Making informed decisions for a company’s growth and survival requires evaluating its competitive position. A SWOT analysis framework is used to assess a company’s competitive situation and create a strategic plan. You will learn about the theories and applications of the SWOT analysis in this blog.
What Is A SWOT Analysis?
Using SWOT analysis, an organization can determine its strengths, weaknesses, opportunities, and threats to project planning or competitive business environments. Situational analysis or situational evaluation are other names for it.
In other words, SWOT analysis evaluates a company’s performance, rivalry, risk, and potential and specific areas inside a company, like a product line or division, an industry, or another organization.
Components of the SWOT analysis
Strengths include aspects like a strong brand, a devoted client base, a strong balance sheet, innovative technology, etc., that indicate what an organization excels at and what sets it apart from the competition. For instance, a hedge fund might have created a proprietary trading method that outperforms the market. The next step is for it to decide how to use the results to draw in more investors.
An organization’s weaknesses prevent it from operating at its highest potential. A bad brand, higher-than-average turnover, high levels of debt, an inadequate supply chain, or a lack of cash are examples of areas where the company needs to improve to stay competitive.
Opportunities are advantageous outside variables that might provide a company with a competitive edge. If a nation lowers its tariffs, a car manufacturer may export its vehicles into a new market, boosting sales and market share.
Threats are elements that could potentially hurt an organization. For instance, a corporation that produces wheat is at risk from a drought since it could ruin or diminish crop yield. Other frequent threats include growing material costs, heightened competition, a shortage of labor, etc.
What Are The Applications of SWOT Analysis?
Making Use of Advantages
You must match your strengths to the opportunities if you want to benefit from market advances. If you have high-quality items and a prospective new consumer nearby, you must allocate resources to this business to take advantage of it. Give your top salespeople, for instance, the task of signing up for this new company.
Getting Rid of Weaknesses
You must remedy the issue or stop the weak activity to address vulnerabilities found in a SWOT analysis. For instance, you can’t stop a weak sales strategy, but you can train your salespeople and offer them more resources. Salespeople will be inspired to use the available customer information for their sales calls if you invest in CRM software and make it accessible to them on mobile devices.
Lessen Threats
Threats identified by a SWOT analysis must be dealt with in one of three ways: by strengthening the business to counter the danger, by ceasing the threatened activity, or by deciding the threat is inconsequential and taking no action.
SWOT Analysis of A Company
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Strengths
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Weaknesses
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Return on Investment: Infosys executes new projects with a fair amount of success and generates solid earnings from its current operations.
Comprehensive Business Solutions: Infosys delivers end-to-end business services in IT, software, business consulting, and business process management. Strategic Alliances: To improve its services and business solutions, Infosys has teamed up with significant technological and business companies. Low Salary Expenses: The majority of Infosys’ 119 development centres are situated in India, which offers the business high-calibre technical expertise at a much-reduced price. Brand Value: Infosys has a credit grade of CRISIL AAA / Stable / CRISIL A1+ and is ranked as the 602nd largest public business in the world, as per the Forbes Global 2000 ranking (rated by CRISIL). |
Putting More of an Emphasis on Product Segments: Infosys has begun to put more emphasis on its platform and product business, but the services segment still accounts for about 94% of its revenue.
Emerging Markets: Rapid technological advancements are largely to blame for the explosive growth of emerging markets. Infosys is losing out on development opportunities as it doesn’t offer services for the majority of new economies. Restricted Market: The majority of the company’s sales are made in North America and Europe. Thus, the business is susceptible to volatility and unequal growth. Significant Attrition Rate: Many employees quit Infosys in search of higher-paying positions, more rewarding career possibilities, and study opportunities. |
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Opportunities
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Threats
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Cloud Computing: As Cloud Computing has transformed the fundamentals of how we compute, there is a growing demand for cloud-based solutions..
Acquisition: Investing in tech firms is one strategy to advance technology. Infosys recognised the potential and made significant investments in early-stage technology firms.. Emphasis on Emerging Markets: Infosys needs to concentrate on developing nations with potential for future growth in the demand for IT services and consulting services.. |
Global Market Volatility: As a result of the unstable global financial markets, Infosys is subject to unstable global macroeconomic indices..
US immigration restrictions: US laws could change, which would affect Infosys’ business and that of other nations that rely heavily on the US market.. Increasing wages: India’s rising wages are putting pressure on Infosys and other Indian IT companies, which already enjoy a significant competitive edge that lowers labour costs.. More competition: Competition is escalating exponentially; Infosys is in the same industry as major consulting and technology companies like SAP, Oracle, Salesforce, Wipro, and Capgemini. |
Final Words
A business can employ a SWOT analysis for general business strategy meetings or meetings focused on a particular department, such as marketing, production, or sales. By doing this, you may decide on a general strategy after conducting a SWOT analysis and observe how it will affect the segments below.
SWOT is a great planning technique, but with a few drawbacks. Not all of the points within the categories are given the same priority. Also, SWOT does not take into consideration the variations in weight. Thus, it should not be used in isolation.
FAQs
Is SWOT analysis internal or external?
A SWOT analysis is both internal and external. Internal factors mean strengths and weaknesses, whereas external factors are threats and opportunities.
Does SWOT analysis have limitations?
Yes, a SWOT analysis has a few limitations. Namely, it neither prioritizes issues nor provides solutions or alternative decisions. Moreover, it can generate many ideas but not help you select the best.
What are the benefits of SWOT analysis?
By addressing weaknesses, thwarting threats, seizing opportunities, leveraging strengths, and developing corporate goals and methods for accomplishing them, a SWOT analysis can help you better understand your company.
Is SWOT analysis qualitative or quantitative?
The traditional SWOT analysis is based on qualitative analysis and does not have a way to quantitatively assess the weight or intensity of the SWOT components.
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