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Organizational strategies are the means through which companies accomplish their missions and goals.

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Successful strategies address four elements of the setting within which the company operates: (1) the company's strengths, (2) its weaknesses, (3) the opportunities in its competitive environment, and (4) the threats in its competitive environment.
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This set of four elements

STRENGTHS, WEAKNESSES, OPPORTUNITIES, and THREATS

when used by a firm to gain competitive advantage, is often referred to as a

SWOT ANALYSIS.
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SWOT was developed by Kenneth Andrews in the early 1970s, and it continues to be used with only minor modification and development into the twenty-first century.

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An assessment of strengths and weaknesses occurs as a part of organizational analysis. It is an audit of the company's internal workings, which are relatively easier to control than outside factors.

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Conversely, examining opportunities and threats is a part of environmental analysisthe company must look outside of the organization to determine opportunities and threats, over which it has lesser control.

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As earlier stated, strengths and weaknesses are often internal to an organization, while opportunities and threats generally relate to external factors.

For this reason the SWOT Analysis is sometimes called Internal-External Analysis and the SWOT Matrix is sometimes called an IE Matrix.

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STRENGTHS

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By strengths we mean the resources, products, and capabilities available which enable you to achieve a competitive advantage.

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Here are some questions you can use to determine your weaknesses: Do you have patents in place? Do you have any cost advantages (access to cheaper resources)? Do you have special know-how among your staff?

Do you make use of exclusive distribution rights?

Do you have any logistical advantages?
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 Do you have any logistical advantages? What do you do better than anyone else? What do your customers see as your strengths? What might your competitors say are your strengths?

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Strengths capture the positive aspects internal to your business that add value or offer you a competitive advantage. This is your opportunity to remind yourself of the value existing within your business.

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 positive attributes of the people involved in the business, including their knowledge, backgrounds, education, credentials, contacts, reputations, or the skills they bring.
available capital,

equipment,
credit,
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 established customers,

existing channels of distribution,

copyrighted materials, patents, Information and processing systems, and other valuable resources within the business.
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WEAKNESSES

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Weaknesses are obviously the opposite of strengths, or even just the absence of strengths in particular areas. These are factors that are within your control that detract from your ability to obtain or maintain a competitive edge. Which areas might you improve?

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Here are some questions you can use to determine your weaknesses: Are you missing patent protection in certain areas? Are your resources too expensive, or your cost structure too expensive?

Are you lacking know-how?

Are your distribution channels weak?
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 Are your distribution rights non-exclusive or shared? What do your competitors do better than you? If customers have left you, why was this? If you are consistently failing to make sales, why is this?

What might your competitors see as your weakness?

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Weaknesses capture the negative aspects internal to your business that detract from the value you offer, or place you at a competitive disadvantage. These are areas you need to enhance in order to compete with your best competitor.

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 lack of expertise, limited resources, lack of access to skills or technology, inferior service offerings, or poor location of your business. These are factors that are under your control, but for a variety of reasons, are in need of improvement to effectively accomplish your marketing objectives.
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OPPORTUNITIES

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Opportunities assess the external attractive factors that represent the reason for your business to exist and prosper. These are external to your business. What opportunities exist in your market, or in the environment, from which you hope to benefit? These opportunities reflect the potential you can realize through implementing your marketing strategies.
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Useful opportunities can come from such things as:

Changes in technology and markets on both a broad and narrow scale. Changes in government policy related to your field. Changes in social patterns, population profiles, lifestyle changes, and so on.

Local events.
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Here are some questions you can ask to help identify opportunities:

What are the major trends in the marketplace?

What are the trends in government policy/law? How are peoples social behaviors changing? How are populations changing?

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 How are environments changing?

What is likely to be your competitors focus in the coming years?

What are customers asking for? Have you noticed changes in what your customers are buying? How are peoples lifestyles, working environments changing?
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 Opportunities may be the result of market growth, lifestyle changes, resolution of problems associated with current situations,

positive market perceptions about your business, or

ability to offer greater value that will create a demand for your services.
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THREATS

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Include factors beyond your control that could place your marketing strategy, or the business itself, at risk. These are also external you have no control over them, but you may benefit by having contingency plans to address them if they should occur. It is a challenge created by an unfavorable trend or development that may lead to deteriorating revenues or profits.
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Here we examine what changes in the external environment could pose a threat. Questions to ask here include: Could customer needs or trends shift your customers away from you or your product? Are there potentially new laws or regulations which could impact you? Is the industry or your consumer moving the same direction?
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 Could new technology render your business/project/skills/product obsolete?

Can you determine your competitors strategy and how much should you be worried about this?

What barriers are in your way preventing you from getting to where you want to be, and can these be overcome?
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It may be valuable to classify your threats according to their seriousness and probability of occurrence.
The better you are at identifying potential threats, the more likely you can position yourself to proactively plan for and respond to them. You will be looking back at these threats when you consider your contingency plans.
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 Competition existing or potential is always a threat. Other threats may include intolerable price increases by suppliers,

governmental regulation,
economic downturns,

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 devastating media or press coverage,

shift in consumer behavior that reduces your sales, introduction of a leap-frog technology that may make your products, equipment, or services obsolete.

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IMPORTANCE

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It is a simple but useful framework for analyzing your organization's strengths and weaknesses, and the opportunities and threats that you face. It helps you focus on your strengths, minimize threats, and take the greatest possible advantage of opportunities available to you.

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It can be used to "kick off" strategy formulation, or in a more sophisticated way as a serious strategy tool. It can also be used to get an understanding of your competitors, which can give you the insights you need to craft a coherent and successful competitive position.

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