July 28, 2012
Dr. Phyllis Parise
Appraising a company’s resource strengths and weaknesses and its external opportunities and threats, commonly known as SWOT analysis, provides a good overview of whether the company’s overall situation is fundamentally healthy or unhealthy. Just as important, a first-rate SWOT analysis provides the basis for crafting a strategy that capitalizes on the company’s resources, aims squarely at capturing the company’s best opportunities, and defends against the threats to its well-being (Thompson, Strickland & Gamble, 2010). The purpose of the situation analysis of the external environment is to find what is happening in the company environment now and in the future and how these factors will influence the activities and existence of the company. Environmental Threats
Often, certain factors in a company’s external environment pose threats to its profitability, competitive well-being, and growth prospects. Threats can stem from the emergence of cheaper or better technologies, rivals’ introduction of new or improved products, the entry of lower-cost foreign competitors into a company’s market stronghold, new regulations that are more burdensome to a company than to its competitors, vulnerability to a rise in interest rates, the potential of a hostile takeover, unfavorable demographic shifts, adverse changes in foreign exchange rates, political upheaval in a foreign country where the country has facilities, and the like (Thompson, Strickland & Gamble, 2010). An environmental threat is an external element that can develop into anon crisis or crisis problem and potentially prevent the organization from achieving its goals. It is management’s job to identify the threats to the company’s prospects and to evaluate what strategic actions can be taken to neutralize or lessen their impact (Thompson, Strickland & Gamble, 2010). The threat faced by Sweet C’s Cupcakery that can hinder its profitability is the existence of competitors. The threats coming from these competitors should not be taken lightly. In tough economic times all businesses are trying to attract customers. Firstly, Sweet C’s has to find out what our competitors are doing. Even if our competitors are not doing anything different, we have to consider the types of threats they can pose. You then need to create a plan as to how you are going to deal with this threat upon your business circumstances. As a new business, it is important that Sweet C’s Cupcakery has a competitive advantage over the competition. In order to respond to this threat, we will lower their prices and offer discounts.
In addition to our store, Sweet C’s Cupcakery serves customers via online orders. More and more small businesses are using the Internet to conduct business. There are many online threats that small businesses can face and so should be prepared for. Viruses, malicious codes or hacking are all threats that some small businesses have already faced (Bi, 2011). To respond to online threats, we will always keep back-up of important files and have regular computer maintenance. Anti-spy-ware and anti-phishing software can act as preventative measures to combat such threats (Bi, 2011).
There are many threats that small businesses face that are beyond their control. Natural disasters, accidents or terrorist attacks are very real threats that some small businesses can face. While you are not able to control these threats there are preventative measures that you can take. Insurance to cover damage caused to business premises is something that small business owners need to think about. Being prepared for all types of threats that your small business could potentially face will help you to cope and recover better. An honest assessment of threats to your business will help to highlight areas that could cause damaging effects to your business (Bi,...