Definition: SWOT is a comprehensive audit and competitive analysis that analyzes the Strengths, Weaknesses, Opportunities and Threats facing a business. An honest SWOT analysis helps a retailer identify what it's doing well, where it can improve, and where it fits in the competitive landscape.
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 organization'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 organization'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 organization. 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.