10 Reasons to Use SWOT Analysis for Your Company
What is the secret of entrepreneurial success? Why do the destinies of enterprises operating in the same conditions evolve differently: some are growing rapidly and are receiving super profits, others lose their positions and become unprofitable? Every year, the research in the field of business confirms that the success of an enterprise depends mainly on the quality of management. The key to effective management is the competent implementation of its four main functions: planning, organization, motivation, and control. SWOT analysis is one of the most effective methods of strategic planning. Here are the top 10 of its positive features to benefit your company.
Any Areas
Basic SWOT analysis is beneficial since the scope of its use is practically unlimited. This makes it possible to appreciate the state of any business entity, whether it is a large manufacturing enterprise or a small grocery store. In addition, whole branches of the economy and in some cases individuals can be objects of this research (in the last case, personal SWOT analysis is used).
Universal Method
This study is conducted to obtain a detailed description of the state of the business in which it is today and to determine, with the available data, the most effective direction of its development. The need to implement SWOT analysis, as a rule, arises when an enterprise needs to make certain changes, set business priorities, get recommendations for developing a strategy. With its help, it is possible to conduct both an operative assessment of the situation for making the right management decision on a specific issue and a full-scale analysis for the long-term strategic planning of the enterprise as a whole.
The Possibility of a Comprehensive Assessment
SWOT analysis template allows estimating the following factors.
- strength is the internal capabilities (skills, potential) or resource that can lead to the formation of competitive advantages;
- weaknesses are activities that an enterprise does not perform very well or resources that are used irrationally
- feasibilities are alternatives that an enterprise can use to achieve strategic goals;
- threats are any processes or phenomena that impede the movement of an enterprise towards achieving its mission and goals.
Objectivity
If you are able to move away from your subjective assessments, carefully look at the parameters of SWOT, evaluating them from outside, alternately acting as a potential or real buyer/client, competitor, or simply an outsider, then you will cope with this task. Special education is not necessary to complete your SWOT.
When analyzing, it is important to remember that an objective assessment of the company’s condition will help to extract the most useful information that will make your business more successful. The analysis should be made by a group of people who will be able to submit various ideas and look at the situation objectively.
Information Base
SWOT analysis helps to reveal an impressive information base that will allow you to analyze your past strategy, study the current situation, and develop a strategy for the future.
Identifying Factors
SWOT analysis allows you to identify all factors that affect the activity, and therefore allows you to compile and compare data of completely different types and purposes. Therefore, these matrixes of the SWOT analysis are an indispensable information base for carrying out further, deeper analysis of various factors of influence. SWOT analysis helps to develop an understanding of the circumstances. This method helps to balance its internal strengths and weaknesses with those favorable feasibilities and threats that the organization will face. It helps to determine not only the capabilities but also all the available advantages over competitors.
SWOT analysis allows examining the feasibilities available on the market and weighs its ability to pursue them. Also at the same time, threats that could undermine the firm’s position are studied. Strengths and weaknesses are considered from the perspective of buyers, which brings a real basis for decisions about the allocation of resources and helps the company to make the most of its available feasibilities.
Profitability
The methodology of SWOT-analysis is developed taking into account all identified factors that should necessarily be linked to the developed strategy. Applying the results is beneficial for the amplification of the company, successful sales, and promotion. The methodology is very relevant; today most of the executives of large firms implement similar developments to their strategic planning.
The Ability to Improve Key Success Factors
Before choosing the parameters for analysis, it is necessary to determine the “key competencies” or “key success factors” of the company in the market. These are factors related to technology, production, marketing, finance, which largely determine the success or failure of business in the selected market, the implementation of strategies and the achievement of goals.
Key competencies include the distinctive capabilities of the company, the totality of its skills, processes, and technologies that are currently most attractive to customers and which provide the greatest advantage in a competitive market. For example, for a wholesaler of goods of the lowest price category, these are competitive prices, or rather the price/quality ratio, the provision of deferred payments, the motivation and professionalism of sales personnel, etc. This study allows us to identify key aspects in a new light and improve them in conformity with changing conditions.
Analysis of the External and Internal Ambiance
The factors of the internal ambiance include strengths and weaknesses. That is, they are any characteristics of the future project, which increase the chances of success and give advantages in the market and what the project lacks, but what the competitors have. Strengths, for example, can include super-professional team members, personal connections of the founder with potential customers or the availability of a client base. Weaknesses are, for example, the inability to refine the product because of a few financial resources or the lack of a client base. The factors of the external ambiance include the categories of feasibilities and threats. This is all that affects the project from the outside, gives additional advantages to the business idea or reduces its chances. For example, the growth or decline of the market segment where it is planned to start operating, the favorable economic situation in the country, the increased interest of investors in this segment of the market or, conversely, the crisis and the extinction of attention can be included in this group.
Answers to the Main Questions
SWOT analysis should provide answers to the following questions.
- Does the company use internal strengths or distinctive advantages in its strategy?
- If your company does not have distinctive advantages, what of its potential strengths can be used in this way?
- What weaknesses require adjustment, based on strategic considerations?
- What are the feasibilities that give the company a real chance of success when using its skills and access to resources?
- What changes in the external ambiance can help/prevent your company/product from achieving its goals?
Author bio: Rosaria Elias, writer and editor Businessays.net
Graduated from the philological faculty with honors, professionally engaged in journalism, writing articles on various topics. Study business on specialized courses and successfully implement knowledge in projects.
