result in an inability to effectively operate in the external environment. Opportunities represent external possibilities that can provide a competitive advantage if exploited. Threats are external factors that can inhibit or reduce organizational capabilities. In the final analysis the SWOT review is used in answering the question: is the factor an internal or external benefit or liability in the competitive positioning of an organization? (Pershing, J., Stolovitch, H. and Keeps, J., 2006, pp. 1096-1098)

Using the SWOT analysis enables organizations to build more effective business strategy and planning. The results or findings provide valuable information and guidance on organizational business operations. The internal assessment is a key strategy that analyzes the organization's ability