What are the differences between the internal and external factors associated with the SWOT analysis?

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reidalot eNotes educator| Certified Educator

When conducting a SWOT analysis as a tool to shape a company's business strategy, the internal factors of a business are its Strengths and Weaknesses. The external factors in the acronym are Opportunities and Threats.

Strengths and weaknesses can be controlled by the company, and it is a self-evaluation tool. Strengths include what a business does well and what gives the business the edge over competitors. Weaknesses also must be evaluated. Weaknesses could include such things as poor time management or goods that are not profitable. By assessing weaknesses, the company can improve in areas that are holding it back.

The external factors that can affect a business are a company's opportunities and threats. Opportunities consist of looking at short-term and long-term goals and assessing those goals as to where the company is at the present. It may also include how to target more customers or how to do more with current customers. Threats include evaluating the competition and noting what they may be doing better than your company. In order to stay competitive in the market, a business needs to know what companies are at the top of that market.

A SWOT analysis allows a business to combine strengths and opportunities to allow for growth while improving upon weaknesses and eliminating threats.

clamo88 eNotes educator| Certified Educator

You asked for differences between the internal and external factors associated with SWOT analysis.

Internal factors (strengths and weaknesses) are much more under the control of the organization.  The organization can move people around, provide training, change how it uses other resources, and do other things internally to strengthen its ability to achieve objectives.

External factors (opportunities and threats) are far less under the organization's control and can have an impact on the internal factors.  Keep in mind that a threat to one organization is often an opportunity for another organization.

For example, the current economy is a threat to many organizations.  How do you motivate employees when you are laying them off because consumers cannot afford to buy your products?  It is an opportunity for organizations that can position themselves to provide services for people who are laid off or can outsource services to organizations that have undergone a layoff.

krishna-agrawala | Student

the term SWOT is an acronym formed from first letters of four words - strengths, weaknesses, opportunities and threats. This term is used for an analytical technique involving identification and analysis of strengths, weaknesses opportunities and threats for a firm to help the firm formulate its strategy.

The four factors of the swot analysis consist of two factors that are internal to the firm engages in the strategic planning process. These are strengths and weaknesses of the firm. The other two factors, that is, strengths and weaknesses, are environmental factors. They represent some characteristics of the environment faced by the company rather than the characteristics of the company it self.

giorgiana1976 | Student

SWOT analysis (Strength-Weakness-Opportunity-Threat) is actually a technique that can identify strengths and weaknesses and there could be examined opportunities and threats of a project, or of an action, or of an individual.

Generally, there are two ways that SWOT analysis can be used: for business or for personal reasons. For personal reason, SWOT analysis can be used to monitor a person's career, noting the skills and the problems the person has. In the professional context, SWOT analysis can be used to measure the profitability of a business or project.

If SWOT analysis is made for a company,the first two acronyms (S.W.) concern the company and reflects it's position, and the last two (O.T.) concern  the environment and reflect it's impact on activity of the company analyzed.

Strengths of a company are characteristics or distinguishing skills that it possesses at a higher level, compared with other companies, especially competitors, which assures it a certain advantage.

The weaknesses of the company are its characteristics that determine a performance level below of those of competitors.

Opportunities are positive external environmental factors for the company, ie chances offered by environment, to the firm, to establish a new strategy or to reconsider the existing strategy, in order to exploit arising profitable opportunities.

Threats are negative external environmental factors for the firm, ie situations or events which may affect adversely, in significant measure, the firm capacity to fully achieve the set targets, the result being the drop of its financial and economical performances.