Strengths
Weaknesses
Opportunities
Threats

The SWOT analysis is often used in a sales/marketing department in an organization. This 4 magic words are also use to support any points proposed in a report to senior management and is deemed to be part of managerial skills. It provides a thorough understanding of a business to help eliminate poor managerial decisions in order to bring the business to be more competitive in the market. Let me elaborate more with some examples:

Strengths
Everyone seems to be more interested in taking corrective actions when a problem arises rather than learning from previous successful achievements of an organization. It is important to know our strengths and using it effectively can bring a business to another level, ie. to secure a large market share compare to other competitors. Branding, product quality, customer oriented, packaging etc are some examples especially in today's globalization era which places more attention to customer service and product's image.

Weaknesses
One of the principles of Total Quality Management(TQM) highlights that the price of preventing is often lesser than the price of correcting. If we know our weaknesses, we should pay more attention in correcting it or invest in technology/training to improve our weaknesses, ie. setting our weaknesses level to the minimum if problems still arise. For example, if there are about 5% of defects in the manufacturing process, we spend some money on training and development of the workers or employ more skilled workers to reduce the defects to say, 2%? Practising specialisation could be a cheaper solution to improve efficiency, assuming if we were to do the same thing everyday...the chances of us making a mistake is minimal.

Opportunity
A business should seek opportunity at all times for expansion to consistently increase revenue and profits to cope with inflation as well as to attract investors. A business is often at stake if it relies solely on one industry(not all). This is because government policies, environmental issues, etc. might just change the regulation of an industry and result the business to go bust(worst scenario) or it might just cause revenue to decrease for example a windfall tax on profits above $10 million. It is often said that "you should not put all your eggs into one basket". In other words, diversify your risk.

Threats
You need to understand your competitors to plan for fourthcoming periods to cope with competitors campaign. Sometimes, you need to compromise in order to stay competitive like reducing profit margin when pricing goods/services to secure your market share. The most common strategy used widely in the market today is the "loss leader". "Loss leader" means setting a price of a product below cost to attract customers to your organization and make other goods/services compensate for the loss.

This SWOT analysis is also used in team-building and is proven effective.