Definition: SWOT refers to strengths, weaknesses, opportunities and threats. This analysis generates a list of what an organisation does best and worst. It also defines areas for improvement and potential threats in the marketplace. Given the continually evolving online environment, the process is particularly relevant to businesses engaged in ecommerce.
Performing a SWOT analysis helps one thoroughly understand his or her business by presenting a viewpoint of the company's operations from a different angle. For new businesses, this analysis is critical to the organisation's planning process. It can, however, be performed at any time. A company's unique “SWOTs,” as they are often referred to, will help get a new business on the right track.
The strengths and weaknesses component of SWOT are internal to the business. As an example, one strength may be an organisation's intellectual property while low domain authority or poor physical location may be a significant weakness. While these internal positives and negatives can be altered, doing so usually takes a considerable amount of work.
Opportunities and threats are usually external to the organisation. An example of an opportunity is the potential to establish a fresh relationship with a new supplier while a possible threat may be a new competitor.
A SWOT analysis is only effective if it takes everything into consideration. No area of the company should be left out, making it important to include representatives from every department or team. The analysis may bring issues to light that were not previously on a company's radar.