Meaning:

The abbreviation SWOT stands for strengths, weaknesses, opportunities and threats.
SWOT analysis is a tool used widely by business organizations to forecast or estimate their strengths, weaknesses, opportunities and threats.
This analysis helps businesses to gain greater clarity of the prevailing business environment.
SWOT analysis provides a framework for the organisations to take and execute necessary steps. It provides guidelines to the organisation to probe further into the affairs of the economic environment.

STRENGTHS:

Strengths are equivalent to assets of the organisation. It is an inherent capacity by which the organisation gets a competitive advantage. They represent the strongest aspects of the organisation. Strengths are the elements wherein the organisation is expert at. These are the factors responsible for the steady success of the organisation. For example: loyal customer base, high profit margin, low turnover ratio, goodwill.

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WEAKNESSES:

Weaknesses are the factors which prevent the organisation from achieving its goals. It is an inherent limitation which creates a strategic disadvantage. They form obstacles which prevent the organisation to reach its full potential. These are the areas which require improvement. For example: Huge costs, low profit margin, high employees turnover ratio, frequently changing customer base.

OPPORTUNITIES:

Opportunities refer to the external environmental factors. Opportunities represent the organisation’s vision to opt for better deals. It is a favourable condition in the organisation’s surrounding that has the potential to strengthen its position. If taken timely action, opportunities may result in the advancement of the organisation.For example: Growth in demand for a particular product or service that a company provides.

THREATS:

Threats refer to the things that are threatening for the survival and growth of the business. One cannot always predict threats.A threat is an unfavorable condition in the organisation’s surrounding which leads to a risk, or causes damage to the organisation.These are the factors present in the external environment which put at risk the profitability and certainty of the business organisation.For example: business rivals.