What is the purpose of SWOT Analysis ? Why is it necessary to do a SWOT analysis before selecting a particular strategy for a business organization ?

SWOT stands for strengths, weaknesses, opportunities, and threats, is a tool for strategic analysis of any organization, which takes into account examination of the company's internal as well as its external environment. It consists in recognition of key assets and weaknesses of the company and marching them to exploit future opportunities and combating threats. SWOT is quite helpful in formulating a company's strategy. Strength: Strength is an inherent capability of the organisation which it can use to gain strategic advantage over its competitors. Weakness: A weakness is an inherent limitation or constraint of the organisation which creates strategic disadvantage to it. Opportunity: An opportunity is a favourable condition in the organisation's environment which enables it to strengthen its position. Threat: A threat is an unfavourable condition in the organisation's environment which causes a risk for, or damage to, the organisation's position. SWOT analysis helps managers to craft a business model (or models) that will allow a company to gain a competitive advantage in its industry (or industries). Competitive advantage leads to increased profitability, and this maximises a company's chances of surviving in the fast changing, competitive environment. Key reasons for SWOT analyses are: It provides a logical framework It presents a comparative account It guides the strategist in strategy identification.