Monday, 19 December 2016

Why SWOT Analysis is Important in Business

If you are planning to get yourself involved in the business world, you should know what SWOT analysis is and its importance. SWOT analysis has been around for many years now. To be specific, people started using this tool around the 1960s. It was developed by Albert Humphrey of Stanford University which was actually based on the Team Action Model research project. Basically, SWOT analysis is considered to be one of the most essential tools that almost all companies use to carefully assess the industry. In addition, companies also use such tools to be able to come up with some strategies to keep up with the tight competition in the market.

SWOT actually stands for four things; strengths, weaknesses, opportunities and threats. When talking about the strengths of a particular business, these refer to the products or services of the company, its reputation, its location, the years of experience and the expertise of the people working in such company. The strengths of the company are the things that make it grow and succeed. The weaknesses, on the other hand, are those things that have to be improved like a weak brand name, poor reputation and more. The absence of the strengths is basically the weaknesses or in other words, they are the complete opposite of the strengths. When it comes to opportunities, these may pertain to some changes in the company, the emerging markets and the technologies. And lastly, new competitors in the market, new regulations and increasing cost are among the things that can be considered under threats.

But is business plan SWOT analysis really important for a business? The answer to this question is a big YES! It is actually known as the main component of strategic planning. This particular analysis is responsible for determining and evaluating the impact of different factors to a particular business, both internal and external factors. The internal factors are those that belong in the strengths and weaknesses whereas the external factors are those that are among the opportunities and threats. After the evaluation, a company will then be able to develop something that would determine the current status/condition of the market and then make the company more competitive.

However, although business plan SWOT analysis is important, the strategies should not be based only on the analysis. Other important analysis on what should be done and what should not be done have to be taken into consideration as well. Bear in mind that the SWOT analysis will only provide a snapshot or a part of a big picture, just to give an idea on what are the areas that can be improved and many more.

To sum it up, business plan SWOT analysis is really important for a particular business plan, regardless of its nature and size. So if you are just about start a business, you should be aware about this particular type of analysis - what it can do for your business, how it can help you become successful in your chosen industry, how to come up with solid strategies and much more.

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