SWOT analysis: what it is – Dictionary of Economics


SWOT Analysis Concept

The SWOT analysis, also known as SWOT analysis, is a methodology for studying the situation of a company or a project, analyzing its internal characteristics (Strengths and Weaknesses) and its external situation (Opportunities and Threats). Hence, the name it acquires. It comes from the acronym in English SWOT (Strengths, Weaknesses, Opportunities and Threats).

The objective of this analysis is that the company, based on the information it obtains about its situation, can make the decisions or organizational changes that best adapt to the demands of the market and the economic environment.

How is a SWOT done?

The SWOT analysis is based on two basic pillars: internal analysis and external analysis. In the first, leadership, strategy, the people who work in the company, the resources they have and the processes must be questioned. And, in the second, the market, the sector and the competition must be studied.

Within the internal analysis, the strengths and weaknesses of the company should be analyzed. The strengths will tell us the skills that the company has that make it different from its competitors. And on the contrary, the weaknesses will show us the factors that make us remain in an unfavorable position with respect to our competitors.

Within the external analysis, we will study the opportunities and threats. Within the possibilities we must take into account the possible future, that is, the new markets in which our company has a place. And, threats can alert us to factors that may endanger the survival of our company.

Depending on the results obtained by the company after the SWOT analysis, it must apply a certain type of strategy. We can classify these strategies as offensive, defensive, for survival or for reorientation.

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