SWOT Analysis

SWOT Analysis is one of the most common and the most used techniques in business, and is what you'll most likely be taught in your very first week in business school - that's how important it is. So what is SWOT Analysis? First of all, the word 'SWOT' is the shortened version of the four principles that make up SWOT Analysis. These are 'Strengths', 'Weaknesses', 'Opportunities' and 'Threats'.

You would usually be said to 'do a SWOT Analysis' of your own business to find out each of these four things, as once you know exactly where you stand in the marketplace and as a company you can make better decisions for the future and for the good of the business.

While this model is extremely basic and is probably a tad too simple for most companies, it can be extended so that it fulfils the needs of bigger businesses. In addition to this, it's a great way for those that are new to business to start looking at things from a different angle and with a new mindset (hence why it is taught so early on in business school). Often students will be asked to pick a business or company of their choice and to do a SWOT Analysis on them.

The main reason that a company would do one of these is if something is going drastically wrong. For example, their profits may have suddenly dropped, or they may be steadily losing their share of the market. These problems, if not dealt with properly can lead a company to bankruptcy, so it is important to identify what is wrong early on so that you can change your strategy to deal with it quickly and effectively.