What Is a SWOT Analysis?

Introduction

In any organization or companies, they do involve planning, and to come up with positive and impactful planning several factors have to be taken into account. Hence SWOT analysis becomes an essential tool to guide stakeholders in having perfect preparation. SWOT analysis is the strategy and framework used by different companies and organizations to examine both external and internal factors and also current and future elements that are likely to affect the performance of the business and hinder the achievement of the penned down objectives. SWOT is an abbreviation that represents four significant issues, like strengths, weaknesses, opportunities, and threats.

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SWOT analysis is a sketch that helps in the interpretation of the strengths and weakness of the company or organization by looking into the present facts and data review. It has helped to reduced lots of mistakes when making decisions on the way forward of the various organization by using beliefs instead of the available facts. By analyzing both the external and internal data, this technique can be more useful in channeling a business towards intended objectives and drive it towards achieving success. This can be made possible by studying the organization's performance, product line, competitions, potential risks and other entities surrounding the business. SWOT analysts always focus on determining, what will give them a competitive advantage over there competitors and this is what brings success in a company.

Internal factors are those factors that affect the performance of the business and which the company has got control over, for example in SWOT, internal factors can determine both the weakness and strength of the business. Other factors are; financial, employee risk, financial, innovations and competition. External factors are those issues affecting the operation of the business and which the business has no control over, example; legislation, business environment, and technology. When these factors are understood by analysts then planning will be very accurate and positive results achieved (Nadine et al., 188).

SWOT analysis contains four significant parameters that it helps in examining, these includes:

Strengths

These include the strategies, operations, and characteristics that gives the business an upper hand or competitive advantage over other related business or competitors, for example, having a strong customer base, current technology operations, being flexible to frequent changes in the markets and consumers preferences, producing a unique and certifying brand of products, clearly having your business situated at a strategic place, employing a motivated, competent, reliable, committed and skilled employees. Forming the best marketing and selling strategies and having trusted sales force, all these factors bring about a competitive advantage over competitors and build the strength of the business, and also they can help attract investors.

Weaknesses

These are areas that require the business to quickly make reforms and necessary changes to achieve greatness and success, as they are responsible for hindering the obtaining of the intended objectives. Various businesses have different kinds of problems and weaknesses, some which may include, inadequate capital for investments, incompetent employees, unhealthy competition, high level of debts, corrupt leaders, misappropriation of funds, and insufficient chain supply. Hence for a business to remain competitive, all these problems must be addressed and rectified to be successful.

Opportunities

These are some of the environmental and external or project factors that give the business a competitive advantage over others. For example, if the government has decided to reduce the rate of tax of a particular good or business, then this can be a perfect opportunity for business to venture into such kind of business. For manufacturers who export products, it can be a precious opportunity for any company to export even more if tariffs have been reduced. Hence the business should be in apposition to deploy agents to carry out investigations, on various opportunities that the market is offering, this will always ensure that the business stays updated and make prior plans ahead of their competitors.

Threats

These are factors that can bring harm to the business. There are several risks that every business are exposed to; they may include; climate property loss, business interruption, employee's injuries, liability losses, electronic data breaches, rise in the cost of materials, rise in the level of competition, change in a climate like drought, tight labor supply, and fire outbreak. T overcome and fight these risks. First, it is essential for the business to be insured so that at the time of loss the company or industry will be compensated through subrogation. Frequent research should be carried out to determine all the potential threats that the business is likely to face, and early necessary measures taken into account to encounter them before they occur (Sarsby et al., 156).

How SWOT Is Used in a Business

Planning and decision making are some of the things that are very hard making in a business. It demands intense research, on various factors to avoid making wrong assumptions, decisions and planning as this can cost the business in a negative way. Thus to ensure proper planning and sound decision making, managers, analysts, and all stakeholders have found it better to use SWOT, as a tool to determine, strength, weaknesses, opportunities, and threats facing the business. In using SWOT, these four elements must be taken into keen consideration as follows;

Strengths

Business should ensure that those factors that give them an advantage over their competitors are well upheld. For example, the analyst should examine the current state of the products on the market, selling and marketing strategies and performance, the communication methods, and find ways of enlarging their consumer base.

Weaknesses

Being able to determine what is likely to reduce the performance rate of the business and organization and rectifying it before it is too late is very important. Through SWOT the planners can determine what drags the operations of the business down like, inadequate capital, unskilled employees, increased debts, incompetent leaders and this will help to make a sound decision towards achieving stated objectives.

Opportunities

Opportunities available in the market is what will determine continuous investments of the business. Hence before any plans and objectives are stated or noted down, it's imperative for the business to carry out research and explore any available research, to enable better allocation of investment funds appropriately.

Threats

Most of the businesses face various threats and risks that on numerous occasions lead to a negative impact on the business, like loss of properties, climate change, stiff completion and these may lead to financial loss. If all these threats are located by the analysts, then it can be easy taking necessary measures to curb all these problems before they occur (Mariani et al., 156).

Findings

In this essay paper, I found that SWOT is a very vital tool when it comes to carrying out exemplary planning and decision making towards achieving their objectives and business success. But it's also important to note that if SWOT is analyzed wrongly it can lead to wrong and misleading decision making thus the outcome becomes unpleasing.

Planning is very hard that is way, in using SWOT, I found out that thorough investigations should be carried out, the technical team of well knowledgeable members should be included in analyzing various data, and stipulate well-explained details, for sound decision making.

Conclusion and Recommendation

In conclusion, my thoughts and recommendations are based on the fact that any business must have planning and decision-making strategies and also goal setting, for the organization. Being knowledgeable and well vast with the current affairs happening within the surrounding of the business, helps in making the right decisions, hence using SWOT as a tool for planning requires severe research and the business strengths and weaknesses. Lastly, knowing the strengths, weaknesses, opportunities, and threats facing the business is the beginning of a journey towards achieving success in any business.

Works Cited

Mariani, Giovanna, Francesco Greggio, and Gino Reolon. M&a and Value Creation: A Swot Analysis. Torino: Giappichelli, 2017. Print.

Pahl, Nadine, and Anne Richter. Swot Analysis: Idea, Methodology, and a Practical Approach. Munchen: GRIN Verlag, 2007. Print.

Sarsby, Alan. Swot Analysis. , 2016. Print.