Defining the Purpose of A SWOT Analysis
What is a SWOT analysis?
A SWOT analysis is a technique that is used to evaluate external and internal factors that affect an organization. Usually, a four squared assessment is carried and it assesses the strengths, weaknesses, opportunities and threats that an organization faces. There are many ways through which information for a SWOT analysis can be obtained. These include:
- Assessment of an organization’s records
- Interviewing employees and clients
- Carrying out exit interviews
- Carrying out market analysis
Who can use a SWOT analysis?
Every company can use the SWOT analysis. For new companies, a SWOT analysis can be used to establish industry attractiveness and the feasibility of the company in terms of penetrating a new market. Older and more established companies can use the SWOT analysis to determine the reasons behind poor sales and performance. These companies can also use this technique to improve their market strategies and compete more effectively in the market.
When is a SWOT analysis necessary?
A SWOT analysis can be carried out for different purposes. There are many reasons that can drive organizations to engage in this strategic planning technique.
- Exploring new markets. Companies that are just starting out may need to carry out a SWOT analysis to gauge whether or not they can penetrate and make profits in the market.
- Exploring solutions to organizational challenges. An organization that is facing problems may need to carry out a SWOT analysis in order to explore possible solutions that can help it improve.
- Identification of limitations and barriers to organizational goals and objectives. A company that is facing challenges in achieving its vision and mission can use the SWOT analysis to identify the major obstacles and get rid of them.
- Make decisions on the future direction of the company. There are no static markets in the business world. This calls for strategic planning in order to determine which direction an organization should take in future. A SWOT analysis can help to reveal the most cost effective and beneficial trends for any company.
- Revise current plans and activities of an organization. Where an organization feels uncomfortable with pursuing certain set goals or changes in the market cannot allow it to achieve set objectives, there may be need to revise initial plans. A SWOT analysis comes in handy as it can reveal the vestigial markets and trends that the company should avoid.
What are the benefits of conducting a SWOT analysis?
The SWOT analysis has gained popularity among strategic planners in the recent times. This is because it offers many benefits for both new and old organizations. It can also be used by any organization regardless of the field or market it belongs to.
Some of the key benefits that an organization stands to gain from carrying out a SWOT analysis include:
- It helps to identify attainable objectives and goals for an organization. These are goals based on the strengths and weaknesses of the organization and in particular its resources.
- A SWOT analysis also helps organizations to come up with practical methods of attaining their set objectives.
- This kind of analysis also helps to identify the competitors that an organization has to face in the market and hence device ways of competing effectively.
Ultimately, a SWOT analysis is essential because it helps an organization maximize on its potential and work on its weaknesses hence make the most profits.
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