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Business Analysis Through SWOT: Strengths, Weaknesses, Opportunities, Threats

by sawpan

The SWOT analysis is a methodology for strategic planning, which can apply to a variety of business types and vocational fields. The theory and structure itself is not terribly complex, but application and interpretation can be difficult for particular organizations in certain situations. Self-analysis can sometimes be problematic from an objectively standpoint, which is why some organizations will bring in an outside consultant. The idea of the SWOT analysis is to evaluate the business and prepare it for future opportunities. Therefore, here are a few thoughts on the specifics of the SWOT analysis, which includes strengths, weaknesses, opportunities, and threats.

Strengths

The first part of the SWOT analysis has to do with the strengths of the organization. This is an internal analysis, and it has to do with what the organization does well. It might include particular products, staff, innovations, culture, or history. When people evaluate strengths they have to be careful to stick with internal factors, rather than roaming outside the company. It can be tempting to start talking about opportunities, but this comes later.

Weaknesses

As one might imagine, weaknesses have to do with the shortcomings of the organization. This includes lack of innovation, limited products or services, personnel problems, internal distractions, and breakdown in communication. Evaluating weaknesses may be one of the most difficult parts of the process because people may be tempted to point fingers, which can cause awkward relational problems. Of course, if people are not honest with their analysis, the organization risks the possibility that certain problems will be ignored and company will not learn from it’s mistakes.

Opportunities

The analysis of opportunities has to do with external factors, such as the marketplace or new opportunities for company growth. This can be a highly theoretical part of the process. In addition, it can be a little difficult because people may be doing some guessing. Logically, if they were aware of particular opportunities, they may have already capitalized on them. Instead, certain situations remain a possible opportunity rather than a defined mastery. Opportunities may be in the form of new markets, breakthroughs in technology and trends in society that are advantageous to the organization.

Threats

Finally, there are threats to the organization, which are also external factors. These include things like economic downturns, change in laws and regulations, and shifts in consumer attitudes and behavior. In many ways, external threats cannot be controlled, but the savvy business will maintain some level of awareness so that they can adjust to these sorts of changes. The organization that struggles is often the place that does not read the signs and pay attention to how the world is changing.

As mentioned, one of the largest obstacles to an effective SWOT analysis is objectivity. Sometimes people romanticize their strengths and minimize their weaknesses, because admitting organizational shortcomings may reflect badly on their performance. In addition, evaluating the external world can be complex because some people do not often venture outside the walls of their own organization. Still, a SWOT analysis can be a very valuable exercise if people use it as an opportunity to evaluate, plan, and execute new plans for the future.

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