ANALYZE YOUR BUSINESS
To achieve success in the competitive business world, all business management students are taught about the SWOT analysis and how it can help a business. The SWOT analysis looks at both external and internal factors that can influence any business. The analysis has proved so successful that many organizations outside the traditional business environment have adopted its guidelines. The main aim of the analysis is to identify both positive and negative factors that could have either a long-term or short-term effect on the strategic planning of the organization.
To be able to interpret the results delivered by the SWOT analysis correctly, the input data must be current and accurate. This includes data on profitability as well a competitive analysis to isolate the key points. The SWOT analysis looks at the strengths and weaknesses to help the business owner identify opportunities to ensure that the business strategy remains valid. The negative side or weaknesses identified by the analysis should be addressed to ensure that this does not hamper the growth or profitability of the business.
When a SWOT analysis is prepared for strategic planning purposes, it must have a specific goal which the business wants to reach. The reason for this is to keep the process focused and they can evaluate the results achieved. Importantly the analysis must be manageable in size and only contain relevant key points that are focused on the final aim. This is normally revolving around three key points.
The person preparing the SWOT analysis must be brutally honest in their assessment when they identify all the factors that can influence the business performance in either a positive or negative way. The final aim of the analysis is to arrive at an informed decision taken into account all the negative and positive elements in the market place. When using a SWOT analysis the readers must be aware that certain limitation exist that could influence the true value of the report. In many cases the analysis may lack some deeper understanding of competitors and this lack of depth or detail could play a role later on.
The SWOT analysis consists of four parts.
The section dealing with strengths look at what features the business can offer their clients and how they can outperform their competitors. To ensure a reliable and honest view, the person creating the analysis must look at this from both a company view and from a competitor’s viewpoint. For example if your company’s strength is in its variety of offerings at an unbeatable price, that should be objectively mentioned.But market research must be done to ensure that this is a fact and not just merely coverups to fulfill this grid.
When listing the weaknesses one should look at all the internal factors preventing the business from offering a better service than other competitors in the same line of business. This could be any or all of the following:
- Service levels
- Warranties offered
Once the weaknesses are identified, they are one of the easiest elements to rectify or improve. Once identified and corrected, it can greatly influence the final outcome of the business model.
Opportunities are all those internal and external elements which the business has not yet explored. They are mostly elements that are reachable but still somewhere in the future of the organization.
Here we can identify opportunities such as:
- Bulk discounts
- Being at auctions
- Education in the particular area
- New developments in the field
- New technology
- Trends that may become popular
- Buying from another supplier
Finally, threats are things that can do your business harm. It may be something that the competition does better or cheaper. Opposition may offer better discounts or a wider selection to the market. Some threats may be easy to overcome but some are permanent and those that are not identified could cause the business some harm in the future. One very obvious example recently was the rise of Android and iOS. Blackberry and Nokia did not see that coming and obviously when they did , they did not have any counter strategy to tackle the 2 giants. So if there is no counter strategy, then loss is imminent.
The aim of this SWOT matrix is to enable your business to identify and quickly weed out negatives and push forth the positives. So to ensure your business grows fast and quick ensure you do a SWOT on your business. It is not only for students who do case studies but for everyone who owns and runs a business or even an organization. At the end of the day, it does help!