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What is a SWOT Analysis?
Definition and Importance of SWOT Analysis
- A SWOT analysis is a tool designed to understand a business's situation by creating a comprehensive list of strengths, weaknesses, opportunities, and threats. It is essential for current and future decision-making.
- The SWOT matrix provides insights into what the business is doing well and identifies current or potential challenges. It offers a broader view of the company, from competitive advantages to difficulties that may impact it.
Internal vs. External Analysis
Internal Diagnosis
- The internal diagnosis focuses on analyzing strengths and weaknesses based on factors like organizational structure, operations, management, and financial aspects influencing performance.
- Strengths are positive characteristics that inspire or serve as models for the company; they differentiate the business from competitors. Conversely, weaknesses are negative elements that hinder achieving objectives and expected results.
External Diagnosis
- The external diagnosis examines conditions beyond the company's control that can present either threats or opportunities depending on their impact on operations.