SWOT analysis is performed by the business owners to identify and document their key strengths, weaknesses, threats and opportunities. This analysis provides some key targets to the business entrepreneurs in terms of their weaknesses those they need to convert it in their key strengths so that they could better beat their competitors with their high-quality unique product and services. It has been researched that a SWOT analysis is documented just to facilitate the fact based, realistic and data driven focus at the key strength as well as weakness of the organization. The organizations should use SWOT analysis as a guide for their business improvement & strategic growth rate.
Factors of SWOT analysis
Following are some key factors those are important to be considered by the organization in order to perform SWOT analysis. This analysis provides them a clear idea about their positive points and weaknesses those they need to improve in order to maintain their competitive edge among similar organizations operating under similar industry.
Strength: The key strength of the organization includes the key activities those add value in existing business environment of the organization and helps them in the effective achievement of competitive edge. Strength of an organization includes everything that makes them different from their competitive enterprises such their marketing strategy, strategy to retain their employees and customers, strategy related with the use of recent technologies and trends and product pricing strategy. This makes the organization and business owner eligible to get competitive advantage in context with key strategy related with business growth rate and customer base as well.
Weaknesses: This is another key factor to be involved under the SWOT analysis of an enterprise. This key factor includes all key aspects those might diminish the existing growth care of the organization and corresponding customer base as well. Furthermore, the poor marketing strategy of the organization, poor customer retention and employee retention strategy of the organization could be included under this key factor. This is the key aspect that is highly prioritized by the organization because this make them eligible to get a clear idea related with the key improvement areas of their business which is important to be known to them so that they could work hard for their significant improvement.
Opportunity: Opportunity is the key aspect to be considered while performing SWOT analysis. This module of the analysis provides them clear idea about the marketing and business growth opportunities those could be grabbed by them to increase brand awareness among majority of customers. This module refers to the favorable external factors those could offer them a competitive advantage. For example, it would be easy for a car manufacturer to export its vehicle in new market in case a country cuts its tariff rate and this would also result in increased sales rate of the organization and market share as well.
Threats: This is the last module of SWOT analysis and is associated with several key factors those acts as a biggest threat within the growth rate of the organization. Also, these key factors have the potential to harm the organization in terms of finance, customer base, employee retention rate and product sales rate of the organization. This module also includes details related with changing customer attitude towards the enterprise, negative press and media coverage, financial risks, emerging competitors and changing regulatory environment of the organization etc.
Advantages of SWOT analysis
Person with good knowledge regarding different key concepts of business can easily perform SWOT analysis as it’s not that much complex to be understood and performed. SWOT analysis is best to be performed by the business owner due to its several key benefits those are listed down the section-
With the help of PESTLE analysis, it would be easy for the entrepreneur to understand the newly established or already established business at new location under new industry.
• This analysis also provides better assistance to him about various weaknesses or weak points associated with his newly established business/ venture.
• This analysis makes the business owner eligible to deter business threats and capitalize on variously associated key opportunities.
• The business owner can take advantage of strengths of his business to maintain competitive edge and give strong competition to competitive enterprises under similar industry.
• The business owner can also develop business goals with the help of SWOT analysis together with the key strategies to achieve them in a better way and attain maximum customer base which is every business’s main agenda because it directly influences the financial growth rate of the enterprise.
SWOT analysis is one of the key stages of business planning under which the key strengths, opportunities, weaknesses and threats of the business is identified, evaluated and analyzed significantly. This analysis is not recommended to be performed when there is a need to conduct more in-depth analysis of several business activities of the enterprise. Decision making process would be easy to perform to the business owner with the help of results and findings of SWOT analysis. A SWOT analysis doesn’t provide solutions/ alternative decisions to the business owner in response to the key threats and weaknesses identified through SWOT analysis.