Sources of Planning Ideas - SWOT

Situational Analysis

A Situational Analysis is an ongoing activity by managers and SME owners to assess both internal and external business environments. 

All businesses must predict and respond to continual change; internally and externally. 

SWOT stands for Strengths, Weaknesses, Opportunities and Threats.

Internal: Strengths and weaknesses (some degree of control)

• Staff, equipment, experience, processes, products, customer service

External: Opportunities and threats (no real control)

• Competitors, economy, interest rates, laws, customer preferences

A SWOT analysis allows a business to identify its strengths and advantages against rival firms and target its shortcomings (limitations) to make improvements. 

A SWOT analysis forces business owners to question the business’ position relative to external business conditions.

This enables SME owners to improve business decisions to improve business performance (revenue and profitability).