Importance of Swot Analysis

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Why is the process of conducting an internal and external analysis on a regular basis important for any size company? The process of an internal and external analysis on a regular basis is important for any size company because it allows the company to know where it stands at the moment and determines the development and forecasts of those factors that will influence the organizational success. This is also known as environmental scanning where the external and the internal environments are scanned for information like ongoing trends patterns, occasions and changes going around and the effect it has to both these environments. External analysis: These analyses are performed outside the firm and depend on the following factors: a, MACRO: technological, demographic/economic, political/legal and social/cultural, national and global environment b. MICRO: competitors, suppliers, customers, publics, channels etc. Internal Analysis: This analysis is performed within the firm that includes the employees, management and the shareholders, resources, organisational structure etc. SWOT Analysis

The most common way of analyzing this external and internal environment is by performing the SWOT analysis. SWOT is an acronym used that describes Strengths, Weaknesses, Opportunities, and Threats that are strategic elements for a firm. A SWOT analysis should not only result in the identification of a corporation’s core competencies, but also in the identification of opportunities that the firm is not currently able to take advantage of due to a lack of appropriate resources. (Wheelen, Hunger pg 107) The External analysis comprises of the Opportunities and Threats that the company needs to identify or focus on for its profitability and development of defensive actions. * Opportunities: This analyzes the area where the firm can identify its opportunities so as to have a competitive advantage over its competitors. Once identified, the firm has to work on them to make it one of its...
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