What Is SWOT Analysis And What Are Its Benefits?
SWOT analysis is a strategic development tool that matches the strengths of the organization and weaknesses with the external opportunities and threats. It is an acronym for strengths, Weaknesses, Opportunities, and Threats.
It is a vital part of an organization’s strategic planning process since it provides an all-rounded view of the organization’s current and forward-looking position. Each of the four components of SWOT analysis has a specific advantage to the overall planning process in the following ways:
Strengths
This section allows the organization to look into its competitive advantages within the marketplace. The competitive advantages are the focal point and give direction to all of the organization’s operation and strategic planning process. For example, a company with an efficient distribution channels and systems, and good bargaining power with its suppliers can as its strengths can leverage these strengths to offer low costs to its customers.
Weaknesses
Understanding your weaknesses as an organization gives you the ability to deal with them whenever they happen. Normally, organizations have two specific approaches to handling their weaknesses. A company may choose to improve on its weaknesses especially if the weaknesses hamper the operations of the organization, or it downplay and ignore the weaknesses if they are part of the overall business approach in marketing its brand and products.
Opportunities
Opportunities are pivotal to the development of the company’s strategies and planning. This is because they play a key role in helping the organization identify areas of growth and how to improve their operations. This calls for a constant review of the existing and emerging opportunities in the market. This element of SWOT analysis enables the organization to take advantage of the new markets, changes in the market and to match them with the organization’s strengths. It enables the organization to gain new markets, get access to capital, and enjoy the market share.
Threats
Analyzing the threats to your organization is never an easy part of the SWOT analysis but it is important to the overall performance of the company. This is because it gives the organization a better understanding of the business environment, existing regulations, consumer buying trends, technology and other factors that may pose a threat to the operations of the organization and prevent it from achieving its objectives. By effectively assessing the risks and challenges, the management can adequately prepare and decide on how to respond strategically.
A company or organization that carries out SWOT analysis regularly stands to benefit immensely and it is on the right track of meeting its objectives.
