PURPOSE OF A SWOT ANALYSIS 1
The Purpose of a SWOT Analysis
Charles Anderson Joyner III
PURPOSE OF A SWOT ANALYSIS 2
Every business to include the largest ones that control their areas of industry--has a limited supply of manpower, production capacity and capital. Evaluating the company’s strengths, weaknesses, opportunities, and threats helps it determine how to allocate these resources in a manner that will result in the highest possible potential for revenue growth and profitability. The management team examines where the company can compete most effectively. The company more times than not discovers competitive strengths that have not been fully utilized in the past in addition to critical areas that needs to be improved in order for the business to more effectively compete. A realistic assessment also prevents strategic blunders like entering a market with products that are clearly inferior to what well-entrenched competitors are offering. Continuous improvement in all areas of a company’s operations is an important aspect of staying ahead of competitors. Weaknesses and opportunities can--and must--be turned into future strengths.
PURPOSE OF A SWOT ANALYSIS 3 Strengths, weaknesses, opportunities, and threats (SWOT) analysis is a necessary, straightforward standard that assists in direction and serves as a foundation for the development of business’s marketing strategy. It brings about this process through assessment of the organization’s strengths (what it can do) and weaknesses (what it cannot do) in addition to opportunities (potential favorable conditions for the company) and threats (potential unfavorable conditions for it). SWOT analysis is also an important step in the planning process but sometimes its value is often minimized in spite of how simple it is in creating it. The role of SWOT analysis is to take the information from the environmental analysis and separate it into internal issues (strengths and weaknesses) and external issues (opportunities and threats). Once this is completed, SWOT analysis determines if the information indicates something that will assist a business in meeting its objectives (a strength or opportunity), or if it identifies an obstacle that must be overcome or minimized to achieve desired results (weakness or threat). The purpose of a SWOT analysis is to get managers into the mindset and thinking about everything that could possibly be an impact to the success and failure of a new project. Failing to acknowledge an essential strength, weakness, opportunity or threat could and usually does lead to terrible management decisions. Take for example, a software company that might hold a patent for a new computer processor failed to recognize a threat from its competitors who were also developing comparable products, it might overestimate conceivable sales of its new processor and assume debt to finance the growth of its project only to notice down the line that the company’s promising product will not make enough money to make a profit or even pay off the assumed debt. A SWOT analysis could have helped this company’s management avoid expensive mistakes early on and alerted them to which products were more likely to succeed. PURPOSE OF A SWOT ANALYSIS 4 With SWOT’s origins dating back to the 1960s with Albert Humphrey, it is as useful now as it was back then. Businesses utilize the process in two different ways-as an easy icebreaker assisting individuals come together to “kick off”...
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