Competitive Intelligence Portal - SWOT Analysis

Internal and External Factors

The intention of any SWOT analysis is to separate the key environmental factors that are significant to the marketing plans of the business. SWOT clusters key portions of information into two main categories:

• Internal aspects - The 'strengths' and 'weaknesses' internal to the business, i.e., its strategies and its position in relation to its competitors.

• External factors - The 'opportunities' and 'threats' caused by the external environment and the competition.

The internal aspects may be considered as strengths or weaknesses depending upon their effect on the company's positions. This means, they may symbolize a strength for one organization but a weakness, in relative terms, for a different. The external factors may comprise macroeconomic issues such as technological change, legislation, and socio-cultural changes, in addition to changes in the marketplace or competitive position. The results are often presented in the form of a matrix.

It should be kept in mind that a SWOT analysis is just one technique of categorization and has its own weaknesses. It is worth pointing out that SWOT analysis can be very subjective: Two people rarely come-up with the same version of a SWOT analysis even when given the same information about the same business and its environment. Accordingly, SWOT analysis is best used as a guide and not a prescription. Adding and weighting criteria to each factor increases the validity of the analysis.

The importance of individual SWOTs will be exposed by the value of the strategies it creates. A SWOT point that generates valuable strategies is central. A SWOT item that leads to no strategy is not relevant.