SWOT analysis which is commonly called as SWOT matrix plays a crucial role in the planning phase of any business. SWOT analysis is really useful tool for the entrepreneurs that help them to identify the strengths, weaknesses, opportunities and threats that are involved in the business being undertaken by them.
SWOT analysis can be represented in the form of 2 ×2 matrix with 4 elements (strengths, weaknesses, opportunities and threats) that affect the business on which the SWOT analysis is conducted. The strengths and weaknesses are considered as the internal factors that you or your organizations possess where as the opportunities and threats are considered as the external factors from the external environment, opponents and the competitors in the business.
Before starting any business, one should know the favorable factors and unfavorable factors that affect the objective of your business. By using this SWOT matrix it becomes an easy task to know the favorable and unfavorable factors. The strengths and opportunities are the favorable factors that make you an advantage in achieving your objective. The weaknesses and threats are unfavorable factors which oppose you in achieving your objective.
Briefly the four elements can be described as follows.
Strengths – These are the positive characteristics of your own business that are helpful in attaining the objective.
Weaknesses – These are the negative characteristics that you possess and which may become an obstacle in your business.
Opportunities – These are the chances provided by external world that favor your business.
Threats – These are the elements that are liable to cause problems in your business.
By listing out all these elements, one could get clear understanding about the business and can make decisions in the business in any sort of situations. It becomes easy to convert the opportunities to strengths and one can give a try to convert threats and weaknesses to your strengths or if not to that extent, can try to minimize those threats.