Things You Need to Know About SWOT Analysis
It is never easy to start and manage a business. There are so many things that attract your attention which lead you to be caught up easily in the minutiae at the expense of the big picture. To ensure that your business remains for a long period of time, you need to step back from time to time and see things from a wider perspective.
That is when SWOT analysis creeps in. A SWOT analysis can help you check the potential of your business. It is a powerful way to evaluate it, whether you are two people or 500. You do not only assess the performance of your business at present, you will also examine its performance in the coming weeks, months, and even years.
In this article, you will what a SWOT analysis means, the purpose of conducting it, the elements it is consist of, and its benefits and limitations.
WHAT IS A SWOT ANALYSIS?
A SWOT analysis is a methodical strategy to identify and evaluate some main characteristics: Strengths, Weaknesses, Opportunities, and Threats, in short SWOT. SWOT analysis can be used by a company, organization, or individual projects within a single department. SWOT analysis is commonly applied at an organizational level to know how a business is closely aligned with its growth tracks and success benchmarks, but they can also be applied to see how well a certain project, such as online advertising campaign, is performing according to initial outlook.See also Difference Between Economic Value Added and Market Value Added
PURPOSE OF PERFORMING A SWOT ANALYSIS
Conducting a SWOT analysis helps owners to carefully evaluate his business by presenting a perspective of the company’s operations from a different angle. This analysis is pivotal, especially for new businesses, in their planning process. It can be executed at any time. A unique SWOTs will help a new business get on the right track.
ELEMENTS OF SWOTAs its name implies, a SWOT analysis examines four elements:
Internal characteristics and resources that contribute to a successful result.
Internal characteristics and resources that work against a successful result.
External attributes that the company can benefit from or utilize to its advantage.
External attributes that could imperil the company’s success.
SOME BENEFITS OF SWOT ANALYSIS
1. It is easy to do and practical to use;
2. It can be clearly understood;
3. It tackles all the main internal and external factors affecting the company;
4. It helps the company determine its goals in the future;
5. It initiates further analysis.
SOME LIMITATIONS OF SWOT ANALYSIS
It is clear that SWOT analysis carries some notable benefits to the company or organization applying it. However, a lot of managers and academics heavily criticize or do not even acknowledge it as a serious tool. According to many, it is a ‘low-grade’ analysis. Here are some of the significant downsides identified by a research:
1. There are too many lists of strengths, weaknesses, opportunities, and threats;
2. There is no prioritization of factors;
3. The factors are described too broadly;
4. The factors are often opinions, not facts;
5. There is no recognized method to differentiate between strengths and weaknesses, opportunities and threats.See also Can Changes in Working Capital Can Affect a Companu Cash Flow
SWOT analysis is a simple but useful tool for examining your business’ or organization’s strengths and weaknesses, and the opportunities and threats that you are experiencing. It helps you pay attention to your strengths, lessen threats, and take the greatest possible advantage of opportunities available to you.
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